Philippines eyed as LNG hub in Southeast Asia

Philippines eyed as LNG hub in Southeast Asia

Natural gas has been one of the cornerstones of the Philippine energy sector
since the Malampaya gas project in northwest Palawan started contributing to
the Luzon grid in 2002.

The Malampaya gas project is touted as one of the largest and mort
significant industrial projects in Philippine history, delivering around
3,211 megawatts of capacity to five natural gas plants in Batangas namely
Ilijan, Sta. Rita, San Lorenzo, San Gabriel and Avion power plants.

The eventual depletion of the Malampaya gas reserves in the next decade and
the lack of a new gas discovery given the ongoing challenges in the upstream
petroleum industry has prompted the government to look at the viability of
putting up a liquefied natural gas infrastructure (LNG) in the country.

While several industry players have expressed interest to put up their own
LNG facilities, the move recently gained traction with the decision of
Energy Secretary Alfonso Cusi to direct the Philippine National Oil Co. to
put up the country's first LNG facility.

With a project cost estimated at P100 billion and target completion by 2020
or 2021, the plan has gained strong support from the investors here and
abroad.

"In the short-term, we seek to build a common LNG receiving and distribution
infrastructure as part of the future clean energy city," Cusi said.

Cusi said LNG can provide the demand from baseload, mid-merit and peaking
requirements "and can compete with other fuel sources that can address the
least-cost optimal electricity from such demand centers.

Cusi wants the Philippines to become the hub for LNG in the Southeast Asian
region after missing being the hub for aviation and maritime sectors.

"LNG should have been done long time ago because the Malampaya undergoes
maintenance every 18-24 months. Every time it goes under maintenance, it
costs the consumers a lot because we have power plants that are dependent on
natural gas would have to switch to expensive adjustment and its costing the
Filipinos," he said.

The maintenance shutdown of the Malampaya power plant in 2014 cost consumers
around P10 billion, he said.

"We could have avoided that if we have LNG terminal Aside from maintenance,
preparation for eventual depletion, that study became a little bigger when
we saw the PH can become LNG hub, and we'd like to give it a shot," Cusi
said.

More than 30 industry players have expressed interest in the country's first
integrated LNG terminal in Batangas that will also supply a new 200 MW LNG
power plant.

Government is utilizing its banked gas from the Malampaya gas project as the
government's equity into the LNG project, PNOC president Reuben Lista said.

Lista said the LNG will be undertaken government to government (G2G) and
they expect to make an announcement on the partnerships for LNG project
before June 30.

Lista also addressed concerns that competition as the power sector has
largely been private sector driven as a result of the passage of the
Electric Power Industry Reform Act of 2001.

The EPIRA prohibited National Power Corp. from engaging in power generation
anew and unbundled the power sector thus resulting to more private sector
players.

"We are not competing with the private sector. This project will actually
help the private sector. We will assure that there is a source of LNG if and
when Malampaya sizzles out," Lista said.

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Link to Original Article:
http://thestandard.com.ph/supplements/mixed-energy-special-report/240249/ph-
eyed-as-lng-hub-in-southeast-asia.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com