The Philippines may be forced to rely heavily on dirty coal energy to combat a looming crisis resulting from the depletion of its only natural gas reserves in the Camago-Malampaya field off northern Palawan.
This is how US-based analyst Gregory Poling, a senior fellow at the Center for Strategic and International Studies (CSIS) and director of its Southeast Asia Program and Asia Maritime Transparency Initiative (AMTI), sees the future of energy production in the Philippines.
In a roundtable discussion with Palawan media on Saturday, Poling pointed out that the Philippines has no means to replace the natural gas being produced by Malampaya that currently supplies electric power to most of Luzon, because of its inability to access the Reed Bank in the wake of its territorial dispute with China.
The country’s lone gas field produces around 146 billion cubic feet of gas per year and supplies around 45 percent of Luzon’s energy needs.
With the expected depletion of its reserves by 2027, the country is predicted to face a huge energy supply gap that translates to some 12 to 14 hours of rotating brownouts every day in the Luzon grid.
There are other promising oil and gas reserves, though, such as the Reed Bank (locally known as Recto Bank), located northwest of Palawan, which the 2016 ruling of the international tribunal at The Hague affirms as part of the PH’s exclusive economic zone (EEZ), that could be exploited to produce gas for the next few years.
However, the longstanding territorial dispute between the Philippines and China over the West Philippine Sea is preventing companies from investing and conducting oil exploration in these waters.
Even with outgoing president Rodrigo Duterte’s lifting of the six-year ban on WPS oil exploration in 2020 and the signing of the 2018 Memorandum of Understanding (MOU) on joint maritime oil and gas explorations with China, the Philippines still faces threats and harassment from China in the disputed area, which also makes PH explorations more difficult to execute.
Alternative energy resources
Poling believes the country may have to import liquefied natural gas (LNG) to close the energy gap or turn to China to build polluting plants that even Beijing has avoided building domestically.
“The Philippines has two options: massively importing LNG or turning back to coal, and the only country willing to build coal plants is China,” he said.
China has the largest coal power plant in the world, the Datang Tuoketo power station, and is responsible for more than half of the new coal power stations built globally in 2021. This, despite Chinese president Xi Jinping’s pledge to stop building coal plant projects abroad.
At present, there are still deals that China has signed to build coal-fired power plants in neighboring countries such as Vietnam and Indonesia.
Poling said that the crisis caused by the lack of energy produced locally gives China a lot of power in its fight with Manila and in keeping its military grip on the West Philippine Sea.
Coal plants in the Philippines
Since 2017, no new coal power plants have been built because of community protests and the Supreme Court ruling that voids power supply agreements.
The Department of Energy (DOE), later on, issued a moratorium to halt the building of new coal-fired power plants in the country but allowed projects that have already existed in the industry.
Despite this moratorium being in place, several companies are still bidding to mine coal blocks in the south.
Poling expects the moratorium to be challenged as the administration shifts from Duterte to Ferdinand “Bongbong” Marcos Jr.’s on June 30, and as Filipinos look forward to what Marcos can offer as a solution to the energy crisis .
“The Philippines is in a much worse place than it was six years ago and if we don’t implement policies necessary in the next six years, it will probably be too late,” Poling said.