Natural gas has been one of the cornerstones of the Philippine energy sector since the Malampaya gas project in northwest Palawan started contributing to the Luzon grid in 2002.
The Malampaya gas project is touted as one of the largest and mort significant industrial projects in Philippine history, delivering around 3,211 megawatts of capacity to five natural gas plants in Batangas namely Ilijan, Sta. Rita, San Lorenzo, San Gabriel and Avion power plants.
The eventual depletion of the Malampaya gas reserves in the next decade and the lack of a new gas discovery given the ongoing challenges in the upstream petroleum industry has prompted the government to look at the viability of putting up a liquefied natural gas infrastructure (LNG) in the country.
While several industry players have expressed interest to put up their own LNG facilities, the move recently gained traction with the decision of Energy Secretary Alfonso Cusi to direct the Philippine National Oil Co. to put up the country’s first LNG facility.
With a project cost estimated at P100 billion and target completion by 2020 or 2021, the plan has gained strong support from the investors here and abroad.
“In the short-term, we seek to build a common LNG receiving and distribution infrastructure as part of the future clean energy city,” Cusi said.
Cusi said LNG can provide the demand from baseload, mid-merit and peaking requirements “and can compete with other fuel sources that can address the least-cost optimal electricity from such demand centers.
Cusi wants the Philippines to become the hub for LNG in the Southeast Asian region after missing being the hub for aviation and maritime sectors.
“LNG should have been done long time ago because the Malampaya undergoes maintenance every 18-24 months. Every time it goes under maintenance, it costs the consumers a lot because we have power plants that are dependent on natural gas would have to switch to expensive adjustment and its costing the Filipinos,” he said.
The maintenance shutdown of the Malampaya power plant in 2014 cost consumers around P10 billion, he said.
“We could have avoided that if we have LNG terminal Aside from maintenance, preparation for eventual depletion, that study became a little bigger when we saw the PH can become LNG hub, and we’d like to give it a shot,” Cusi said.
More than 30 industry players have expressed interest in the country’s first integrated LNG terminal in Batangas that will also supply a new 200 MW LNG power plant.
Government is utilizing its banked gas from the Malampaya gas project as the government’s equity into the LNG project, PNOC president Reuben Lista said.
Lista said the LNG will be undertaken government to government (G2G) and they expect to make an announcement on the partnerships for LNG project before June 30.
Lista also addressed concerns that competition as the power sector has largely been private sector driven as a result of the passage of the Electric Power Industry Reform Act of 2001.
The EPIRA prohibited National Power Corp. from engaging in power generation anew and unbundled the power sector thus resulting to more private sector players.
“We are not competing with the private sector. This project will actually help the private sector. We will assure that there is a source of LNG if and when Malampaya sizzles out,” Lista said.