Group urges full implementation of NatGas law

The Petroleum Association of the Philippines (PAP) called on power generation companies to maximize the utilization of domestic natural gas to help stabilize electricity prices. 

In a press release, the group said the country still has unused indigenous capacity that could reduce reliance on costly fuel imports.

 “There is an opportunity to fully implement the downstream Natural Gas law by maximizing the use of indigenous gas,” PAP Chairperson of the Board of Directors Donnabel Kuizon Cruz said. 

“We still have capacity there that we can use and push into our power generation companies so we can help reduce the price,” Cruz said.  

Amid the proposals to temporarily suspend or cut excise tax on oil products due to the Middle East crisis, the group has advocated for the full implementation of Republic Act No. 12120 or the Philippine Natural Gas Industry Development Act as a long-term safeguard against price volatility. 

The group noted that Section 38 of the law, which exempts the sale of indigenous natural gas and electricity generated from it from VAT, could deliver additional savings for consumers.

 Cruz, who also serves as President and CEO of Prime Energy, operator of Service Contract No. 38 covering the Malampaya Deep Water Gas-to-Power Project, said locally produced gas offers a significant cost advantage over imported liquefied natural gas (LNG).

Electricity generated from Malampaya gas costs about P4.80 per kilowatt-hour, compared with P10.30 per kilowatt-hour for imported LNG, according to Cruz.

“That’s how big the difference between our own fuel in the country is, compared to imported gas today,” Cruz said. 

Cruz also said that global tensions serve as a wake-up call to strengthen the country’s domestic fuel supply. 

She then described the 2022 extension of the Malampaya Service Contract as the catalyst for the country's recent upstream successes.

“The Iran conflict underscores the importance of having our own resources—our own indigenous or domestic fuel sources such as indigenous gas, oil, and indigenous coal,” Cruz said.

“The government’s move to extend the license was very timely. This allowed us to start drilling for new wells, and we already had one discovery—with hopefully more to come,” she added. 

 Meanwhile, Cruz credited the Department of Energy for continuing to develop the country’s indigenous resources, including awarding additional petroleum service contracts to boost local energy production and reduce reliance on imported oil. —VAL, GMA Integrated News