Cayetano pushes ahead with Gas Industry Development Bill

Senator Pia Cayetano, the new chair of the Senate Committee on Energy, got an up-close look at the Philippines’ brightest jewel, the Malampaya offshore gas platform currently operated by the SC 38 consortium led by tycoon Enrique Razon’s Prime Infrastructure Capital.

Indeed, natural gas is beginning to have a major impact on the Philippines’ Southeast Asian neighbors.

According to the latest data, Indonesia holds 35 percent of the region’s proven gas reserves, Malaysia 25 percent and Vietnam 17.9 percent. Myanmar, Brunei and Thailand hold 12 percent, 6.2 percent and 4 percent respectively.

According to the International Energy Agency’s (IEA) 2023 Statistical Review, Malaysia, Indonesia and Thailand will be the leading gas producers in Southeast Asia as of 2022.

Gas production in the region reached 210 billion cubic meters in just one year, with Malaysia (41%), Indonesia (29%) and Thailand (13%) leading the way.

Southeast Asia’s annual gas production will increase by 50 billion cubic metres between 2030 and 2050, the IEA said in its report.

Indonesia and Malaysia will continue to top the list, while the Philippines’ gas production is negligible.

Cayetano’s visit to the Malampaya platform offered a glimpse into how the Philippines’ only domestically produced gas source could become not only the country’s main source of energy but also its lifeline when all else falls apart.

Senate Energy Committee Chairman Pia Cayetano with the Malampaya gas field platform.

“When you experience this and see what investments are being made to ensure energy security and reliability, you will be impressed,” Cayetano said.

She said the need to develop the Philippines’ natural gas resources is crucial.

While Senator Cayetano’s desire to seek more information to use as Chairman of the Senate Committee on Energy is commendable, given the limited time he had in his Malampaya speech, it is not surprising that he clearly only scratched the surface.

She will likely decide the fate of a bill under consideration in the Senate that could realise her belief that homegrown natural gas will revolutionise the Philippine energy sector.

Senate Bill (SB) 2247, or the Philippine Downstream Gas Industry Development Bill, is historic in many ways.

First, it acknowledges that the Philippines has natural gas, in contrast to the former president’s statement that the country is poor because of a lack of gas and oil. A full transition to renewable energy requires a stable power supply without disrupting the progress toward carbon neutrality, which is proving to be a difficult task.

Experts at the Department of Energy believe the answer lies in liquefied natural gas as a cleaner alternative to an energy sector that relies primarily on coal.

SB 2247 seeks to prioritize domestic or local supplies of natural gas used to generate electricity.

This aims to fill a gap in the further development of the Philippines’ existing natural gas resources, as demonstrated by the Malampaya field.

The bill will make Philippine-produced gas a national purchase priority, certainly opening the door to an unprecedented wave of investment in the Philippine energy sector.

This bill aims to be an unprecedented policy change that not only encourages the discovery of new natural gas wells, but also prioritizes its use in power generation over imported fuels, in this case liquefied natural gas (LNG).

This will not only complement but also strengthen Malampaya’s continued operations as provided for by Service Contract 38, which the Marcos administration extended for another 15 years.

Malampaya operators have already demonstrated world-class expertise in operating gas platforms and are expected to demonstrate this highest standard when they commence drilling up to three new wells, as promised during the SC 38 renewal.

The timing of SB 2247 couldn’t be perfect as it will lay the foundation for a truly Philippine gas industry that will protect us from the need to import LNG at exorbitant prices.

SB 2247 is currently being fine-tuned by Cayetano’s committee.

The Philippine Gas First policy not only has a patriotic ring to it, but it is also the most practical solution to keep power generation costs down, as domestic gas is obviously cheaper than imported LNG, and it is also a major source of revenue for the government.

Malampaya has already demonstrated its capacity to supply even in the most difficult circumstances: on April 16, when power supplies were shaky, Malampaya gas was key to keeping the power plants operating, which supply 20% of the Luzon power grid’s demand.

Philippine power grid operator National Grid Corp. had to issue yellow and red alerts as other power plants were deemed unreliable.

Malampaya’s operators responded quickly, conveniently shifting excess power from one grid to another at risk, highlighting a valuable lesson in problem-solving: great ideas are worthless if they aren’t implemented.

SB 2247, championed by Cayetano, will help build a sustainable and stable energy sector. The Philippines should learn valuable lessons from the experiences of its neighbors, Indonesia and Malaysia, which have rushed to develop their gas reserves to become the region’s largest producers.

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