THE Philippine strategy of importing gas for its energy needs is at risk from high liquefied natural gas (LNG) prices, which could result in low utilization for the LNG import terminals being constructed, an energy analyst said.
“Investors in planned LNG import infrastructure run the risk of low utilization rates and ultimately possible stranded assets, as high prices are expected to continue for years to come,” according to Robert Rozansky, research analyst at Global Energy Monitor.
According to Global Energy Monitor, Asian LNG terminals have the potential to hold 442 million tons per annum (MTPA), with about a third of that total representing builds in progress.
“This $119-billion investment could lock Asian economies into reliance on a volatile, expensive energy source and challenge global efforts to address the climate crisis,” the report said.
“Asia has enough LNG import projects in development to boost global LNG import capacity by nearly 50%, and a third of these projects or 145 MTPA are already in construction,” the report said.
The Institute for Energy Economics and Financial Analysis had noted in August that the Philippine LNG projects face difficulties because of the uncertainty in the global LNG market.
“Doubling down on gas is a recipe for disaster with no end in sight for sky-high prices and a tight supply. Asian economies would be wise to leapfrog gas directly to sustainable, clean energy, insulated from the volatility of global fossil markets,” the report said.
The Department of Energy (DoE) is considering LNG projects as a component of its fuel diversification plan amid the tight power supply projected for next year.
In 2023, two of the six approved LNG projects will start operations — those of Atlantic Gulf & Pacific Co. and First Gen Corp., through its subsidiary FGEN LNG Corp.
The DoE has also approved the projects of Energy World Gas Operations Philippines, Inc.; Vires Energy Corp., Shell Energy Philippines, Inc.; and Luzon LNG Terminal.
The Philippines has to resort to imports of LNG to ensure the continued operation of power plants currently being supplied by the Malampaya gas field.
Malampaya supplies 20% of the national power requirement and 27% of the Luzon grid’s needs. It is expected to be commercially depleted in 2027. Its concession agreement expires in 2024. — Ashley Erika O. Jose
