MANILA -- Philippine power provider First Gen has received the go-ahead to construct a $300 million floating liquefied natural gas terminal together with Japanese utility Tokyo Gas.
First Gen said Friday it won approval for the project from the Philippine Department of Energy. Construction begins next month, with completion slated for the third quarter of 2022.
The project will modify an existing liquid fuel transport jetty near one of First Gen's gas-burning electrical plants on the coast of the main island of Luzon. A vessel called a floating storage and regasification unit will be continuously moored at the jetty.
First Gen will pick up 80% of the investment while Tokyo Gas foots the other 20%. This is the first floating LNG terminal project taken on by the Japanese utility.
The two companies teamed up in December 2018 to develop an onshore LNG receiving terminal, but plans were switched to a floating terminal to lower construction costs.
Floating LNG terminals, however, are highly vulnerable to typhoons and other severe weather, so there are limits to expanding capacity. An onshore terminal remains on the table if there is greater demand.
First Gen supplies electricity to the island of Luzon, which is home to the Philippine capital of Manila. Gas-powered plants currently take fuel extracted from a deep-sea natural gas field off the island of Palawan in the southwest.
The gas field is projected to dry up within the next decade. This has touched off a search for alternative sources of natural gas.