The double-whammy impact of the reportedly declining reserves in the Malampaya deep-water gas-to-power project and the underinvestment in oil and gas exploration has created a bleak outlook for the country’s upstream industry.
The Department of Energy (DoE), however, has found a saving grace — the creation of liquefied natural gas (LNG) import terminal to meet the growing demand for a cleaner power source.
“Attaining energy security may have been complicated by the current global health crisis. However, the DoE is seeing to it that we will be able to carry on,” Energy Secretary Alfonso G. Cusi said on Thursday.
“The Department continues to pursue all possible avenues that would help us break free from energy import dependence and provide the energy needs of future generations of Filipinos in a sustainable manner,” he added.
In anticipation of the eventual depletion of the Malampaya, which has been providing about 20 percent of the country’s power needs, Cusi said he has been pushing for the optimization of LNG from importing the gas.
Cusi noted that by establishing the necessary infrastructure to help the sector progress from its current infancy stage, the Philippines has the potential to become a regional LNG hub.
Current data from the DoE-Natural Gas Division indicate that of the six proposed LNG terminal projects, four have been issued with Notices to Proceed (NTP), with an initial validity of six months, subject to further extensions for approval of the DoE.
The Interim Floating Storage and Regasification Unit (FSRU) Terminal project of FGEN LNG Corp. and partner Tokyo Gas will be finished by the end of September 2022.
Meanwhile, the FSRU and Onshore Regasification Terminal project of Atlantic Gulf & Pacific Company of Manila Inc. (AG&P) and partner Osaka Gas will be completed in the second quarter of next year.
FGen’s LNG project costs P13.28 billion, while AG&P’s LNG project amounted to P15.33 billion.
According to Fitch Solutions Country Risk & Industry Research, the country’s crude oil and natural gas production “remain in freefall under the weight of natural declines and underinvestment in new exploration.”
“The current dire situation poses significant risks to the Philippines’ future energy supply security given how reliant it is on oil and gas for power generation, industrial processes, and transportation,” Fitch Solutions said in its latest report.
Fitch Solutions pointed out that initiatives to extend Malampaya’s field life have produced diminishing returns over recent years.