Indigenous gas ‘bedrock’ of PH energy future—Prime Energy exec

Donnabel Kuizon Cruz, Prime Energy managing director | PHOTOS: LinkedIn

Indigenous gas development must remain an integral part of the Philippine energy policy to attain national energy security, a top executive of Prime Energy Resources Development (Prime Energy) said on Tuesday.

Donnabel Kuizon Cruz, Prime Energy managing director and general manager, made the statement during a panel discussion on “Fostering Growth in the Natural Gas Sector” in a forum organized by the think tank Stratbase Institute.

Cruz pointed out the importance of “synergy” between imported liquefied natural gas (LNG) and indigenous gas to have a stable, reliable and affordable power supply.

“For LNG to take root as a trusted fuel source, it needs indigenous gas as a stable ground. Indigenous gas development must remain a bedrock of our energy policy,” Cruz said at the forum.

Prime Energy, a wholly owned subsidiary of Razon-led Prime Infra, operates the Malampaya Deep Water Gas to Power Project, the country’s first and only indigenous gas resource off the province of Palawan.

According to Cruz, indigenous gas guarantees fuel supply as the power grid becomes increasingly vulnerable to weather and other disruptions.

But she said in contrast with imported LNG, Malampaya production facilities had been desitned to withstand inclement weather..

“During the April heat wave when the Luzon grid was on yellow and red alert, Malampaya operated at close to 120 percent of its current system capacity,” she pointed out.

She said Malampaya delivered enough fuel to generate 2,000 megawatts, or about 20 percent, of Luzon’s total demand for electricity. This, Cruz added, also lowered Luzon consumers’ electric bills by 50 centavos to 20 pesos.

“Imagine what would have happened if this weather situation was a global situation and we couldn’t even import LNG,” she said.

Cruz said indigenous gas helps stabilize electricity prices as shown by the impact of the Russian war on Ukraine which triggered price spikes in LNG.

“Had there not been Malampaya gas during that time, Filipinos would have paid, on average, 25 pesos per kilowatt hour in fuel costs for using LNG, compared to only 6 pesos per kilowatt hour for using Malampaya,” she said.

“Indigenous gas prices remain largely stable against these shocks. and therefore cushions our electricity bills,” she added.

Aside from providing reliable and more affordable power generation fuel, Malampaya also brings revenue to the government, Cruz said.

“For every peso of net revenue or sales from Malampaya gas, 60 centavos is remitted to the government,” she said.

“This amounts to 300 to 500 million USD annually for use in energy development projects,” Cruz said.

At the same forum, Energy Secretary Raphael Lotilla said energy security was the Marcos administration’s priority with renewable energy being the way forward.

In the transition to full renewable energy use, Lotilla said the government was pursuing a “robust natural gas strategy.”

“Successful exploration and production activities will not only contribute to the country’s energy security goals but also drive economic growth, create employment opportunities, and generate revenue stream,” Lotilla said at the forum.

“Exploration and development of these resources including the building of necessary infrastructure will certainly take time, making it essential to have a reliable energy transition source in the meantime.” he said.

Service Contract No. 38 (SC 38), which governs the Malampaya project, was extended for another fifteen years until February 2039.