“In the Philippine context, natural gas is a pillar of a realistic energy transition”
As electricity demand in the Philippines accelerates—set to more than quadruple by 2050—the question is not just having enough generation capacity, but whether we’ll have the right kind.
According to the Department of Energy, electricity sales are growing at an annual rate of 5.5 percent, driven by population growth and industrial expansion. And while the Philippine Energy Plan champions renewables, natural gas remains essential to ensuring power stability, and protecting consumers from price volatility.
Natural gas is not just a cleaner alternative to coal—it’s the fuel that makes the transition to renewables viable.
Solar and wind power are intermittent. When the sun isn’t shining or the wind isn’t blowing, something has to fill the gap. Without reliable baseload and peaking support, the grid becomes vulnerable to blackouts and price spikes.
Currently, natural gas supplies about 4.5 GW of the country’s generation capacity. But only 1.2 to 1.3 GW of that comes from Malampaya, the nation’s sole indigenous source.
Even with Phase 4 drilling underway and projections to boost output to 1.7 GW, supply will still fall short of what’s needed to power existing plants—let alone the nine new DOE-approved gas-fired projects expected to add another 5.63 GW.
Without fuel to run them, those investments will sit idle. It’s already happening, with distribution utilities forced to buy from the more expensive Wholesale Electricity Spot Market (WESM), pushing up rates for consumers.
Consumers are the first to feel the cost.
When fuel supply lags behind capacity, utilities pass on the burden to households and businesses.
For many low-income families, whose electricity bills already stretch monthly budgets, even modest rate increases will hurt.
For businesses, big and small, power price spikes cut into margins. A reliable, competitively priced supply of natural gas can help shield Filipinos from these shocks.
President Ferdinand Marcos Jr.’s signing of Republic Act 12120—the Philippine Natural Gas Industry Development Act—was a vital step. It provides the legal structure to advance gas development and positions natural gas as a “safe, efficient, and cost-effective” energy source. But legislation alone doesn’t secure supply. It must be backed by infrastructure, exploration, and coherent fuel procurement strategies.
The infrastructure to support LNG imports is beginning to take shape.
First Gen’s subsidiary, FGEN LNG, has received a 25-year permit to operate a 5 million metric ton-per-year terminal in Batangas.
Meanwhile, Linseed Field Corporation’s LNG terminal—also in Batangas—has resumed operations, reinforcing the country’s gas delivery capacity.
In a major boost to sector integration, Meralco, Aboitiz Power, and San Miguel Global Power finalized a $3.3 billion deal to develop a full LNG value chain.
Their joint acquisition of Linseed Field Corp., as well as stakes in South Premiere Power Corp., Excellent Energy Resources Inc., and Ilijan Primeline Industrial Estate Corp., signals a strong push to secure supply.
Simultaneously, domestic exploration must continue.
According to DOE briefings, the upcoming Malampaya drilling includes two new wells and one exploratory well—with the potential to extend field life to 2034.
Meanwhile, exploration in Eastern Palawan and the Sulu Sea, could harness reserves of up to 18 trillion cubic feet. These are strategic assets critical to reducing import dependence and insulating the country from external fuel market disruptions.
At present, the Philippines imports 54percent of its total energy supply.
Nearly all the coal used for electricity generation is imported, making the system heavily exposed to global market fluctuations.
Natural gas offers a way to rebalance this equation. Unlike coal, gas can be paired with flexible, quick-start plants that provide backup for renewables.
Natural gas is often referred to as a “bridge fuel,” but in the Philippine context, it is more than that—it is a pillar of a realistic energy transition.
It supports grid stability, shields consumers from volatility, and buys time for renewables to scale up.
The real question isn’t whether to choose gas or renewables—it’s how to use both strategically to ensure the lights stay on at stable and affordable rates.
The challenge now is to match generation targets with fuel realities.
Delays and gaps translate directly into higher costs passed through electricity bills. For households already burdened by rising living expenses and for industries sensitive to energy costs, these are substantial risks.
Treating natural gas as a critical component of energy planning is essential to delivering stable, affordable power.
For consumers, it’s about the dependability of the system to deliver electricity that’s reliable, reasonably priced, and resilient enough to withstand shocks.