By Sheldeen Joy Talavera, Reporter
OTHER energy companies should be given access to explore indigenous gas to enhance competition and efficiency, an analyst said.
“Indigenous gas cannot be limited to only one provider and a few power plants. Ownership should be broadened to allow greater competition and efficiency,” Leonardo A. Lanzona, an economics professor at Ateneo de Manila University, said in a social media message.
“To achieve this, technological innovations and manpower development must be pursued to encourage more players in what currently seems like a natural monopoly,” he added.
Mr. Lanzona also suggested that foreign companies should be allowed to operate under strict regulations to “bring in not only capital but also the necessary technology and know-how to develop the sector.”
Senator Pia S. Cayetano, chairperson of the Senate committee on energy, said at a public hearing last week that the government has identified natural gas as a transition fuel to renewable energy.
“It is important that we have policies supporting more exploration of natural gas because energy security depends on having our own supply,” Ms. Cayetano was quoted as saying in a statement.
“We will be less dependent on international factors that affect the prices of our energy sources,” she added.
Senate Bill No. 2247, or the Philippine Downstream Natural Gas Industry Development Act, aims to promote the development of natural gas.
The Malampaya gas field, the country’s sole natural gas provider, is expected to run dry by 2027. Service Contract No. 38, which governs the Malampaya project, was extended for another 15 years until February 2039.
Energy Undersecretary Sharon S. Garin said that the Department of Energy (DoE) has recommended additional features to the bill, such as prioritizing and utilizing indigenous natural gas.
“It provides us with energy security and reduces our susceptibility to the volatility of the international market,” Ms. Garin said at the hearing.
The DoE also recommended fiscal incentives to encourage investment in indigenous gas and the imposition of fines and penalties that it currently cannot enforce as policy, she said.
Terry L. Ridon, a public investment specialist and convenor of think tank InfraWatch PH, said that the country will “most certainly” need to import natural gas, which is subject to fluctuations in global commodity prices.
He noted that even indigenous natural gas is “dependent on global commodity pricing, though the government has more market control over commodities produced within our borders.”
“It makes sense to continue exploring and fully exploiting the Malampaya gas field, while also importing natural gas for our energy needs. These actions are not mutually exclusive,” Mr. Ridon said.
Meanwhile, Sherwin T. Gatchalian, vice-chair of the Senate committee for energy, lauded the commitment of Prime Energy Development B.V. to further explore the country’s natural gas resources.
“I’m very happy to hear that there is a potential, there is now a potential, real activity in that area and real drilling will happen,” Mr. Gatchalian said at the hearing.
Prime Energy, a subsidiary of Razon-led Prime Infrastructure Capital, Inc., operates the Malampaya Deepwater Gas-to-Power Project. The company is planning to drill at least two deepwater wells in the Camago and Malampaya East fields by 2025.
Noel M. Baga, convenor of think tank Center for Energy Research and Policy, criticized the proposed law for being “lacking” as it does not require third-party access.
Under Section 24 of the bill, participation for any permit holder or operator of a liquefied natural gas (LNG) and regasification terminal and related facilities to third parties is voluntary and at the sole discretion of the permit holder or operator.
“Thus, natural gas developers who do not own LNG terminals or operate pipelines would have no access to natural gas,” Mr. Baga said.
“This restriction hinders competition and discourages new natural gas developers from entering the market since they lack secure access to LNG terminals and pipelines,” he added.
He argued that requiring third-party access would compel LNG terminal owners and petroleum pipeline operators to offer excess capacity to third parties “at fair rates.”
“Such a provision would attract more investors by ensuring a reliable supply of natural gas and fostering competition, which could lead to lower electricity prices,” Mr. Baga said.
In 2023, natural gas accounted for 12% of the country’s power generation mix, with a capacity of 13,858 gigawatt-hours, according to DoE data.
As of April, there are committed natural gas projects, either in the construction phase or with financial closure, with a capacity of 1,320 megawatts.