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We're lagging in exploration.



I've been reading about many ongoing moves by the Philippines to import LNG from other countries. This somewhat concerns me because I get the sense that the Philippines and our government are prioritizing importation before LNG exploration, which should actually be the first and primary option.

Historically, there are many problems and issues when a government relies too heavily on importation.

At the 1st Asia Pacific LNG Investment Summit on December 5, 2018, the main goal of the gathering was to establish the Philippines as Southeast Asia's LNG hub, and this is quite admirable, I admit. Such a goal will definitely propel the Philippines into the world spotlight and will gather international acclaim.

I see how the Summit expects that LNG would have a significant role in the country's energy mix when the Malampaya gas field is depleted, but my question right now is when will gas from Malampaya be depleted. And why is the only proposed solution to import LNG from other countries?

The news today makes us paranoid about the status of Malampaya but is the future of Malampaya truly that bleak? I've seen statements by various consumer groups like AGHAM voicing out this similar concern and opinion, as it seems to me that our government is becoming too narrow-minded when it comes to looking to LNG to supply power to our country.

From the research that I have done, and from reports that I have read in print and online, it is quite clear that there is still gas in the ground.

Early this year, it was reported that Shell Philippines Exploration (SPEX) said that Malampaya gas can exceed its expected 2029 life expectancy. In fact, in 2015, SPEX completed a Depletion Compression Platform adjacent to the existing Shallow Water Platform. The new offshore platform will ensure the steady supply of natural gas. This goes to show that Malampaya is still alive and kicking, and will be able to serve us well past 2019.

We must realize that the new offshore platform can support gas exploration in adjacent fields. The problem is that the LNG terminal as the only proposed solution forces the country to import even if there may still be available indigenous sources, and this will bite us back in the end. And there are many negative side effects if we force importation rather than exploration of our own resources.

For example, if our government decides to focus primarily on importation, it discourages exploration, further exposing the country to higher prices like exchange rate risks, volatility of fuel prices in the world market and it can lead to possible supply hostage, which is a scary situation for our economy if you consider the possible geopolitical risks not only with fuel source but also in shipping.

Unfortunately, we are already lagging behind our surrounding countries. What alarms me the most is that the Philippines continues to fall behind its neighbors in exploration based on the oil and gas rig count.

One startling figure that I researched was that the rig count of Indonesia is 17 times that of the Philippines, while Thailand's is 7 times more than the Philippines. That is a huge difference. One can see that the Philippines is already far behind the other Asian nations. We cannot let this trend continue, especially since we have many options open to us like exploration.

I believe that the Philippines should put in the same amount of effort to push for exploration because it is the better and more sustainable solution. By utilizing indigenous sources, I believe that the country would limit its exposure to exchange rate risks and volatility of fuel prices in the world market. This will also mean that the Philippines would also have control over supply and limit exposure to geopolitical risks.

I agree with AGHAM when they stated that aside from ensuring energy security, using indigenous sources would allow Filipinos to benefit from job creation, skills training, and more business for local communities. It is also true when they say that the government will also receive royalties from exploration of indigenous sources.

From 2001 to 2017, the national government's net share in royalties from Malampaya amounted to US$3,529.21 million or about P161 Billion. Only foreign investors will benefit from the LNG terminal and importation.

Thus we must find a way where the major benefit will go to the Philippines and its people, and at the end of the day, exploration is the way.


Elinando B. Cinco
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Title Annotation:Opinions and Editorials
Publication:Manila Bulletin
Geographic Code:9PHIL
Date:Dec 14, 2018
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