September 22, 2022

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DoE sees facility investment for gas imports topping P69B

THE natural gas industry will require investment of P69.23 billion to help navigate the transition from domestically produced to imported gas, the Department of Energy (DoE) said on Thursday after announcing the completion of the Natural Gas Development Plan (NGDP).

The estimated capacity of the receiving facilities required for the transition is 24.6 million tons per annum (MTPA) of liquefied natural gas (LNG) by 2040, the DoE said. The capacity requirement is only 15.6 MTPA under a scenario of greater adoption of clean energy.

The plan estimates natural gas consumption in the Philippines to be at least 16.8 million tons of oil equivalent (MTOE) for power generation and 0.05 MTOE for non-power applications by 2040.

It said much of the gas demand will be “mainly driven by the displacement of coal and oil-based fuels in power generation and greater use of gas-fired power plants as sources of balancing power.”

“Reductions in production levels are anticipated starting in 2022, with the Malampaya concession expiring by 2024. While the gas field will continue to produce significant amounts of natural gas until 2027, the impending depletion of the Malampaya gas fields, ongoing lack of LNG infrastructure, price volatility due to geopolitical and other international issues, and the increasing urgency to reduce coal and oil-based fuel utilization are providing a high level of uncertainty for potential investors and industry stakeholders, given the possibility of stranded assets should projected demand fail to pan out,” according to the plan.

The DoE said it prepared the NGDP with the University of the Philippines Statistical Center Research Foundation, Inc. The plan will serve as a guide in developing the downstream natural gas industry.

“We underscore the importance of developing our natural gas industry. As part of our strategy and ensuring energy security, we need to strengthen our strategies and policies,” Rino E. Abad, director of the DoE’s Oil Industry Management Bureau, said in a media statement.

The NGDP is a US-funded gas policy development plan guiding the DoE in drafting policy recommendations to promote clean energy.

The NGDP outlines for potential investors the legal framework, gas demand outlook, ongoing projects, industry practices and product and facility standards. It also calls for the establishment of a technical committee on downstream natural gas.

“With the challenges facing the current supply of our natural gas from the Malampaya gas field, this NGDP is also timely in providing our prospective investors’ guidance and policy framework, legal requirements, and incentives in putting up LNG facilities and other infrastructure,” Mr. Abad said.

The DoE also said that the NGDP also contains proposed regulatory processes, including the recommendations to government agencies and local government units (LGUs).

“These include technical, administrative, and regulatory guidance for agencies and LGUs, a simplified process for securing permits and clearances, documentary requirements, and technical standards to comply with,” the DoE said.

To date, the DoE has approved six proposed LNG terminal projects with operations expected to start between 2023 to 2025.

These include the FGen LNG Corp., Linseed Field Corp., Energy World Gas Operations Philippines, Shell Energy Philippines, Vires Energy Corp., and Luzon LNG Terminal. — Ashley Erika O. Jose