Proposed natural gas law to lure investors — analysts
By Sheldeen Joy Talavera, Reporter
THE PASSAGE of the proposed Philippine Natural Gas Development Act may attract investors to the country’s natural gas sector, but ongoing South China Sea disputes over resource-rich zones pose challenges, according to analysts.
“Hopefully, the Senate Bill 2793, once passed, will encourage both foreign and local E&P (exploration and production) companies to look for fossil gas in the Philippines,” Pedro H. Maniego, Jr., senior policy advisor of think tank Institute for Climate and Sustainable Cities, said in a Viber message on Saturday, noting the huge investment required.
The Philippines is under pressure to find other sources of indigenous energy as the Malampaya gas field, the country’s sole natural gas provider, nears depletion.
The Malampaya gas field, which supplies a fifth of the country’s power requirements, is expected to run out of easily recoverable gas using current techniques by 2027.
Upstream oil and gas firm PXP Energy Corp. was ordered to put on hold its exploration activities at the Reed Bank due to tensions with China.
“While the bill may improve the enabling conditions for natural gas sector investments in the Philippines, the sector’s most significant impediment is the country’s ongoing maritime dispute with Beijing in areas within and near identified natural gas exploration zones,” Terry L. Ridon, a public investment analyst, said in a Viber message.
“The dispute will make it difficult for Manila to explore and exploit these areas on its own or with other foreign partners,” he added.
Mr. Maniego said that the Philippines “occupies a low position in the global energy market with its minuscule production of coal, oil, and gas.”
The country’s neighbors in Southeast Asia were able to find substantial deposits in their maritime areas, he noted.
“Finding fossil gas to augment our requirements will raise the country’s standing. Unfortunately, the identified viable deposits are located in the disputed zones in the West Philippine Sea claimed by China,” Mr. Maniego said.
He said that the exploration of fossil fuels requires significant investment and could only be conducted by “companies with ample financial and technical resources.”
Meanwhile, Mr. Ridon said that generation facilities that use indigenous natural gas should still compete with other generation facilities on the basis of price.
This would ensure that the lowest cost of power remains the most important mandate under the Electric Power Industry Reform Act.
“The mere use of indigenous natural gas should not be the basis of priority dispatching in our energy system,” Mr. Ridon said.
‘RIGHT SIGNAL’
Sen. Pilar Juliana “Pia” S. Cayetano, chair of the Senate committee on energy, said the swift passage of Senate Bill No. 2793 would send the “right signal” to investors.
“It seeks to declare that the Philippines is open and will have very clear-cut policies on natural gas and indigenous natural gas development,” she said during the recent interpellation for the bill.
SB 2793, Ms. Cayetano said, would “promote awareness and create an environment that will open up opportunities for investors.”
She noted that legislative efforts to support natural gas exploration have been minimal since its peak in the 1970s, when more than 150 wells were drilled.
“This was when Malampaya was discovered,” she said.
The Philippines, she added, has effectively abandoned exploration of existing natural gas resources.
The proposed measure addresses the gaps in policies, legal support, and incentives for investors to restart their exploration of local gas resources, she noted.
“Natural gas is called a transition fuel, and we have proof that there is, it’s available in the Philippines,” Ms. Cayetano said.
“So by passing this law, it’s like erecting a billboard on EDSA globally and tell them that the Philippines is prioritizing natural gas,” she also said. “If you are an expert in natural gas, you’re welcome to come here. We have good business opportunities.”
Service Contract No. 38 governing the Malampaya gas field has been extended for 15 more years.
The Malampaya consortium, led by Prime Energy Resources Development B.V., has pledged to drill two new wells to prolong the gas field’s lifespan and generate new gas by 2026.