DOE crafting gas quality standards for PH

By Myrna M. Velasco – November 26, 2018, 10:00 PM
from Manila Bulletin

The Department of Energy (DOE) is at the process of crafting the rules that will institutionalize the quality standards of natural gas that will be extracted and/or imported into the country.

The department has issued its draft Circular and up for comments and inputs of relevant stakeholders in the shifting gas market in the country.

On enforcing quality of gas that will be utilized in the energy sector, the DOE took its cue from the set of standards drawn up as early as year 2016 – or what has been concretized as PNS/DOE QS 011:2016.

The DOE has stipulated that “all entities engaged in the business of importing, trading, supply and distribution of natural gas, shall supply natural gas to end-consumers in the country, complying with the specifications of PNS/DOE QS 011:2016.”

In terms of unit of measurement of the gas supply, it has been specified that the basic unit be expressed in cubic meters and unit measurement shall be expressed in joules – hence, all reporting shall also be done on such prescribed unit of measurements – while prefixes be set in megajoules, terajoules, petajoules or as appropriate.

For gas with superior calorific value and is anchored on Wobbe index, the DOE noted that such “shall be expressed in megajoules per cubic meter.”

The Philippine gas sector is confronted with its market reset in the 4-5 years given the much anticipated decline of production at the Malampaya field, hence, the DOE is working on a pathway that will ensure the continuous flow of gas supply in the country.

The remedy being pushed so far is importation of liquefied natural gas (LNG) that shall be manned by the DOE-selected entity to be putting up the LNG import facility.

Other than prescribing the standards, however, players in the industry are more interested to know how government regulators will be approaching gas pricing – given the fact that even international markets now have fragmented indices when it comes to setting the cost for the commodity.

So far, the DOE has been silent on that realm despite many assertions from various sectors that gas may come as a more expensive option compared to other fuel technology choices that could power the country’s economic growth trajectory.

Primarily for the Asian market, it was noted that uncertainties continue over competitive relationship between oil-linked and Henry Hub-indexed LNG prices – and there’s also the precipitation of other price indices across regional markets.

Industry and market players reckoned that enhanced flexibility in LNG transactions will be essential in establishing a well-functioning LNG market in the region – and players are likewise required to introduce pricing mechanisms that timely reflects prevailing market conditions.