Clear policy framework for LNG pushed

British Ambassador Asif Ahmad has urged the Philippine government to craft clear-cut policies and a framework that would not only effectively promote the massive use of natural gas in the country, but also make it more competitive compared to other fuel sources.

The government should also help secure these potential huge-ticket investments, which usually run up to billions of pesos, by providing “certainty” in the local business environment, Ahmad said.

“We at the British Embassy in Manila are making a push for the use of liquefied natural gas (LNG) because of a number of things. One, it’s because we recognize that without assured energy supply here, it’s very difficult to bring more British investors here. Currently, we’re the largest investor here from the European Union already, but the first thing they talked to us about after port congestion, is the fuel and interruption of supply,” Ahmad explained.

“We are faced with the same challenge as everyone else in the world is facing (in terms of securing energy supply), but the Philippines has been lucky that it has geothermal, hydropower and wind power resources, but gas has to be part of the solution here,” he said.

At present, Shell Companies in the Philippines is part of the consortium operating the Malampaya gas platform off Palawan, the country’s sole source of natural gas to power three gas-fired facilities in Batangas.

But with the Malampaya gas field seen to last only up to 2030 and with the growing demand for this fuel source, the Philippines will have to start looking at importing natural gas.

Ahmad, however, noted that the Philippines must move fast as the global hydrocarbon market was expected to tighten in the next several years.

“In the meantime, we’ve been working with Shell to convince the Philippine government that part of the answer to energy security here is to move to LNG, and you need to move fast while the markets are soft because right now, prices have fallen. But sure as anything, in a certain period, it may go back up. The Philippines is a relatively small buyer of gas and for the country to come in and secure 30-year contracts will be very very tough,” Ahmad noted.

The British envoy further noted that companies such as Shell were willing to build the necessary LNG infrastructure but the government must provide the security, policy and framework as well as ensure that the pricing regime for gas would be as competitive as other forms of energy sources.

“We want what every business should enjoy everywhere they operate, which is certainty that their business model is something that the host government will accept. Everywhere in the world, governments must make sure that the business environment is attractive,” Ahmad said.

Ahmad cited the case of the Pandacan oil depot where Pilipinas Shell Petroleum Corp., along with two other major oil companies, have been ordered to vacate.

“If you look at what happened to Shell, they’ve been told to move their tankers from one place to another. We can’t invest billions only to find you’re fighting every single barangay captain,” he added.