Bill creating midstream natural gas industry framework reaches Senate plenary

The bill creating a legal and regulatory framework for the midstream natural gas industry has reached the Senate plenary on Tuesday.

Senate energy committee chairman Sherwin Gatchalian sponsored Committee Report 225 contained in Senate Bill 1819 during the Senate session on Tuesday.

In sponsoring the bill, Gatchalian said SB 1819 seeks to develop one of the country’s most important energy sources: natural gas.

He noted that 19% of the country’s power is from natural gas and it is the third most utilized source after coal at 57% and renewable energy at 21%.

The lawmaker underscored that power shortages in Luzon are possible if the natural gas from Malampaya Gas Field becomes completely depleted.

The Malampaya service contract will expire in 2024 and even if the contract is extended, Gatchalian said, the Department of Energy estimates that the 848,834 million standard cubic meters in the field will run out by the first quarter of 2027.

“This implies that we could be facing a major energy crisis less than six years from now unless we find alternative sources to supply Philippine demand for natural gas,” Gatchalian said.

The Senate energy panel chairman cited research asserting that investments in natural gas will benefit consumers in the long-run.

“The legislation we are sponsoring today will foster the development of the midstream natural gas industry in a bid to strengthen Philippine energy security by diversifying our primary sources of energy and promoting the role of natural gas, especially liquified natural gas, as a complementary fuel to variable renewable energy,” he said.

He added that the measure would govern the promotion and development of the natural gas industry, foster a competitive market for natural gas, encourage the flow of investments for industry development, and protect midstream end users by mandating transparent and fair rates, fees, and charges.

The bill seeks to develop infrastructure for liquified natural gas terminals all over the country. However, the LNG terminals will not be considered as public utility.

These terminals include all facilities, whether onshore or offshore, used to import, receive, unload, load, process, store, and regasify natural gas in any form from local or foreign sources.

The terminals will be regulated  by the DOE rules concerning Third Party Access (TPA).

TPA allows additional industry players to use natural gas facilities which are owned or operated by other players. This will inject more competition into the midstream industry by allowing for the participation of smaller firms that may not yet have LNG facilities of their own, Gatchalian said.

The third party rights will be determined through a competitive selection process to minimize “sweetheart deals” between industry players and other anti-competitive behavior.

Other salient features of the bill include the treatment of pipelines and provisions that will uphold transparency and fairness in the operation of major components of the midstream industry.

“Mr. President, nothing less than the future of the Philippine energy sector is at stake here. Therefore, I am respectfully soliciting the support of this esteemed chamber for the swift passage of this landmark energy legislation,” Gatchalian said. — BM, GMA News