LNGPH weighs onshore gas storage expansion in Batangas

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LNGPH onshore gas storage

Highlights

LNGPH is considering a P6 billion third onshore LNG tank in Batangas with 180,000-cubic-meter capacity, taking 36 to 42 months to build.
Expansion follows last month's commissioning of two Batangas tanks totaling 120,000 cubic meters, and would lessen reliance on a 135,000-cubic-meter floating storage unit.
The LNG terminal and Ilijan power assets are included in a $3.3-billion deal among Meralco PowerGen, Aboitiz Power, and San Miguel Global Power, with LNGPH set to bid in a 3,800-megawatt state auction.

Batangas storage plan and project timeline

As reported by BusinessWorld Online, LNGPH is considering a third onshore LNG tank in Batangas, with President and Chief Executive Officer Yari A. Miralao saying the consortium is in a "contemplative period" as it studies shifting more storage capacity onshore. He said the proposed facility would cost about P6 billion and would take around 36 to 42 months to build.

The planned tank would have capacity of up to 180,000 cubic meters, equivalent to about 18 days of gas supply. Mr. Miralao said onshore tanks offer a more natural and resilient solution than floating storage and regasification units, particularly because natural gas supplies about 20% to 40% of the Luzon grid's power.

The expansion follows the commissioning last month of LNGPH's two onshore storage tanks in Batangas. Those facilities each hold 60,000 cubic meters, giving the consortium a combined 120,000 cubic meters of storage, or about 11 days of gas consumption.

Power sector implications and auction plans

The Batangas facilities store imported LNG before it is converted back into gas through regasification equipment and sent by pipeline to power plants for electricity generation. LNGPH also charters a 135,000-cubic-meter floating storage unit from Abu Dhabi National Oil Co., and the proposed onshore addition would reduce reliance on vessel-based storage.

The terminal and related gas assets form part of a $3.3-billion investment agreement reached early last year by Meralco PowerGen Corp., Aboitiz Power Corp., and San Miguel Global Power Holdings Corp. The transaction covers the Ilijan gas-fired power assets, which have combined installed capacity of more than 2,500 megawatts, as well as the LNG import and regasification terminal in Batangas.

LNGPH unit Excellent Energy Resources, Inc. is also preparing to join the government's first mid-merit natural gas capacity auction with three projects in Batangas and the Visayas. The company is among 10 prequalified bidders in the Department of Energy process, which seeks to procure more than 3,800 megawatts of capacity.

In our earlier article on planned Philippine sovereign bond reforms and anticipated inclusion in J.P. Morgan’s Government Bond Index-Emerging Markets, we explained how these changes could broaden the investor base and improve liquidity for peso government securities. We also noted that cheaper funding and stronger market infrastructure are not enough on their own—meaningful gains still depend on credible fiscal policy and well-executed investments in areas like infrastructure and structurally important inputs such as power.

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