PH gas outlook bullish but RE policies pose downside risks
by Philippine Resources - February 16, 2023
Photo credit: Malampaya gas field
Fitch Solutions said the Philippines’ gas consumption outlook remains bullish but the administration’s aggressive push for renewable energy (RE) poses downside risks to natural gas consumption in the power sector.
In a commentary released to the media on Wednesday, Fitch Solutions said the country’s gas consumption between 2010 and 2021 averaged 3.5 billion cubic feet (bcf) to 4.4 bcf.
“The outlook for gas consumption remains bullish both reference and clean energy scenarios (CES),” it said.
Under the Philippine Energy Plan 2022-2040, the government aims to expand the gas-fired power-generating capacity to 24.3 gigawatts (GW) in the reference scenario and to 18.9 GW in CES from the current capacity of 3.45 GW.
It added that with the Department of Energy’s (DOE) approval of seven gas-fired power plants with a combined capacity of 7.1 GW, the country’s demand for liquefied natural gas (LNG) from the power sector could go up to 6 million tons per year.
The demand excludes requirements from the existing five power plants that source gas from the Malampaya gas field project.
Also, 10 proposed gas-fired power projects have yet to be approved. They have a total capacity of 8.8 GW.
With the expected depletion of the Malampaya gas field next year, Fitch Solutions said the Philippines will become reliant on LNG imports for power generation starting in 2025.
This year, some LNG import terminals will start their operation to supply the gas demand.
However, Fitch Solutions said the administration’s ongoing energy policy that favors renewable sources could pose significant downside risks to natural gas consumption in the power sector.
“Overall, the outlook for LNG imports remains bullish, but the future role of LNG in the power sector could be at risk if the incumbent Marcos government, which views natural gas as a transition fuel, invokes a change in current energy plans,” it said.
In the long-term energy plan, the government aims to expand renewable power capacity from 7.6 GW in 2022 up to 53.2 GW in the reference scenario and 81.5 GW in the CES.
Several reforms were also made in the first six months of the Marcos administration to lure investments in the RE sector. By Kris Crismundo
Article courtesy of the Philippine News Agency
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Philippine Resources - December 01, 2021
Gas drilling in Recto Bank should push through: Pimentel
Photo credit: Inkl The chair of the House Strategic Intelligence Committee on Tuesday said oil drilling activities in Recto Bank must proceed as scheduled amid rising tensions with China. Surigao del Sur Rep. Johnny Pimentel said the Sampaguita gas field could yield up to USD18.2 billion, or around PHP910 billion, in future royalties for the government, based on a 60 percent net share. “We have no choice but to carry on with the drilling activities because the Sampaguita gas discovery in Recto Bank has the potential to energize the entire national grid – not just Luzon – for the next 20 to 30 years,” Pimentel said. Pimentel said Sampaguita is “an untapped value-changing asset” that would be valuable to the country’s future energy security with up to 4.6 trillion cubic feet of gas, while Malampaya, which has been producing gas for the last 20 years, has only 1.6 trillion cubic feet of residual gas at best. “There is even one study suggesting that the entire Recto Bank has up to 20 trillion cubic feet of potential gas in place,” Pimentel said. The Permanent Court of Arbitration in the Hague ruled in July 2016 that Recto Bank is within the Philippines’ exclusive economic zone, as defined under the 1982 United Nations Convention on the Law of Sea. By virtue of the ruling, Pimentel said the Philippines enjoys absolute rights to exploit all resources in the seamount. Article courtesy of the Philippine News Agency
Philippine Resources - October 18, 2021
Next Malampaya can be found in Mindanao: PNOC EC exec
As the Malampaya natural gas field is drying up, Mindanao might have the indigenous energy resources to energize the country. In a webinar of Davao International Conference 2021 Thursday, PNOC Exploration Corp. (PNOC EC) vice president for upstream operation Jaime Bacud said Mindanao is rich in indigenous resources that can support the country’s energy requirement. Bacud said Mindanao alone has three sedimentary basins waiting for exploration for oil and gas resources. These basins include Agusan, Cotabato, and the Sulu Sea. “We still think that there is natural gas potential for these areas, and it could be where we could find the next Malampaya,” Bacud added. The Malampaya gas field, which supplies around 30 percent of Luzon’s power requirement, is the country’s lone natural gas source. As the government issued a moratorium on new coal projects, Bacud said oil and gas exploration, particularly in Mindanao, could help in the government’s goal to achieve energy independence. “We still have a lot of natural or oil and gas resources that are still untapped. And this could be our way forward to get closer to what we call energy independence,” he added. By Kris Crismundo Article courtesy of Philippine News Agency
Philippine Resources - February 08, 2022
Let biz sector handle Malampaya deal, PRRD tells senators
Photo credit: Shell President Rodrigo Duterte on Friday slammed the Senate resolution recommending charges against Department of Energy (DOE) Secretary Alfonso Cusi and other officials over the approval of what lawmakers alleged was an anomalous sale of shares in the Malampaya gas field. In a statement, Duterte expressed "grave concern" over the Senate's adoption of the resolution, as it casts "undue, undeserved, and unwarranted aspersion" on key DOE officials. "The government values the critical role and contribution of the Malampaya Gas Field to energy security. I will not allow this valuable resource to be jeopardized and embroiled in the political antics of some members of the Senate," he said. Duterte affirmed that Cusi still has his full trust and confidence, and shall remain as the head of the energy department. He maintained that the national interest has been protected and the government's rights remain intact amid the developments involving the share sale and purchase agreement. "I am calling on our legislators to ensure that our ability to compete is not jeopardized by political intrigues and innuendoes. Leave business transactions in the capable hands of the business sector. Let us respect their business decisions while we protect our national interests," Duterte said. The resolution, penned by Senator Sherwin Gatchalian, recommends the filing of criminal and administrative charges before the Office of the Ombudsman and the Civil Service Commission against Cusi and other DOE officials for approving and recommending approval of the Chevron Philippines-UC Malampaya transaction. Gatchalian said the officials violated laws for allegedly railroading the approval to the sale of the 45-percent participating interest in the Malampaya gas project of Chevron Malampaya LLC Philippines, now known as UC 38 LLC, to UC Malampaya, an indirect subsidiary of Udenna Corporation, despite the lack of financial qualification. Duterte, however, said that the sale and purchase of the stock of Chevron Malampaya LLC was a private transaction between private entities that must be respected. He also reiterated that both foreign and local investments are "vital" to the economy. "We compete for them with other countries, and our ability to do so requires me to create and maintain an environment conducive to the entry of investors," he said. Duterte said that while he recognizes the Senate's power to conduct congressional probes in aid of legislation, this should be exercised "with prudence and circumspection, devoid of reckless accusations, and focused on improving existing laws". By Filane Mikee Cervantes Article courtesy of the Philippine News Agency
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Philippine Resources - June 10, 2023
DMCI Mining Targets 1.5 Million WMT Nickel Ore Shipment in 2023
Photo Credit: dmcihouse.net DMCI Mining Corporation is targeting to ship 1.5 million wet metric tons (WMT) of nickel ore in 2023, after its subsidiary Zambales Diversified Metals Corporation (ZDMC) was granted an Environmental Compliance Certificate (ECC) in January to produce 2 million WMT of nickel ore. Prior to the ECC issuance, ZDMC was only allowed to extract 1 million WMT. “We have the necessary facilities and mitigating measures to minimize the impact of our operations on the environment. With these in place, we’re targeting to produce anywhere between 1.7 million to 2 million tons of nickel ore this year,” said DMCI Mining president Tulsi Das C. Reyes. From January to March, ZDMC nickel ore production soared by 88 percent from 318,000 WMT to 599,000 WMT, its highest-ever quarterly output. This led to a 16-percent improvement in total inventory, from 154,000 WMT to 178,000 WMT. However, total shipment declined by 21 percent from 620,000 WMT to 487,000 WMT owing to the depletion of the BNC mine and stockpile, cushioned by the double-digit growth of ZDMC shipment. Average selling price increased by 11 percent from USD44 to USD49 owing to higher Zambales shipments of higher-grade nickel ore. Despite the mine and stockpile depletion of Berong, DMCI Mining standalone revenues narrowly declined (-8%) from P1.4 billion to P1.3 billion due to better selling prices while reported net income contracted by 15 percent from P543 million to P463 million.
Philippine Resources - June 10, 2023
DMCI Power to build wind facility in Semirara Island
Leading off-grid electricity generator DMCI Power Corporation (DPC) is set to build a wind power plant in Semirara Island, home of the biggest coal reserve in the Philippines. DPC intends to finalize the wind power capacity in the coming months, with projections ranging from 8 to 12 MW, and operational implementation expected within 12 to 15 months. The project will be funded and undertaken independently by the company. “We are also looking at solar energy to augment the supply in the island, but we are prioritizing wind resource development because it has shown the most promise,” said DPC president Antonino E. Gatdula, Jr. “Current studies suggest that wind power could potentially deliver a 33% plant utilization rate, compared to just 17% for solar. Capital expenditure per megawatt for both wind and solar projects are also roughly the same,” he explained. In a 2001 wind resource study conducted by the National Renewable Energy Laboratory (NREL), a United States Department of Energy (DOE) laboratory, it was found that Semirara Island has some of the best wind resources in the Philippines. The wind corridors between Luzon and Panay (including Semirara Islands and extending to the Cuyo Islands) were found to have good-to-excellent wind power density and speed for utility-scale or village power applications. DPC is in the process of validating these wind resource estimates to determine the final location and capacity of its wind project.
Philippine Resources - June 05, 2023
Semirara Mining and Power Corporation eyes Japanese market expansion
Photo credit: Bilyonaryo Integrated energy company Semirara Mining and Power Corporation (SMPC) is set to make its second trial shipment to Japan this June, in a bid to reduce its dependency on the Chinese market. The company will export 50,000 metric tons (MT) of Semirara coal to Shikoku Electric Power Corporation for its 700-megawatt coal fired ultra-supercritical power station. “China is still our main foreign buyer but with their industrial output growing slower than expected, we want to develop other Asian markets like Japan,” said SMPC president and COO Maria Cristina C. Gotianun. From January to March, Semirara coal shipments to China plunged by 50 percent from 2.2 million MT to 1.1 million MT, accounting for 72 percent of exports. South Korea was a steady market at 300,000 MT, representing one-fifth of export sales. The rest of the exports went to Japan (5%) and Brunei (3%). SMPC first made a trial shipment to Japan in January 2023, selling 78,410 MT of mid-grade coal to J-Power, a utility company that operates coal, hydroelectric, wind and geothermal power stations. “For 2023, we are targeting to export around 30 percent of our full-year sales target of 15 to 16 million MT,” added Gotianun. In the first quarter, standalone coal revenues sank by 40 percent from P25.7 billion to P15.5 billion mainly due to high base effect of record production, shipments and selling prices. Standalone reported net income slumped by 51 percent from P14.2 billion to P7 billion on topline weakness and slower decline in cash costs.
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