* Energy World says its LNG import hub, power plant to start
* Shell, First Gen also working on projects
* Philippines needs more energy to power growing economy
* Looking to gas as cleaner source of energy than coal
By Erik dela Cruz
MANILA, June 9 Australia-listed Energy World
Corp Ltd expects its nearly $1 billion liquefied
natural gas hub and power plant in the Philippines to be running
by early 2015, paving the way to a new market for imports of the
Purchases by the Southeast Asian nation would be welcome
news for major LNG producers such as Chevron, ExxonMobil
and Total, which are facing uncertainty about
longer-term demand in Japan and South Korea, the top two buyers
of the cleaner fuel.
"We expect to be ready to operate at the end of this year or
early 2015," Energy World Chief Executive Stewart W. G. Elliot
told Reuters on Monday. "Total cost is close to a billion
dollars, including a 650 megawatt combined cycle power station."
That time frame would foreshadow the construction of two
other LNG import and storage terminals in the next five years in
separate projects proposed by Royal Dutch Shell Plc and
local firm First Gen Corp.
The Philippines, one of Asia's fastest-growing economies,
needs to boost its energy output to keep up with demand, but
public resistance to dirtier fuels has delayed some coal-fired
Shell's Philippine unit operates the country's sole natural
gas field, in Malampaya in the South China Sea, supplying three
gas-fired power plants that account for a third of power
generation on the major island of Luzon, home to Manila.
But the government expects the field to dry by as early as
2023, directing focus towards importing from global supplies
swollen in the wake of North America's fracking revolution.
Hong Kong-based Energy World has a 20-year lease on land in
Quezon Province in Luzon for its import hub, which is expected
to have an initial capacity to ship in 3 million tonnes of LNG a
The power plant, at the same site, is slated to deliver 200
MW of supply by early 2015, before adding a further 450 MW by
early 2016, Elliot said.
The company plans to ship fuel from its Sengkang field in
Indonesia, as well as possibly buying under contract from other
producers or in international spot markets.
The power plant will take most of the imports, but the
company also plans to make gas available throughout the
Philippines, distributing by sea to coastal terminals and by
land via road tankers.
Manila Electric Co (Meralco), the country's biggest
utility with a franchise that covers the capital and nearby
provinces, could be a customer.
"We are open to that," Meralco President Oscar Reyes said,
when asked about the possibility of buying Energy World LNG.
Energy World's Elliot added that there could also be
"tremendous opportunities" to sell gas to industry, households
Elsewhere, Shell is looking to invest $2 billion to build
new fuel storage and distribution facilities, including a
floating LNG import terminal, while First Gen plans to build a
$1 billion import hub to come online by 2019.
But the shift towards LNG faces some high hurdles - most
notably that coal is still seen a cheaper source of energy,
making some utilities reluctant to invest in gas-fired power
Coal is the "most competitive" energy source, costing a
little more than half the price of natural gas, said Meralco's
"You've got clean technology in coal now ... but LNG clearly
is a cleaner source of power."
The latest round of development comes less than a decade
after several pioneering LNG power and pipeline projects were
shelved or cancelled due to a lack of government support. Those
included a supply deal with BP for a 1,200 MW power
And Manila still has no development blueprint for natural
gas, with its energy minister ruling out sovereign guarantees
and state subsidies for LNG investors and users.
"Government clearly needs to help LNG, because right now
everybody is focused on the cheapest which is coal," said Jesse
Ang, a representative in the Philippines of the World Bank's
private sector arm, International Finance Corp.
(Additional reporting by Rosemarie Francisco; Editing by Joseph