DOE exec: Balance needed in expanding LNG in country's energy market

Balancing the market for the remaining reserves in Malampaya is an important consideration in light of the proposed development of a midstream liquefied natural gas industry in the Philippines, an official of the Department of Energy (DOE) said Tuesday.

During a Senate hearing, Energy Assistant Secretary Bodie Pulido said that if there will be no more renewal of Gas Sales and Purchase Agreements (GSPAs) in Malampaya, the energy sector would have to rely on liquefied natural gas as an alternative.

However, he stressed that the depletion of the Malampaya cannot be projected with certainty.

"One of the issues that we're dealing with now is we're also currently talking with the consortium regarding their application for contract extension of Malampaya," Pulido said.

"One of the difficulties that we have right now is how to balance that contract extension with the incoming liquefied natural gas," he added. "We also have to ensure that there has to be some kind of market for the remaining reserves of Malampaya."

Malampaya has been supplying fuel to the Luzon electricity grid for nearly two decades, servicing approximately 21% of the national electricity demand. Its reserves were previously projected to start running out come 2024.

But Energy Secretary Alfonso Cusi recently clarified that there will still be Malampaya reserves "beyond 2024."

"2024 is the expiry of the concession agreement that is being evaluated. We are going to deal with the service contract whether it will be extended and whether it will be terminated," he added.

In anticipation of this depletion in Malampaya reserves which fuels five power plants, Senator Sherwin Gatchalian, chairperson of the Senate Committee on Energy, has filed Senate Bill No. 1819 which would provide a national energy policy and framework for the development and regulation of the Philippine midstream natural gas industry. 

"Because we haven’t discovered new sources of gas in our country, we have to resort to importing LNG just to make sure that those 3,200-megawatt gas-fired power plants keep on running," Gatchalian previously said.

The DOE welcomed the proposed measure which would cover all aspects of the midstream natural gas industry, including transportation, transmission, storage, and marketing of natural gas in its original or liquefied form.

"This bill for us is very critical because the bill gives the DOE some authorities regarding gas aggregation and so on and how to address the different parts of that value chain," Pulido said.

Aside from the proposal to import LNG, Pulido said the DOE is also trying to bring in more investors in upstream energy exploration in the country to identify domestic energy sources while promoting national sovereignty in some disputed waters.

He reiterated Cusi's position that the Philippine service contract system must be used for any exploration and development in the country's waters as this is "an express recognition of Philippine sovereignty and exclusive economic use." —KG, GMA News