PH mulls LNG importation from Australia

by Myrna Velasco – February 29, 2016

from Manila Bulletin

Houston, Texas – With anticipated production decline and lapse of the Malampaya gas field service contract in 2024, the Philippine government is now exploring prospective import sources of liquefied natural gas (LNG), and Australia is among those on its roll.

This was indicated by Energy Secretary Zenaida Y. Monsada at her talks during the recently concluded IHS-CERA Week, noting further that this will be a strategic alternative to offset any supply loss from the country’s only commercial gas field.

“We are looking at Australia, because it is one of our prospects on LNG supply,” she told an international audience in a strategic dialogue centering on “The Future of Asia’s Power Markets: Redefining Fuel Competition.”

In a separate press conference with global journalists, Australian Minister for Resources and Energy Josh Frydenberg said Southeast Asian countries are among the strategic markets they have been eyeing for their massive LNG supply.

He noted prior in a Ministerial Plenary Dialogue that Australia’s build-up of LNG project developments will already make it the biggest LNG supplier in the region, surpassing the production of Qatar.

“Certainly, it will be a good economic story to tell in Southeast Asia if we can have our neighbors as our markets for LNG,” Frydenberg said.

In a short banter with Monsada following their press briefing, the Australian minister similarly reiterated his country’s offer to supply the future gas needs of the Philippines. “I am already making you an offer,” he told the Philippine energy secretary in jest.

Frydenberg reckoned that “the advantage Australia could offer is ease of transportation because we are near the doors of our friends in Southeast Asia.”

He stressed that their biggest LNG buyers to-date are Japan and Korea, but they have been stepping up into expanding their markets in Asia.

“We are gearing up for diversification so we are looking at potential markets in Southeast Asia, including Vietnam and Indonesia, as we have seen their gas demand increase,” Frydenberg said.

For the Philippines, Monsada qualified that the government is still waiting for the final decisions of prospective LNG terminal investors on when they can put up the necessary import handling facility.

Since the Malampaya gas service contract will wind up in the next eight years, investment plans are already anticipated to be cemented around this time to set enough lead time for project development.

“We are hoping that the two contenders will finally decide on putting up the facilities – one of the contenders would be the owner of the two natural gas power plants (First Gen Corporation); and the other one is oil and gas company (Royal Dutch Shell),” Monsada said.

The government, having its way, she added will just toss LNG terminal ventures into the hands of the private sector. Nevertheless, the State can also dip its hands into it when needed.

“We can still invest on terminal if warranted. We are preparing on that to be able to have the alternative supply by 2023,” the energy secretary said.