MANILA: In its quest for energy security and an ambitious shift to renewables, the Philippines finds itself at a critical crossroads, grappling with the economic realities of imported liquefied natural gas (LNG) and the goal of expanding its clean power sector.
The waning reserves of the Malampaya gas field, the country’s only indigenous commercial source of natural gas since its operations commenced in the early 2000s, have been forecast to run dry by 2027, with supply expected to be depleted starting in 2024.
According to the Energy Department (DoE), this “could result in permanent loss of gas supplies from domestic sources, leaving the country with a considerable natural gas deficit.”
An analysis by Fitch Solutions stressed that uncertainty remains in terms of the country’s capability of producing gas in the near-to-medium term amid plans to scale up exploration activities.
“Unless gas can be produced from domestic sources, the Philippines will need to rely exclusively on imported LNG going forward,” it said, adding that the country will depend on LNG imports come 2025.
With ambitious targets for renewable energy on the horizon, the present reality steers the country toward an increased dependence on imported LNG.
Last year, President Ferdinand “Bongbong” Marcos Jr signed a service contract renewal agreement allowing the Malampaya consortium to operate for another 15 years, or until February 2039, and requiring it to search for new gas deposits to augment the Malampaya field’s depleting reserves.
The gas field, which covers 830 sq km, has been supplying natural gas to four power plants – Santa Rita, San Lorenzo, San Gabriel, and Avion – in Batangas province that generate a fifth of the country’s electricity needs.
Its advocates believe that the renewal would offset a potential power crisis caused by the original expiration of the deal in 2024 and the expected depletion by 2027 of the reserves in the field in offshore northwest Palawan.
This strategic approach was punctuated last month when the nation’s energy heavyweights – Meralco PowerGen Corp (MGen), Aboitiz Power Corp, and San Miguel Global Power Holdings Corp (SMGP) – unexpectedly joined forces in a landmark US$3.3bil deal.
The agreement is set to establish the country’s “first and most expansive” LNG facility in Batangas province to boost energy security and promote “cleaner” energy.
Under the deal, the three companies will acquire nearly 100% of the LNG import and regasification terminal owned by Linseed Field Power Corp, a local unit of global infrastructure firm Atlantic, Gulf & Pacific Co that received the country’s first LNG cargo delivery in April 2023.
So far, aside from the US$51.8mil worth of LNG shipments received by Linseed Field Power Corp from the United Arab Emirates last April, reports reveal two more significant shipments last year.
In August, subsidiary power company First Gen welcomed its inaugural delivery of 154,500 cubic metres of LNG at its Batangas terminal, aiming to support its four gas-fired power plants – Santa Rita, San Lorenzo, Avion, and San Gabriel – which have been dependent on Malampaya’s supply.
Even as the Philippines turns to LNG to bridge an immediate energy gap, its commitment to green energy remains steadfast, at least according to officials.
With the DoE’s strategy to incorporate nearly 53,000MW of renewable energy by 2040, a future where clean power is a key player is not just envisioned but actively planned for.
A diversified mix of renewable sources is poised to overhaul the current energy landscape, significantly reliant on coal and natural gas. The DoE has delineated clear targets: 27,162MW designated for solar endeavours, 16,650MW for wind projects, 6,150MW for hydropower initiatives, and 2,500MW for geothermal energy production.
These efforts are set to shift the power-generation mix, with renewables expected to account for 35% by 2030 and 50% by 2040, dramatically reducing current dependence on coal and natural gas.
Recent data as of January this year indicate that coal still maintains a strong presence, accounting for nearly half of the nation’s power mix.
Conversely, renewable energy has emerged as a significant energy source, contributing approximately 30% to both installed and dependable capacity.
Installed capacity is the total maximum power a plant can generate, whereas dependable capacity represents the actual power a plant can supply consistently.
Comparative data from December 2022 to January 2024, however, reveal a trend: coal’s share in both installed and dependable capacities is on the decline, while the percentage for renewables has witnessed incremental growth. — Philippine Daily Inquirer/ANN
