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SK E&S, a subsidiary of Korean conglomerate SK Group, has signed a Letter of Intent (LOI) with the Department of Energy of the Philippines proposing the construction of liquefied natural gas (LNG) infrastructure worth US$1.7 billion. In addition, Phoenix Petroleum and China National Offshore Oil Corp (CNOOC) have signed a Memorandum of Understanding (MOU) to develop LNG projects in the country.
SK E&S presented a blueprint to the Philippines' government for the construction of a LNG terminal with the capacity of up to five million tonnes per year, several LNG power plants with more than 600 MW capacity, and a pipeline connecting the terminal and power plants in Luzon Island, north of the Philippines, up to 150km in length.
The agreement between Phoenix Petroleum and CNOOC's Gas and Power Group covers the study, design and development of a LNG receiving terminal as well as a gas-fired power plant in the country. No further details have been disclosed.
The Philippines currently relies on the Malampaya offshore gas field for natural gas. It fuels power plants producing about 40% of supply for the main Luzon island. However, the Malampaya gas reserves are expected to be depleted by 2024, creating a urgent need for LNG imports and infrastructure.
Furthermore, the Department of Energy of the Philippines forecasts that the country’s power demand will grow by an annual rate of 5.6% by 2040, while the demand for LNG is expected to increase by 1.7% every year. Thus, the Philippines government has been reviewing measures to meet this demand, which is key to facilitating the country's economic growth.
In January this year, the Asian Development Bank (ADB) signed an agreement to serve as transaction advisor to the Philippine National Oil Company (PNOC) regarding the development of the country's first integrated LNG facility, which six companies and consortia have bid to develop.
The LOI signed between SK E&S and the Philippines’ Department of Energy is one of three major projects included in an MOU signed earlier this week by the Korean Ministry of Trade, Industry and Energy and the Philippines Department of Energy for co-operation in the energy sector.
SK E&S expects that if its proposals are realized, the project will create 800,000 jobs per year, or 2,200 jobs per day during construction.