THE critical role of natural gas as a “transition fuel” en route to achieving the world’s environmental objectives warrants a new pricing system decoupled from the volatility of most energy commodities, an energy department official said.

Energy Undersecretary Gerardo D. Erguiza called for a system of “fair pricing” for natural gas, demand for which has grown because of the Russian invasion of Ukraine. Fear of sanctions on Russia, a major gas supplier to Europe, has sent Europe scrambling for alternative sources of supply, making energy more expensive overall. 

At a March 9 panel discussion for Cambridge Energy Research Associates Week (CERAWeek) in Houston, Mr. Erguiza argued for a pricing system that makes natural gas affordable in order to ensure a smooth transition to clean energy.

The Philippines “is currently in a transition stage from fossil fuel to clean energy and our transition fuel is natural gas. Along with other fuel prices, natural gas prices also unexpectedly rose,” Mr. Erguiza said separately via Viber.

Manila Electric Co., which sources most of its natural gas from the offshore Malampaya field, warned consumers on Thursday that the impact of the Russia-Ukraine crisis will be felt by power consumers in May.

Energy prices are set globally and tend to move in unison based on calculations of the equivalency of each form of fuel in generating a given amount of energy.

As of March 10, Dubai crude oil is at $114.13 per barrel, according to Bloomberg.

“Expensive natural gas doesn’t serve its purpose,” Mr. Erguiza added.

Separately, Atlantic Gulf & Pacific Company (AG&P) is set to open the Philippines’ first integrated liquefied natural gas (LNG) import terminal in Ilijan, Batangas, in July, marking the Philippines’ transition to gas importer after decades of tapping Malampaya, which is approaching commercial depletion by 2027.

Alexander P. Gamboa, managing director and global head of business development for AG&P Manila, Inc., said the terminal will help service the gas market that had been created by Malampaya.

Mr. Gamboa has said that high demand for LNG has exerted upward pressure on prices but has also created arbitrage opportunities as more sites store gas, effectively making prices less volatile overall.

“The ability of LNG to be moved through a growing network of terminals gives developing countries in Asia effective access to global arbitrage and (and the ability to diversify) supply. In turn, this reduces dependence on global gas reserves, not to mention coal, and mitigates geopolitical trading risk,” he said. 

AG&P’s LNG terminal will store and deliver LNG to power plants. It is expected to have an initial annual capacity of 3 million tons of regasified LNG.

“Without the safety net of natural gas, renewable energy would struggle to establish itself as the backbone of stable energy systems,” Mr. Gamboa said. — Marielle C. Lucenio