Albert D Altura, President, AG&P: Interview

Interview: Albert D Altura

What distinct advantages and challenges does liquefied natural gas (LNG) offer?

ALBERT D ALTURA: With volatile oil prices, gas has become the fuel of choice as it offers greater price stability in the long term, especially for power generation. LNG is the cleanest fossil fuel for power generation, as it emits fewer greenhouse gases and 50% less carbon dioxide. The production and transport of LNG also uses less energy than other fossil fuels, like heavy fuel oil (bunker) or light fuel oil (diesel). In addition, it is a more flexible source that allows peak demand to be met at critical times. Natural gas is an important component of the Philippine government’s fuel diversification programme, which aims to build 7000 MW of new capacity over five years to meet future demand. As a result, new LNG sources need to be developed, especially given that current natural gas supply is largely sourced from the offshore Malampaya field, and most projections suggest that its reserves will be depleted in less than a decade.

For LNG development to take off, the first challenge is to have an adequate receiving terminal in place to ensure supply from major producers. LNG infrastructure to support the use of natural gas, both for power and non-power applications is also required. Traditional solutions tend to rely on a complex pipeline network that requires substantial investment. However, for a country like the Philippines, deploying economically viable, standardised and scalable infrastructure packages to the different parts of the LNG supply network is a more achievable alternative.

In what ways can small-scale LNG distribution networks serve power needs in off-grid areas?

ALTURA: Emerging economies in South-east Asia have massive demand for energy. The Philippines’ geography scatters LNG demand centres across islands, long coastlines and rugged terrain. In order to establish a viable and sustainable LNG distribution network and supply chain in these areas, more pragmatic and flexible infrastructure solutions are needed.

A network of smaller-scale delivery systems, including small vessels of less than 8000 cu metres, regasification terminals and smaller power plants would be more efficient for the Philippine archipelago, as their redeployment capability would allow faster response to demand at reduced costs.

How can energy regulators improve the business environment and attract more investors?

ALTURA: Having the right policy and an efficient regulatory framework is crucial to expanding LNG in the Philippines. The laws developed should establish a clear direction for industry, supply and infrastructure development to help increase competition. Comprehensive incentive packages for LNG development – like the feed-in-tariff scheme for companies pursuing solar development – could also help encourage investment and development in the sector.

Additionally, at an ASEAN level, strong cooperation is required to ease market entry for LNG infrastructure developers; for example, by reducing import duties or introducing tariff-free arrangements for importing required building materials. Any move towards energy integration in the region will certainly be positive and will require strong coordination efforts given the different stages of development of the various countries.

The Philippines’ recent commitment to the 2015 Paris Agreement, namely to move towards greener energy sources and cut carbon emissions by 70% by 2030, might also contribute to setting a more specific direction in terms of what the country aims to achieve with electricity generation from cleaner sources. Natural gas is regarded as the cleanest and most efficient fossil fuel for power generation. LNG will play a critical role in meeting the Philippines’ power generation commitments, while becoming a major component in the country’s energy mix within the next decade.