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Malampaya could have been used to temper gas prices — think tank

SHELL GLOBAL

THE GOVERNMENT could have used the remaining gas from the Malampaya field as a stabilizing source of supply to temper price volatility in the gas market, instead of allowing control of the field to change hands, according to an alternative-energy think tank. 

“In the interim and while securing genuinely long-term and affordable solutions in the form of renewables, handling Malampaya could have been a means for the government to temper price blows,” Gerry C. Arances, executive director of Center for Energy, Ecology, and Development, said in a message to BusinessWorld on Saturday.

Mr. Arances said the government missed an opportunity by allowing the ownership transfer, which “makes no difference for consumers who still have to pay high electricity prices.”

“The elephant in the room is the fact that the government merely acted like a spectator as these deals pushed through,” he added.

Last month, Prime Infrastructure Capital, Inc. acquired the 45% stake of Shell Philippines Exploration BV (SPEX) in Service Contract 38, covering the Malampaya field. The DoE found Prime Infra technically, financially, and legally qualified to succeed Shell as the Malampaya operator.  

The government’s strategy of dealing with Malampaya’s depletion — relying on liquefied natural gas (LNG) imports — has also been called not economically viable.

Alberto R. Dalusung III, an adviser on the energy transition to the Institute for Climate and Sustainable Cities, said in a Viber message to BusinessWorld on Saturday: “LNG does not appear to be an economic energy source currently and up to the medium term. Therefore, the only practical source of gas for the Philippines will be indigenous gas.”  

Mr. Dalusung said the government must intensify its focus on developing indigenous sources, and supported the Department of Justice (DoJ) legal opinion allowing full foreign investment in renewable energy projects.

“I have always taken a contrary position on the interpretation of some constitutional provisions that treat renewable energy sources such as solar and wind as if they were mineral resources, subject to state-defined limits on foreign participation. Renewable energy resources are not exhaustible and their proper use will not deprive future generations of the same resources. Thus, I welcome the DoJ opinion and support the Department of Energy (DoE) plan to open up renewable energy investments to 100% foreign participation.”

The DoE has said imports of LNG will stabilize the natural gas supply and ensure the continued operation of five power plants with combined capacity of 3,453 megawatts which currently run on Malampaya gas.

The department has approved six proposed LNG terminal projects. Of the approved projects, First Gen Corp. and Atlantic Gulf & Pacific Co. have said they expect to start taking delivery of gas in 2023. 

About 20% of the country’s total power requirements, and 27% of the Luzon grid, is serviced by Malampaya, which is approaching commercial depletion. — Ashley Erika O. Jose

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