Nascent LNG framework not yet enough to whet investors’ appetite
The Department of Energy (DOE) has listed multitudes of the “usual suspect companies” attending the initial public consultation of its propounded regulatory framework of the Philippine gas sector’s policy reset, but at its embryonic stage, this has not been enough yet to whet targeted investors’ appetite.
Many interested parties that had attended the government’s policy-setting consultation process had indicated that “it was more of the government wanting inputs from stakeholders for now… so essentially, there are more questions raised than answers at the point.”
There have also been questions on how the DOE has been altering the definition of a ‘gas hub’, with it merely referring to a trans-shipment point or one liquefied natural gas (LNG) facility project.
In the true sense of the gas market today, that may not qualify as such, because a “gas hub” entails having a market wherein buyers and sellers could have a transaction center or contractual point for the commodity. The main features of a gas hub would be an operator and traders.
Energy Secretary Alfonso G. Cusi has grand plans of positioning the Philippines as “gas hub” in the Asia Pacific region, but his department officials have yet to go through the very elementary step of understanding what really constitute a gas hub and how it operates.
More than clearing the regulatory framework pathway, the DoE has also set out the “intervening factors” why the country would need to re-embrace gas in its energy mix.
Energy Secretary Alfonso G. Cusi, in particular, noted that his department is “already preparing the necessary policies as we approach the depletion of indigenous natural gas supply from Malampaya by 2024.”
The energy chief added “by diversifying our energy mix through LNG, we are ensuring a secure and stable supply of energy,” stressing that “this is a priority.”
While devoid yet of substance on policy directions though, primarily those that would deal with gas pricing, off-take agreements and setting the place of gas in the energy mix and power supply deals at the level of the gas-generated electricity, the DOE can just state for now the reasons why it started opting for gas as part of the technology options for the energy sector.
The department cited the potential of gas serving the “mid-merit” capacity needs of the power system or the technology that can be cycled in case of powersupply demand fluctuations in the grid; the allure of gas as a coupling technology to intermittent renewable energy (RE) sources; its prospective use as replacement to diesel-fired power facilities; and the expected gas market expansion into non-power applications.
For many of the stakeholders that attended the public consultation though, they wanted to be apprised more of the intended policy directions of the government; and not reiterate the ‘mediating variables’ already well known to them.