THE Department of Energy (DOE) on Tuesday renewed its push for liquefied natural-gas (LNG) consumption to encourage energy-use diversification in the country.
In its draft fuel-policy mix, the energy department said it wants the share of both LNG and natural gas increased to 30 percent.
“We are trying to look at ways how to actually give incentives to balance other energy resources. Perhaps, give tax perks, like in renewable-energy [RE] sources. I have recommended this to the BOI [Board of Investments],” Energy Secretary Jericho L. Petilla said.
The draft policy, Petilla said, also indicates that coal’s share will be 35 percent, and the rest, hopefully, will be RE.
He added that LNG, albeit expensive, is the preferred fuel for sustainable growth and development because it is cleaner than fossil fuel. “However, we have to have a proper mix. It can’t be always coal,” Petilla said. Most power plants in the country run on coal.
Natural gas from the Malampaya Deep Water Gas-to-Power Project off Palawan currently provides over 40 percent of the country’s energy needs.
The gas project is now on its next phases of development, with Malampaya Phases 2 and 3 expected to maintain the current level of gas production and further support energy security for the country.
Phase 2 involves the installation of two additional subsea wells at a cost of $250 million, while Phase 3, worth $756 million, involves the installation of a platform.
Malampaya is a joint undertaking of the Philippine government and the private sector. The project is spearheaded by the DOE, and developed and operated by Shell Philippines Exploration B.V. (Spex) on behalf of joint-venture partners Chevron Malampaya Llc. and PNOC Exploration Corp.
Petilla had said that the country’s largest natural-gas producer will start losing output from 2015 and will run out by 2024, “if no further activities are undertaken until 2024.”
The Luzon grid is dependent on Malampaya as it fuels three power plants, namely, Santa Rita (1,000 megawatts), San Lorenzo (500 MW) and Ilijan (1,200 MW).
Petilla said it’s not only the DOE that is pushing for a fuel mix but also Shell. “Bear in mind that although Shell is pushing for that, there are LNG and gas-fired power plants in Thailand which are not running because it’s expensive,” he said, adding that, eventually, the LNG market will mature. When this happens, the price will substantially go down, as well.
He said the government has received unsolicited proposals from the private sector to boost natural-gas investments in the country, such as developing a favorable investment climate through the elimination of bottlenecks; more fiscal incentives; consistency in policy and regulations; improved infrastructure; and strengthened government interagency collaboration through Executive Order 60, or the Philippine Upstream Petroleum Task Force.
The DOE has signed a $1-billion financing guarantee from the US Export-Import Bank to support the Philippine government’s RE and liquefied natural-gas development programs.
A memorandum of understanding with US Eximbank was earlier signed by DOE Energy Policy and Planning Bureau Director Jesus Tamang; Energy undersecretaries Ramon Allan Oca, Raul Aguilos and Loreta Ayson; US Eximbank Director Patricia Loui; and US Department of Commerce Deputy Assistant Secretary Holly Vineyard.
Under the agreement, the DOE and the US Eximbank will exchange information on trade and business opportunities and explore options for utilizing up to $1 billion in Eximbank loan guarantees and/or direct dollar loans to finance US exports in support of selected energy projects in the Philippines.
In particular, they will work together in promoting business development opportunities on RE and LNG facilities including port, receiving terminals, regassification facilities, pipelines and other transportation infrastructures.