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LNG seen as medium-term solution at best for power supply problem

LIQUEFIED natural gas (LNG) import terminals are only a short to medium-term solution for fueling the power industry, undertaken because the Philippines had “no choice” due to the depletion of the Malampaya gas field, a senior Senator said.

In a statement on Monday, Senator Sherwin T. Gatchalian, vice-chairman of the Senate’s energy committee, added: “LNG is good for the country’s national energy security now and I commend the energy department’s support for the construction of LNG terminals in a bid to ensure continuous power supply this year,” Mr. Gatchalian said.

Service Contract 38, which covers the Malampaya gas field, is set to expire in 2024. Its concession holders are currently seeking a 15-year extension of the Malampaya concession.

“The establishment of LNG facilities addresses the expected shortfall in the country’s power supply at least in the near and medium terms. Certainly, this is one of the intervention projects that we desperately need to address the loss of thousands of megawatts of power,” he said.

The Malampaya gas field is the country’s only indigenous commercial source of natural gas. It is expected to be largely depleted of easily-recoverable gas using current techniques by 2027.

The Department of Energy (DoE) estimates that the Malampaya gas field accounts for about 20% of Luzon’s total electricity requirements.

To date, seven LNG terminal projects have been approved by the DoE, two of which are expected to come online in the first half of 2023.

The LNG terminals of First Gen Corp. and Linseed Field Power Corp., a unit of Atlantic Gulf & Pacific Co., are expected to come online this year.

A report from Fitch Solutions Country Risk and Industry Research warned that the country will need to turn to the volatile spot market as none of the LNG proponents has secured long-term LNG supply agreements.

Mr. Gatchalian has filed Senate Bill No. 152 or the Midstream Natural Gas Industry Development Act.

The measure allows the private sector to participate in the entire value chain. — Ashley Erika O. Jose