LNG expansion needs balancing — DOE official

LNG plant

Balancing the market for the remaining reserves in the Malampaya gas field is a key consideration in light of the proposed development of a midstream liquefied natural gas (LNG) industry in the country, a Department of Energy (DOE) official said on Tuesday.

During the joint hearing of the Senate energy and finance committees, Energy Asec. Leonido Pulido said that should there be no more renewal of Gas Sales and Purchase Agreements in Malampaya, the Philippines’ energy sector would have to rely on LNG as an alternative.

Pulido pointed out, however, that the depletion of Malampaya’s reserves cannot be projected with certainty given that the DOE is in talks with the Malampaya consortium regarding its application for contract extension.

He further stressed that one of the difficulties the DOE has at the moment is how to balance the contract extension with the incoming LNG supply, adding the need for the department to ensure a market for Malampaya’s remaining reserves.

Service Contract 38, which covers the Malampaya gas-to-power project, expires in 2024, the same year in which reserves were projected to run out. Energy Sec. Alfonso Cusi told senators in a previous hearing, though, that the country’s only indigenous source of gas will still have reserves beyond 2024.

Malampaya, which began operations in 2001, primarily supplies electricity to the Luzon Grid and accounts for a fifth of the country’s overall power demand.

The hearing was conducted to aid the formulation of Senate Bill No. 1819, which aims to promote natural gas as a source of power given Malampaya’s situation.

Sen. Sherwin Gatchalian, chairman of the energy committee and the bill’s author, said that since new sources of natural gas in the country have yet to be discovered, industry players currently resort to importing LNG to feed the country’s 3,200-megawatt gas-fired power plants.

The DOE welcomed the bill, which if approved will cover all aspects of the midstream natural gas industry. These include transportation, transmission, storage, and marketing of natural gas, whether in its original or liquefied form.