DWINDLING supply from the Malampaya gas field and dormant exploration activity will make the Philippines more reliant on imports, BMI Research, a Fitch unit, said in a report.
“The pressure continues to mount for the Philippines to secure additional oil and gas sources, as output from its sole producing Malampaya gas field continues to fall,” BMI said in the March 5 report.
Malampaya accounts for nearly 98% of the country’s total gas requirements, providing feedstock for 2,700 megawatts (MW) of power plants to the Luzon grid through gas landed by pipeline in Batangas. Its gas is expected run out by 2024.
BMI Research forecasts domestic gas output to shrink by 19% annually, roughly at the rate of Malampaya’s depletion.
It said close ties with China will “remain central” if it hopes to tap any resources that may be available in the South China Sea.
“The Philippines’ need for additional oil and gas resources will likely trump any social and political opposition on the ground (to cooperation with China), as output from the Malampaya field rapidly unwinds,” the report read, adding the possible revival of PXP Energy Corp.’s exploration of the offshore Reed Basin, which contains the Sampaguita discovery, estimated to hold 322 billion cubic meters of gas reserves.
But BMI Research noted an improvement between the two countries’ relationship when they issued a joint statement late last year. Both expressed willingness to work together in exploring the South China Sea once a legal framework that is acceptable to both sides can be put in place.
One of the measures to address the looming supply crunch is Energy World Corp.’s Pagbilao LNG project, intended as a storage facility for imports. It is expected to operate by the end of the year.
The government is also banking on the $2-billion floating regasification facility in the waters off Batangas. The regasification project continues to undergo development and will start receiving imports by 2021. The project will include a regasification unit with capacity of 6 billion to 7 billion cubic meters and supply fuel to five gas-fired power plants accounting for about 3,211 MW in the province.
“The outlook for Batangas LNG is positive, amid firm government backing and strong private sector interest,” the report noted.
In addition to Philippine National Oil Co., other project participants could include First Gen Corp., Tokyo Gas, Phoenix Petroleum and China’s CNOOC.
In December, the Department of Energy said it will aggressively pursue the project, regardless of whether Malampaya is able to sustain production beyond 2024. — Janina C. Lim
