Indigenous gas development key to attaining PH energy security

By Alena Mae S. Flores – June 20, 2024, 8:20 pm
from manilastandard.net

Indigenous gas development should remain an integral part of the Philippine energy policy to attain energy security, a top executive of Prime Energy Resources Development B.V. said.

“For LNG to take root as a trusted fuel source, it needs indigenous gas as a stable ground. Indigenous gas development must remain a bedrock of our energy policy,” Prime Energy managing director and general manager Donnabel Kuizon Cruz said.

Cruz made the statement during a panel discussion on “Fostering Growth in the Natural Gas Sector” in a forum organized by the think tank Stratbase Institute Monday.

Cruz said the “synergy” of imported LNG and indigenous gas is important to creating power supply reliability and affordability.

Prime Energy, a wholly-owned subsidiary of Prime Infrastructure Capital Inc., operates the Malampaya Deep Water Gas to Power Project, the country’s first and only indigenous gas resource off the province of Palawan.

Service Contract No. 38 (SC 38), which governs the Malampaya project, was extended for another 15 years until February 2039.

Cruz said indigenous gas guarantees fuel supply as the power grid becomes increasingly vulnerable to weather and other disruptions.

She said that during strong winds and waves, LNG floating storage and other facilities could be disconnected from their berths and pause the supply of gas to power plants, but the Malampaya production facilities are designed to withstand inclement weather.

“During the April heat wave when the Luzon grid was on yellow and red alert, Malampaya operated at close to 120 percent of its current system capacity,” she said.

She said Malampaya delivered enough fuel to generate 2,000 megawatts, or about 20 percent, of Luzon’s total demand for electricity.

Cruz said this also allowed Luzon consumers to save P0.50 per kilowatt-hour to P20 per kWh in their electric bills.

“Imagine what would have happened if this weather situation was a global situation and we couldn’t even import LNG,” she said.

Cruz said indigenous gas helps stabilize electricity prices as witnessed during times of international conflict, like the war between Russia and Ukraine which triggered upward spikes in LNG prices.

“Had there not been Malampaya gas during that time, Filipinos would have paid, on average, P25 per kWh in fuel costs for using LNG, compared to only P6 per kWh for using Malampaya,” she said.

“By using LNG, we became more vulnerable to market shocks. Indigenous gas prices remain largely stable against these shocks and therefore cushions our electricity bills from its adverse effects,” she said.

Cruz said the Malampaya project provides remittances to the government for use in energy development projects.

“For every peso of net revenue or sales from Malampaya gas, P0.60 is remitted to the government. This amounts to $300 to $500 million annually for use in energy development projects,” Cruz said.

Energy Secretary Raphael Lotilla said in the same forum energy security was the Marcos administration’s priority with renewable energy being the way forward.

Lotilla said in the transition to full renewable energy use, the government was pursuing a “robust natural gas strategy.”

“Successful exploration and production activities will not only contribute to the country’s energy security goals but also drive economic growth, create employment opportunities, and generate revenue stream. Ultimately, the Filipino people will be benefited,” said Lotilla.

“Exploration and development of these resources including the building of necessary infrastructure will certainly take time, making it essential to have a reliable energy transition source in the meantime. This is where LNG plays a crucial role, serving as a cleaner substitute for traditional fossil fuels and a more reliable source than renewable energy,” Lotilla said.