The Ukraine-Russia war has exposed the vulnerability of the Philippines to geopolitical tensions. Short of oil and gas discoveries, the nation has time and again capitulated to the vagaries of oil prices in the world market.
For several years, the government and the private sector have acknowledged the need to find a new Malampaya, a new oil and gas discovery that could help secure the country’s fuel requirements.
Oil and gas exploration slowed down amid geopolitical issues and tax disputes.
Today, the supply from the Malampaya project in northwest Palawan, commissioned in 2001, is facing gas depletion leading to supply constraints to power plants in Batangas.
Malampaya has proven reserves of about 2.7 trillion cubic feet (TCF) of natural gas and 85 million barrels of condensate, located some 3,000 meters below sea level. It is the most significant gas discovery in the Philippines to date.
The actual consumption of Malampaya gas reached 2.47 TCF as of June, while the remaining recoverable reserves from July to February 2024 are 191 billion cubic feet (BCF). The estimated remaining recoverable reserves after February 2024 are about 150 BCF.
There is optimism the Marcos administration will be able to revive investor interest in oil and gas exploration in the country, which has been lagging compared to other countries in Southeast Asia.
The Philippines ranked 9th in the region in terms of exploratory drilling, according to the 2021 IHS report.
“We are also looking at the areas that are clearly undisputed. And we are looking at the near fields around Malampaya. And that’s why the President has indicated that he wants to have all legal and policy issues that have been a sword of Damocles over investments in the upstream, clarified fully,” says Energy Secretary Raphael Lotilla.
He said the new administration is “on track towards the resolution on a number of this uncertainty.”
“One of the major focus of the President is on the upstream natural gas development of our indigenous resources. He wants to ensure that the policy environment for investors in the upstream is going to be one, certain; two, stable; and three, absolutely clear,” Lotilla said.
To ensure that the policy recommendations from the DOE to the President and Congress are fully grounded on the Constitution, the laws of the land, and sound legal principles, Lotilla created an Advisory Panel composed of distinguished senior legal advisors from the private sector who will advise the DOE on energy law reform and various energy-related legal matters.
These advisors from the private sector are retired chief justices Artemio Panganiban and Reynato Puno.
Panganiban and Puno will co-chair the DOE’s Law and Energy Advisory Panel and serve as private citizens.
The legal responsibility and accountability will continue to reside in the DOE.
Lotilla said the functions of the Law and Energy Advisory Panel are focused on advising the DOE on several energy-related reform initiatives and legal matters, including the promotion of indigenous as well as low-carbon sources.
The proposed initial discussions will cover legal issues involving the country’s upstream oil and gas sector, including the country’s most significant gas-to-power initiative to date―the Malampaya-Camago project.