Indigenous LNG Stabilizes Electricity Prices, Says Prime Energy

Prime Energy Resources Development, led by Razon, highlighted the crucial role of indigenous liquefied natural gas (LNG) in stabilizing electricity prices and ensuring a steady power supply in the Philippines. The Malampaya gas-to-power project, situated off the coast of Palawan, plays a central role in this effort.

Importance of Indigenous LNG

In a recent news release, Prime Energy’s Managing Director and General Manager Donnabel Kuizon Cruz emphasized the need to develop the country’s indigenous gas resources. “Indigenous LNG must remain a bedrock of our energy policy,” Cruz stated, pointing out that the Malampaya project supplies around 20% of Luzon’s energy needs and supports four power plants in Batangas with a combined capacity of 2,011 megawatts (MW).

Stabilizing Electricity Prices

Cruz noted that the Malampaya facility was instrumental in stabilizing electricity prices during international conflicts, such as the Russia-Ukraine war, which caused LNG prices to surge. “Without Malampaya gas, Filipinos would have paid an average of P25 per kilowatt hour (kWh) for LNG, compared to only P6 per kWh with Malampaya,” Cruz explained.

Indigenous gas prices, she added, are more stable compared to imported LNG, providing a buffer against market volatility and helping to keep electricity bills manageable. During the April heatwave, Malampaya operated at nearly 120% capacity, delivering enough fuel to generate 2,000 MW and saving Luzon consumers up to P20 per kWh.

Challenges of Imported LNG

Cruz highlighted the vulnerabilities associated with imported LNG, especially during adverse weather conditions that can disrupt the supply chain. “Strong winds and waves can disconnect LNG storage from their berths, pausing gas supply to power plants,” she said.

Future Investments and Government Revenue

The Malampaya Consortium, led by Prime Energy, is investing approximately $600 million for further exploration and drilling within Service Contract 38 (SC 38). This includes drilling two new deep water wells from 2024 to 2029.

Cruz also mentioned that Malampaya contributes significantly to government revenues, remitting 60 centavos of every peso of net revenue, amounting to $300 to $500 million annually for energy development projects.

Energy Security and Economic Growth

Energy Secretary Raphael Lotilla reaffirmed the Marcos administration’s commitment to energy security, with a focus on renewable energy. Lotilla stated that successful exploration and production activities will boost the country’s energy security, drive economic growth, create jobs, and generate revenue.

“While renewable energy development is underway, LNG serves as a crucial transition fuel, offering a cleaner and more reliable energy source than traditional fossil fuels,” Lotilla concluded.