MANILA, Philippines—The Department of Energy (DoE) has secured the commitment of Brunei to provide a portion of its natural gas supply for the Philippines, which is set to boost its own natural gas sector through the planned bidding of the critical gas pipeline and power plant conversion projects.
“The Minister of Energy [in Brunei] has promised that we will be a priority for the 2015 natural gas contracts. The problem is that the earliest gas contract available from Brunei is 2015, while that of Australia is 2016. Hopefully by then, we will be able to complete the construction of our liquefied natural gas terminals,” Energy Secretary Jose Rene D. Almendras explained.
The global demand for natural gas has been rising steadily as it has been deemed to be among the more feasible alternatives that will allow countries like the Philippines to diversify its energy and transport fuel sources.
For the Philippines, pursuing alternative fuels such as natural gas is necessary given the global oil price volatility, to which the Philippines is highly vulnerable as it sources most of its fuel requirements from abroad.
Before the Philippines gets in too late in the game, Almendras said it was necessary to start scouting for LNG sources for possible contracts.
“Negotiations for pricing can start around 2013. But when we have bid out our own natural gas projects then we can discuss as to who will be the team that will lead the negotiations for LNG pricing. We also have to wait for the natural gas master plan from Japan International Cooperation Agency (JICA) before we move,” Almendras added.
JICA is expected to submit to the DoE before the end of this month the final master plan for Philippine natural gas development.
The JICA study, in which the World Bank has also collaborated, is expected to reevaluate opportunities in the natural gas industry and identify which infrastructure will be deemed as priority projects, and what kind of investments will be needed. It will also evaluate the viability of importing natural gas and the potential sources. It will likewise contain a validation of the supply and demand statistics as this will spell out the viability of the natural gas program.
Almendras disclosed that among the priority projects will still be the $1.3-billion Batangas-Manila (BatMan 1) natural gas pipeline project and the conversion of the decommissioned 830-megawatt Sucat thermal power plant to run on natural gas.
The bidding of the pipeline will have to be through the public-private partnership scheme as the winning bidder for BatMan 1 has to sign an agreement with state-owned Philippine National Oil Co., which currently holds the franchise to construct a natural gas pipeline.
As for the Sucat power plant conversion project, the government may have the option to also bid it through the PPP or it can be a purely private sector venture.
According to Almendras, the government has the option to bid out the two natural gas projects at the same time, but the final decision would depend on the results of the natural gas master plan by JICA.