LNG: The bridging fuel of the future

LADIES and Gentlemen, while sustainable renewables will come to dominate the future, there is still a need for a stable source of electricity that can bridge this transition. Without this, we will not be able to secure our energy security.

I would like to draw your attention to the second emerging trend that is changing our energy landscape: The revolution in gas that promises to make it the bridging fuel in the short to medium-term. This revolution is defined by three major developments.

The first is increasing demand from Asia – where our players will eventually transition from net exporters to net importers.

The second is increasing supply from the rest of the world: Where new supplies have come on stream, especially from the United States.

The third is cheaper gas. Due to the reconfigurations of these supply and demand mechanics, changing the way gas is purchased and pushing costs down in the process.

In this region, these changes already taking place, and at a fast pace. For starters, nowhere are the prospects higher for the demand of gas than in Asia. For the first half of this year alone, Chinese LNG imports jumped 38% from the same period in 2016. This thirst for gas is set to grow further.

According to forecasts by British Petroleum, China and India alone are expected to account for half of the 30% increase in global energy demand between today and 2035.The same trends are happening in ASEAN, where the situation is such that as gas fields continue to deplete, we will eventually transition from net exporters to net importers.

In fact, the Oxford Institute for Energy anticipates that by 2021, ASEAN countries will be net importers requiring 20 million tons. This is set to rise to at least 45 million tons in 2030. Now, that’s just on the demand side of the equation. As demand continues to grow, things look promising on the supply side as well. Indeed, global supplies of LNG are on course to increase by 50% between 2014 and 2021.

Consider that a decade ago, more than 95% of LNG contracts were for 10 years or more. Today, that figure is down to about 60%. Given these new developments, ASEAN needs to start planning for this future. We need to think of how we can ride this LNG wave, to ensure that we can safeguard our energy security. We’ve started doing just that in the Philippines. We’ve started with the rollhim out of the Batangas LNG Terminal by 2020 to safeguard against the anticipated depletion of the Malampaya gas facility in 2024.

The buy-in is there. The investors are in. And we expect to commence groundbreaking of this project in 2018.

Things are also picking up on the regional front. We have already begun pursuing the Trans-ASEAN Gas Pipeline to ensure that we can move gas around the region, with pipelines linking Singapore, Malaysia, Thailand, Myanmar and Indonesia.

This will benefit our member countries, lowering costs to move gas around. This sense of urgency is encouraging, but more needs to be done to put us on a stronger footing. Especially when you consider ASEAN’s increasing needs for LNG.

Already, it is expected that Southeast Asian nations could soon double import capacity for liquefied natural gas as domestic energy sources fall short, collectively becoming a key player in the global LNG market.

This will see the region boosting its annual LNG receiving capacity from 25 million tons to some 50 million tons over the next five years. The expanded figure equates to about 20% of the LNG carried on tankers worldwide in 2015.

These are great plans, yes. But these are plans that will cost money. It is now imperative on us to draw in more investments and expertise to ensure that we are prepared for this new future. Hence, I call on our friends from other countries to help us on this journey.

We welcome your expertise, your experience as well as your investments to help power growth in this region. My message is simple: ASEAN is the right place for you to invest.

We’re also doing more, making conscious efforts to reduce regulations and to speed up the process of project approvals through the introduction of Executive Order No 30. This will change the way we process energy projects.

No longer will it take up to 3 years for an agency to respond to a proposal for a project. Instead, these agencies must act on a proposal WITHIN 30 days, failing which, the proposal is deemed approved.

Such efforts are not just unique to the Philippines. Indeed, similar trends are taking place across the region, as ASEAN member-countries seek to pull-in much needed investments.

My friends, if ever there was a right time to invest in energy in ASEAN, it is now!

Excerpts of the Opening Speech of Philippine Energy Secretary Alfonso G. Cusi

Joint Official Opening Ceremony of the 35th ASEAN Ministers on Energy Meeting (AMEM35) and the ASEAN Energy Business Forum (AEBF) 2017, 27 September 2017, SMX Convention Center Manila