A fix, look no further
The war has upended the initial projections of a global surplus, prompting huge investments in related storage facilities.
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The war has upended the initial projections of a global surplus, prompting huge investments in related storage facilities.
The Strait of Hormuz blockade exposed the country’s vulnerability to external volatility, given that almost 98 percent of our fuel is imported.
Iran’s sealing off the Strait of Hormuz on 28 February has jolted gas markets worldwide.
It also highlighted the need to strengthen local fuel production, as the Philippines has a unique advantage: indigenous gas.
The Middle East conflict has transformed the promises of the liquefied natural gas (LNG) market from anticipated abundance to acute tightness, with prices soaring, supply chains strained and importers, especially in Asia and Europe, facing higher costs and security risks.
The war has upended the initial projections of a global surplus, prompting huge investments in related storage facilities.
The Qatar disruption, plus any infrastructure damage, is projected to offset most or all of the anticipated 2026 global surplus, creating near-term tightness and extreme volatility through at least the third quarter. Freight rates have also spiked. QatarEnergy declared a force majeure on 4 March, fully halting liquefaction at Ras Laffan and associated facilities due to the military attacks and the shipping blockade. Production was shut down by reducing feed gas and easing pressure to protect equipment; no cargo has been loaded since early March.
Amid the desperate situation, the Philippines does not have to turn too far for a solution.
For over two decades, the Malampaya Deepwater Gas-to-Power project has quietly underwritten Luzon’s energy security.
LNG imports inevitably tied the energy sector to global benchmarks. It reveals that the nation is exposed to shipping disruptions, freight spikes and the full force of international price swings.
The problem extends to coal. As gas prices spiked, generating plants across Asia scrambled for cheaper alternatives, triggering a massive shift toward coal-fired generation.
The switch pushed the Newcastle Coal Index from $115.80/ton on 27 February to a high of $140.50/ton just 48 hours later, representing a potential 21-percent surge at the peak. As of 4 March, prices remained elevated at approximately $135 per ton.
The Middle East war has heightened concerns about global fuel prices, prompting a review of our exposure to LNG, coal and diesel, as these may affect electricity costs.
Against this backdrop of global volatility, Malampaya emerges as a source of stability. Its pricing is governed by long-term domestic formulas rather than daily global uncertainties. Department of Energy data shows Malampaya gas typically lands between $7 and $9 per MMBtu — averaging roughly $8.50. In generation terms, that translates to approximately P5.50-P6.50 per kWh.
In contrast, the generation charge in the February electricity bill was P7.8607 per kilowatt-hour (kWh).
Even at 20 percent of Luzon’s grid, indigenous natural gas serves as a built-in stabilizer. Every cubic foot produced domestically is a supply we don’t have to obtain from a stressed global market.
However, these benefits are not infinite. For years, fears lingered about Malampaya’s inevitable decline, with existing wells projected to be depleted by late 2027.
The narrative changed when the Malampaya consortium secured the extension of Service Contract 38 through 2039 and the subsequent launch of an $893-million Phase 4 drilling campaign.
This effort represents the first significant indigenous exploration in over a decade and has already yielded historic results. On 19 January 2026, President Ferdinand R. Marcos Jr. confirmed a major discovery at the Malampaya East-1 (MAE-1) well, estimated to contain 98 billion cubic feet of gas.
Fast-tracking MAE-1 and Camago-3 — both targeted to deliver first gas by end-2026 — gives the Philippines a domestic buffer, shielded from global shipping shocks and price spikes.
As renewables grow, the grid still needs firm, flexible power to stay stable. Natural gas provides that backbone, enabling deeper penetration of renewables. Indigenous gas makes the equation work.
