EWC last paragraph. Must be an announcement soon re additional...

EWC last paragraph. Must be an announcement soon re additional finance for LNG Hub.

Philippines’ LNG imports seen rising as maritime dispute thwarts exploration


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Posted on August 09, 2017

THE PHILIPPINES’ reliance on imported liquefied natural gas (LNG) will rise in the coming decade as its sole source in the Malampaya gas field “nears the end of its production cycle” and a maritime dispute prevents the country from tapping other sites in the South China Sea, Fitch Group’s BMI research said in an Aug. 7 note released on Tuesday.

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The energy department has said that while the Malampaya gas field will ‘continue production well beyond the mid-2020s,’ its output will not grow significantly. -- BW FILE PHOTO​

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“The Philippines’ natural gas production is set to be nearly depleted by the end of our 10-year forecast period, as low oil prices and ongoing maritime disputes in the South China Sea hamper exploration in its most prospective offshore blocks,” the note read.

“This will entail greater reliance on LNG imports over the coming years,” it added.

“Once self-sufficient in natural gas, the Philippines’ natural gas production is set to decline rapidly over the coming years at an average annual rate of 20%, as its sole-producing Malampaya gas field enters the end of its production cycle.”

Latest available Energy department data show that natural gas was the third-biggest contributor to power generation in the country last year at 21.9%, against coal’s 47.7%, renewable energy’s 24.2% and oil-based fuels’ 6.2%. That compares to contributions of 24.8%, 28.2%, 33.4% and 13.5% of natural gas, coal, renewable energy and oil-based fuels, respectively, in 2003.

In his speech at the 3^rd LNG Supply, Storage and Transport Philippines Forum 2016 at the SMX Convention Center in SM Aura Premier in Taguig City in October last year, Energy Undersecretary Benito L. Ranque had noted that “the country has only one productive gas field” and that “about 98% of its production is currently used for power generation.”

Malampaya fuels the three gas-fired power plants that account for nearly a fifth of Luzon’s installed generating capacity: the 1,271-megawatt (MW) Ilijan Power Plant of KEPCO Ilijan Corp., as well as the 1,060-MW Sta. Rita Power Plant and the 500-MW San Lorenzo Power Plant of First Gas Power Corp. These three facilities in Batangas City provide the minimum supply Luzon consumers need.

“While we expect the Malampaya gas field to continue production well beyond the mid-2020s, it is unlikely that its current output will increase significantly: that is, unless additional resources are discovered and tapped within the area,” Mr. Ranque had said in his speech last October.

“At the moment, there are no significant natural gas discoveries in the country that can feasibly be brought into production,” he noted.

“If ever, incremental gas supplies will have to come from the international LNG market.”

Hence, Mr. Ranque said, the government has been pushing its plan to build a $2-billion LNG import terminal and distribution network that include a floating storage facility, regasification units and onshore terminals in Luzon.

The network includes Philippine National Oil Co.’s Batangas-Manila natural gas pipeline. In its preliminary configuration as of June 2015, this project was estimated to cost some P10.528 billion and will involve a 121-kilometer pipeline that will convey natural gas to Batangas, Laguna, Cavite and Metro Manila.

IMPORTS BEGIN THIS YEAR
BMI noted that the Philippines will begin importing LNG this year for the first time through the 4.1 billion-cubic-meter gas-to-power facility of Hong Kong’s Energy World Corporation Limited in Pagbilao, Quezon that includes a 300-MW power station.​