The Department of Energy said over the weekend it issued the implementing rules and regulations (IRR) of the Philippine Natural Gas Industry Development Act to establish the framework for the development of the industry.
The IRR under Department Circular No. DC 2025-04-0005 mandates the priority dispatch of the Malampaya gas or indigenous gas, although it does not prohibit the importation of liquefied natural gas or use of aggregated natural gas.
Aggregated gas refers to indigenous natural gas that has been combined with or supplemented by imported LNG, pursuant to the required minimum percentage of indigenous natural gas, pricing mechanism and competitive pricing as provided in Section 4(b) of the Act.
Gas that is a blend or combination of purely imported LNG, without any portion of the gas coming from indigenous natural gas sources, would not be considered aggregated gas.
Under the IRR, the procurement and utilization of indigenous natural gas, including without limitation, by gas-fired power plants, should be prioritized over imported natural gas, provided that it is consistent with the State’s policy of ensuring energy security and consumer welfare.
The circular said an indigenous natural gas supplier and aggregator should provide “fair and open access to its natural gas supply in a non-discriminatory and transparent manner” through physical supply, administrative or financial contracts or any other arrangements allowed by the DOE.
It said power produced from indigenous natural gas should have priority over other conventional energy sources.
“Such prioritization shall cover indigenous natural gas power supply contracting, including mechanisms for minimum supply requirements,” the circular said.
It said the DOE should establish mechanisms for the optimal and full utilization of Indigenous natural gas in the generation, transmission, distribution and supply of power.
It said subject to viability, the Philippine Downstream Natural Gas Industry (PDNGI) facilities may be designed and constructed to ensure the accommodation of both indigenous natural fas and/or imported natural gas, pursuant to the standards of the DOE.
The IRR said the DOE should establish measures to support the supply and use of Indigenous natural gas in the domestic downstream natural gas sector.
All PDNGI facilities, as certified by the DOE, should undergo an evaluation process for possible inclusion in and entitlement to incentives under the Strategic Investment Priority Plan (SIPP).
According to the IRR, the purchase and sale of indigenous natural gas, aggregated gas and power generated by generation facilities using indigenous natural gas and aggregated gas should be exempt from value-added tax (VAT), but the exemption is only to the extent of the amount of indigenous natural gas attributed to be in the aggregated gas.