Liquefied Natural Gas (LNG): A Game Changer in the Energy Industry in the Philippines

by Wynn Gaudette P. Navarro

Figure 1 Batangas LNG Terminal (Source: Tractebel)

Liquefied natural gas (LNG) is rapidly gaining traction as a cleaner and more efficient source of energy in the Philippines. The country's increasing energy demand and limited domestic sources of natural gas have made it necessary to explore new options for energy generation and industrial use. The use of LNG in the Philippines has several advantages, including reliability, stability, and a reduced carbon footprint.

What is Liquefied Natural Gas?

Liquefied natural gas is a form of natural gas that has been cooled to a temperature of -162°C, at which point it becomes a liquid. This process of liquefaction reduces the volume of natural gas by around 600 times thus making it easier and more economical to transport over long distances and store LNG in tanks. [1]

Typically, liquefied natural gas contains about 85-95% methane. LNG is also a cleaner and more efficient energy source than coal and oil which produces 30% less carbon dioxide production than the oil and 40% less than coal. It is odorless, colorless, and non-toxic, and produces fewer emissions of pollutants such as sulfur dioxide, nitrogen oxides, and particulate matter than other fossil fuels, making it a cleaner and more sustainable option. [2]

The Potential of LNG in the Philippines

The Philippines is an archipelagic country with over 7,000 islands, making it challenging to distribute energy across the country. [3] The country's energy mix is heavily reliant on coal, which accounts for over 58% of electricity generation in 2021. This dependence on coal makes the country vulnerable to volatile global prices and exposes the population to the harmful effects of pollution. [4] Liquefied natural gas has the potential to address these challenges and transform the country's energy industry. It is via tankers and distributed through pipelines or small-scale LNG terminals, which can provide energy to remote areas without relying on traditional power grids. [5]

In recent years, the Philippine government has recognized the potential of LNG and has taken steps to develop the industry. The country's first LNG import terminal, the FGEN LNG facility, is currently under construction in Batangas City and is expected to be completed by early [6]. The facility, which is being developed by First Gen Corporation, will have a capacity of 5.6 million tons per annum and will supply natural gas to power plants and industrial customers. [7]

In 2017, the Department of Energy issued a circular on the development of the LNG industry, outlining the government's plans to promote LNG as a cleaner and more affordable energy source. The circular sets out guidelines for the construction of LNG terminals, the procurement of LNG, and the establishment of a regulatory framework for the industry. [8] The government has also granted permits to several companies to develop LNG terminals, including Excelerate Energy. [9]

Benefits and Challenges of LNG in the Philippines

One of the main advantages of LNG is its reliability and stability. Natural gas can be transported as LNG over long distances, making it easier to access than pipeline gas. This means that the Philippines can diversify its sources of energy and reduce its dependence on imported oil. Also, as LNG is reliable and already far cleaner than other fossil fuels, it is an ideal partner for volatile renewable energy sources. It also means that LNG can provide a stable source of energy that is not subject to price fluctuations in the global oil market. [10]

LNG is also a cleaner and more efficient energy source than coal and oil. It emits less carbon dioxide and other pollutants, which makes it an attractive option for reducing greenhouse gas emissions and improving air quality. [10] This is particularly important in the Philippines, where air pollution is a major problem in many cities. 

However, there are also some challenges associated with the use of LNG in the Philippines. One of the main challenges is the high cost of LNG compared to other sources of energy, such as coal and oil. This could limit the adoption of LNG by power plants and industrial customers, especially in the short term. Another challenge is the lack of infrastructure for the distribution and use of natural gas, which could limit LNG's availability to customers outside the main urban centers. [11]

Conclusion 

Liquefied natural gas has the potential to transform the energy industry in the Philippines, providing a cleaner, more affordable, and more flexible source of energy. However, the development of the industry faces several challenges, including high capital costs, infrastructure constraints, and the need for an effective regulatory framework. Despite these challenges, the Philippine government's efforts to promote LNG as a cleaner and more affordable energy source are encouraging, ad the development of the industry is expected to contribute to the country's sustainable economic growth.

References

[1]	O. o. F. E. a. C. Management, "Liquefied Natural Gas (LNG)," nd. [Online]. Available: https://www.energy.gov/fecm/liquefied-natural-gas-lng. [Accessed 18 February 2023].
[2]	N. Grid, "What is Liquefied Natural Gas (LNG)?," nd. [Online]. Available: https://www.nationalgrid.com/stories/energy-explained/what-is-liquefied-natural-gas-lng. [Accessed 18 February 2023].
[3]	E. R. I. f. A. a. E. Asia, "Distributed Energy System in the Philippines," nd. [Online]. Available: https://www.eria.org/uploads/media/5_Distributed_Energy_System_in_the_Philippines.pdf. [Accessed 18 February 2023].
[4]	D. o. Energy, "Coal," nd. [Online]. Available: https://www.doe.gov.ph/coal-overview#main-content. [Accessed 18 February 2023].
[5]	E. Education, "Transportation of liquefied natural gas," nd. [Online]. Available: https://energyeducation.ca/encyclopedia/Transportation_of_liquefied_natural_gas. [Accessed 18 February 2023].
[6]	J. Lagare, "First Gen to finish Batangas LNG terminal by early 2023," 8 September 2022. [Online]. Available: https://business.inquirer.net/361269/first-gen-to-finish-batangas-lng-terminal-by-early-2023. [Accessed 18 February 2023].
[7]	A. Jose, "First Gen unit’s LNG project in Batangas seen operational next year," 8 September 2022. [Online]. Available: https://www.bworldonline.com/corporate/2022/09/08/473189/first-gen-units-lng-project-in-batangas-seen-operational-next-year/#:~:text=According%20to%20a%20report%20from,construction%20cost%20of%20P13%20billion.. [Accessed 18 February 2023].
[8]	D. o. Energy, "Rules and Regulations Governing the Philippine Downstrean Natural Gas Industry," 2017. [Online]. Available: https://www.doe.gov.ph/sites/default/files/pdf/issuances/dc2017-11-0012.pdf?withshield=1. [Accessed 18 February 2023].
[9]	D. o. Energy, "DOE marks PH as LNG Hub," 23 March 2021. [Online]. Available: https://www.doe.gov.ph/press-releases/doe-marks-ph-lng-hub?withshield=2#main-content. [Accessed 18 February 2023].
[10]	S. Energy, "LNG," nd. [Online]. Available: https://www.shvenergy.com/what-we-do/lng. [Accessed 18 February 2023].
[11]	G. Group, "What are the advantages and disadvantages of using LNG?," 23 March 2021. [Online]. Available: https://www.gnpw.com.br/en/gas/what-are-the-advantages-and-disadvantages-of-using-lng/. [Accessed 18 February 2023].