LNG’s toehold threatened in Philippines

Source:Reuters Published: 2015-11-25 18:33:01

Cheap coal poses challenge to country’s energy goals


The Philippines is set to import liquefied natural gas (LNG) for the first time in 2016 as it bids to replace fast-fading local gas supplies, but cheap coal is blowing off course the country's vow to lift the use of cleaner fuels.

With 100 million people and one of the world's fastest-growing economies, the country aims to double its power generation capacity by 2030, hoping to put an end to daily blackouts that crippled its economy in the 1990s.

But despite government support for gas, a rash of approvals for coal-fired plants is already set to push coal's share of power generation up sharply to more than 50 percent by that time, while gas' share may dip to 15 percent.

A Philippines lawmaker conceded it is too early to say when legislators will call time on new coal plants.

"It presents a great challenge, especially for us in Congress," said Reynaldo Umali, who heads the committee on energy at the House of Representatives.

This type of dilemma is echoed throughout Asia, where more than 500 coal-fired plants are on the drawing board, spurred by coal's low cost and availability, while LNG needs billions of dollars for infrastructure to receive and store imported gas.

"Many countries and regions in Asia will remain reliant on coal for power generation over the coming decade," said Georgina Hayden, senior energy and infrastructure analyst at BMI Research.

The Philippines wants to roughly double the share of natural gas in its power generation mix to up to one-third by 2030, evenly balanced with coal and renewables.

Adding impetus to its plan is the expected depletion by 2024 of the Malampaya gas field, which accounts for all of the country's gas supplies. Despite ongoing efforts to discover reserves elsewhere in the world, buying LNG overseas is the immediate option.

Australia-listed Energy World Corp Ltd expects to switch on the Philippines' first power plant fired by imported LNG some time next year, after delays to the original December 2014 start-up.

Reuters

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