Vitol Group said Monday it had delivered the first liquefied natural gas (LNG) cargo to Finland’s first LNG terminal and that another LNG shipment has embarked for the Philippines in what is also a first for the Southeast Asian country.
The Finnish purchase had been placed by Elenger Group and fulfilled Sunday, the Rotterdam-headquartered distributor said in a press release, noting the buyer is “the largest privately owned energy company in the Finnish-Baltic region”. The LNG from a plant of Venture Global Calcasieu Pass L.L.C. in the U.S. state of Louisiana arrived on a Vitol tanker at the Inkoo floating LNG facility, according to Vitol. It did not disclose the volume or the sale value.
In the other purchase, Filipino company San Miguel Global Power will get the nation’s “first LNG cargo in mid-April this year and this cargo will be used to cool down the Floating Storage Unit (‘FSU’) Ish and commission the first LNG Terminal in Batangas Bay, Philippines near Manila”, the announcement stated without mentioning the volume or the transaction value.
The supply from Abu Dhabi National Oil Company will feed the 1,200-megawatt Ilijan power plant, whose LNG power output “is expected to significantly augment the net dependable power generation capacity of the country in the face of rapidly increasing post pandemic demand”. The cargo had been loaded on Das Island in the United Arab Emirates, Vitol said.
Baltics Energy Security
Pablo Galante Escobar, head of Vitol’s LNG and European power business, said the Inkoo hub “will enhance energy security in Finland and the Baltic region, facilitating the flow of LNG from around the world to European industry and consumers”.
The facility in Inkoo, about 37 miles from the Finnish capital of Helsinki, began commercial operation in January, according to project owner Gasgrid, as the first LNG depot in a country that does not have natural gas production. It can supply not only Finland but also Estonia, Latvia, Lithuania and Poland, Gasgrid said.
“The LNG terminal project is very significant and historic for Finnish society as a whole. The LNG terminal vessel proved to be the fastest and most effective solution to break away from dependence on Russian gas in Finland and to ensure the continuity of Finnish and Baltic gas supplies in various scenarios well into the future”, Gasgrid wrote in a news release March 3.
“This was the first time a terminal vessel intended for processing liquefied natural gas had been brought to Finland”, it added.
Elenger Finland chief executive Pasi Näkki said in Vitol’s announcement, “as one of the few energy companies operating in the region, we purchase gas directly from the Western sources - this allows us to offer our customers greater security and better prices, and has significantly increased our market share in Finland and the Baltic countries over the past year”.
“Until today we have used the port of Klaipeda in Lithuania to bring gas from the United States and Norway, now we start cooperation with the Inkoo terminal too and also with a new supplier in addition to our current partner Equinor from Norway – a global energy company Vitol”, Näkki added.
Elenger Group said Monday it has entered deals with LNG terminals to deliver 10 cargos by fall, with three deliveries already made for Lithuania’s Klaipeda port in January and March. The remaining seven are for Inkoo, scheduled to arrive in spring and summer.
Eyes on Philippine Market
The Philippines’ importation of LNG comes amid depleting natural gas production in the country. Output from the Philippines has consistently dropped since 2019, from 155.49 billion standard cubic feet (Bscf) that year to 113.61 Bscf in 2022, according to an update by the nation’s Energy Department on February 15.
Calling the delivery “historic”, Vitol Asia president Mike Muller said, “this is a significant milestone and we look forward to bringing more LNG supply from around the world to meet the rising gas demand of the Philippines”.
The Energy Department has forecast an annual growth rate in peak power demand of about seven percent from 2020 to 2040. To meet the demand, the archipelago of over 113 million people needs to raise installed capacity by more than five times from 22,317 megawatts in 2019 to 114,601 MW in 2040, according to the agency’s “Power Development Plan 2020-2040”.
Coal has historically been the Philippines’ top power resource, accounting for 62,052 gigawatt hours (GWh) of the national gross power generation of 106,115 GWh in 2021, based on the latest available data by the Energy Department. Natural gas however has also been a key player, contributing 18,675 GWh to the grid in 2021 ahead of oil at 1,616 GWh but behind renewables at 23,771 GWh.
Energy resources other than coal are expected to step up as the department has imposed a moratorium effective October 2020 on the issuance of new licenses for coal-fired plants in support of energy sustainability. The government in 2021 also joined the COP26 global pledge to phase out coal power by the 2040s. The Philippines, along with its top coal exporter Indonesia, signed a pact with the Asian Development Bank also in 2021 for funding for the transition to clean energy.
In a nod to natural gas as an alternative, the Energy Department has greenlighted the development of seven LNG terminals in the Philippines.
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