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Energy Resource Guide – Philippines - Oil and Gas

The Philippine Department of Energy (DOE) has outlined an overly ambitious two-fold agenda of attaining energy security and implementing power market reforms. By 2040, the Philippine oil and gas sector intends to increase reserves and production of local oil, gas and coal, improve downstream oil industry policies for the continuous supply of high quality and quantity petroleum products, and establish an investment-driven natural gas industry in the Philippines. Likewise, “on-site” or small-scale power generation using marginal gas fields will be promoted.

The Philippine assumes that population will increase from 105 million in 2017 to 148 million in 2040. Such plans are critical as the country faces a loss of almost 30% of its fuel supply source (which will impact approximately 3,000 megawatts of generation) in 2024 when the Malampaya natural gas fields are expected to be depleted. The nation needs to find a new source of energy to compensate for this loss as it seeks to maintain its economic growth and support the country`s infrastructure boom. The immediate plan for this would be through encouraging offshore investment and developing LNG infrastructure.

While the Department of Energy created a Philippine Conventional Energy Contracting Program (PCECP) to encourage offshore exploration, interest has been low due to concerns over contract sanctity, and the nation lags ASEAN neighbors in terms of exploration. While the Government has ambitious plans, there is concern whether there will be enough non-Chinese foreign investment to ensure true competitive development in this sector. LNG has attracted great interest despite ambiguous policies and high initial investment requirements. Furthermore, despite significant interest, to date, all projects (with one exception) are at the permitting project stage. Many of the large power generators in the Philippines are interested in utilizing gas as a part of their portfolio mix, however, are not interested in investing in the necessary infrastructure as a firstcomer. A lack of incentives for LNG use further discourages foreign investment and participation. Should the nation be unable to address the challenges in both offshore exploration and LNG development, it will face a huge energy crisis.


Philippines’ President Sets Country’s Offshore Wind Development In Motion

The Philippines’ President, Ferdinand R. Marcos Jr., issued Executive Order No. 21 on 19 April, directing the country’s Department of Energy to put together a policy and administrative framework for offshore wind development and to commence work related to grid development.

"With heightened investor interest in energy projects. especially in renewable energy, it is crucial to have a clear framework that would speed up the development of OSW and speed up approvals of necessary permits. We will work together with the concerned government agencies. local government units, and the transmission concessionaire to implement the President’s directive", Energy Secretary Raphael P.M. Lotilla said.

63 Awarded Offshore Wind Service Contracts (and What These Contracts Entail)

The DOE said that it had awarded 63 offshore wind contracts so far, with a total potential capacity of 49.928 GW, which is enough to supply the country’s future electricity demand.

This is an increase of almost 8 GW from 30 March, when the DOE said there were 57 Offshore Wind (OSW) Service Contracts (SCs) with a total potential capacity of about 42 GW awarded to that date.

The information from last month was shared as the DOE announced the agency signed three 25-year Offshore Wind Service Contracts with Copenhagen Infrastructure Partners (CIP), through its New Markets Fund, for three offshore wind farms totalling 2 GW in capacity.

According to the World Bank’s The Philippines Offshore Wind Roadmap, the Service Contracts grant developers exclusive rights to explore, develop and utilise offshore wind resources over a specific contract area, including access to lands, offshore areas, and seabed, identified by the developer.

The roadmap estimates the Philippines’ total technical offshore wind potential at 178 GW, with most of that capacity being in areas that are most suitable for floating wind technology.

"Large areas around the country’s coast have technically extractable wind resources. Around 90 percent of the resource is found in waters deeper than 50 meters, which will require the use of floating offshore wind turbines", World Bank states in the roadmap document.

In November 2022, the Philippines’ DOE Secretary Raphael P.M. Lotilla said that, in addition to addressing the country’s energy needs, electricity generated by offshore wind farms could be used to produce alternative fuels such as green hydrogen, which then may be converted into ammonia.