The Philippines turns to gas imports to meet the rapidly rising energy demands

The private sector is accelerating efforts to meet rising domestic energy demand by fast-tracking the development of facilities to import and process liquefied natural gas (LNG) as domestic supplies dwindle. In January 2019 Australia’s Energy World Corporation (EWC) announced that it had received final approval from the Department of Energy (DoE) under their new regulations to build an LNG import terminal and regasification facility on Pagbilao Grande Island, in the Philippines’ Quezon province. The firm, which also operates facilities in its home market and Indonesia, expects the terminal to be operational by March 2020, maintain import capacity of 3m tonnes per annum (tpa) and provide up to 3000 MW of domestic generation capacity. The DoE has also granted approval to EWC to develop a 650-MW, gasfired power plant adjacent to its import facility, which will supply gas to the new power station and third-party clients. “There is a great opportunity for LNG energy production given growing demand for electricity in the Philippines,” Graham Elliott, EWC’s executive director, told OBG. “Given low production cost, LNG-generated electricity would be competitive with any other energy source and can be less expensive than coal.”

Falling Supply 

The need to boost imports and regasification capacity is becoming increasingly urgent, in light of the rapid depletion of the Malampaya gas field. The field currently supplies five gas-fired power stations in Luzon, the country’s most populous island. Those plants have a combined capacity of 3211 MW and satisfy more than 21% of Luzon’s energy requirements. However, reserves are declining rapidly: full-scale production is projected to end by 2024, and the wells are likely to be entirely depleted by 2029. LNG imports will be needed to bridge the gap between supply and demand unless significant new deposits are identified and brought on-line in the interim.

This shortfall is expected to widen as local energy requirements continue to rise. While installed generation capacity currently stand at 23,000 MW, the DoE estimates the country will need to deploy an additional 44,800 MW by 2040. While the government is looking to develop renewable energy capacity to account for 20,000 MW of that sum and has expressed interest in developing nuclear power resources, LNG will play an important role in meeting much of the new demand.

Batangas Projects 

At least some of the LNG supply will come from two other projects that are currently in the pipeline. In January 2019 the DoE granted permission to Tanglawan Philippines LNG, a joint venture between domestic firm Phoenix Petroleum and Chinese state-owned enterprise (SOE) China National Offshore Oil Corporation, to develop a 2.2m-tpa LNG import terminal and processing facility in the province of Batangas, located south of the capital, Manila. Tanglawan plans to begin construction on the $686m facility in late 2019 and commence commercial operations in 2023. The consortium also plans to develop a 2000-MW, $1.3bn, gas-fired power station to complement its import and regasification plant. The state’s Philippine National Oil Company (PNOC) is interested in joining the venture. In January 2019 Alfonso Cusi, secretary of energy and chairman of PNOC, announced that the parties had agreed in principle to the acquisition of a stake in the facility’s development by the Philippine SOE. The trio signed a memorandum of understanding in March 2019, preluding further discussions on PNOC’s equity and role in the project, but details had not been publicly released as of June 2019.

In 2018 domestic energy firm First Gen entered into a development agreement with Japan-headquartered Tokyo Gas to build an LNG terminal and regasification facility in Batangas City. Construction began in May 2019. “With a future of more renewable energy power generation, gas-fired plants are the perfect partner, as their ability to ramp up and down complements renewables,” Jon Russell, executive vice-president and chief commercial officer of First Gen, told OBG. “In contrast coal-fired plants are inflexible and stifle renewables.”


You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: The Philippines 2019

Energy chapter from The Report: The Philippines 2019

Cover of The Report: Philippines 2019

The Report

This article is from the Energy chapter of The Report: Philippines 2019. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart