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Sunday, December 17, 2017

DOE signals LNG importation ahead of Malampaya’s end

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By Myrna M. Velasco

With the highly anticipated signing of the Philippine Natural Gas Regulation (PNGR) Framework, the Department of Energy (DOE) has already set off signal on the kick-off of liquefied natural gas (LNG) importation to satiate the country’s energy needs, even ahead of the contract termination of the Malampaya gas field project.

As stated by Energy Undersecretary Donato D. Marcos, “with this policy in place, the Philippines can readily start importing LNG to safeguard the anticipated drop in the supply of Malampaya natural gas in 2022.”

This, he added, will be “coupled with the forthcoming termination of its (Malampaya gas field’s concession by 2024.”

Marcos explained the policy “would govern the entry and development of LNG regas terminal and its related facilities in the Philippines.”

He added that such has been designed “in the promotion of the Philippines as an LNG emerging market characterized by a liberalized/competitive environment and market-based pricing.”

The gas industry framework’s advancement into a concrete policy, according to the energy official, will likewise underpin the targeted groundbreaking next year of the planned LNG terminal that will line up state-run Philippine National Oil Company (PNOC) as the lead investor.

Energy Secretary Alfonso G. Cusi indicated that his marching order would be to set the LNG terminal on commercial stream by year 2020.

The country, he said, will start “with the rollout of the Batangas LNG terminal by 2020 to safeguard against anticipated depletion of the Malampaya gas facility in 2024.”

The energy chief’s instruction to PNOC would be to undertake competitive bidding next year on targeted partners for the blueprinted LNG ventures.

But while the Philippines has just been moving headway on its gas investment policy reset, global energy think-tank International Energy Agency (IEA) has been sounding off ‘cautionary approaches’ to markets intending to expand their gas technology applications – caveats that the country’s energy planners and policymakers may ought to consider.

Fatih Birol, IEA executive director, noted that with recent geopolitical events such as extreme weather swings to political tensions, “the security of natural gas supplies cannot be taken for granted even with the current low price environment and oversupplied market.”

It was emphasized that “even in the current low-price environment, suppliers are still exposed to low-probability but high impact events that could have potentially serious consequences for global gas supplies.”

Amid well-supplied and low price milieu in the LNG industry, according to the IEA, markets are still experiencing ‘shocks’ that have in turn been creating new form of ‘security challenges’ in the energy sector.

It stressed that such had been due to the transformation that gas markets have currently been undergoing – primarily from having a system of regional markets to being globalized and interdependent markets.

Birol further indicated that “from cold spells in southern Europe, to hurricanes in the Gulf of Mexico, to diplomatic tensions among Gulf countries, energy security is impossible to ignore.”

The IEA stated these events manifest “how importing countries in mature and well-interconnected markets can still experience ‘unexpected shocks’ that put strong pressure on the market.”

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