Natural Gas (Philippines)
Natural gas is the Philippines’ primary domestic fossil fuel and its designated transition fuel toward renewable energy. RA 12120 (§2(b)) explicitly declares that “natural gas shall serve as a transition fuel toward the adoption of renewable energy.” The country’s entire domestic gas supply comes from one source — the Malampaya gas field off Palawan — which is expected to be depleted by 2039. [RA 12120, §2(b)(h), 2025]
Domestic Supply: Malampaya
The Malampaya gas field (Service Contract 38) is the Philippines’ sole significant domestic gas resource. Key facts [PEP 2023-2050 Vol. II, Overview, 2023]:
- Remaining reserves: ~147 billion cubic feet (BCF) as of 2023
- Contract: SC 38 renewed May 15, 2023 by President Marcos Jr. for 15 years (to ~2039)
- Supply: Powers approximately 2,700 MW of Luzon gas-fired generation (Ilijan, Sta. Rita, San Lorenzo)
- GSPA expiry: The Gas Supply and Purchase Agreement for Malampaya expired June 2022; power plant operators are on bridge arrangements
Malampaya depletion is the primary driver of both the LNG import program and the urgency behind the nuclear and offshore wind pipelines in PEP 2023-2050. See Malampaya Gas Field for full details.
LNG Import Projects
The DOE has approved multiple LNG import terminal projects to substitute Malampaya gas after depletion. As of 2023, seven projects are in various stages of development with a combined nameplate capacity of approximately 21.98 MTPA. See LNG Imports as Transition Fuel for the project pipeline and status.
Regulatory Framework: RA 12120
RA 12120 (Philippine Natural Gas Industry Development Act), signed January 8, 2025 (effective ~January 23, 2025), is the first statutory framework governing the Philippine Downstream Natural Gas Industry (PDNGI). Prior to RA 12120, the PDNGI was governed exclusively by DOE circulars (DC2017-11-0012 and DC2024-01-0007) issued under RA 7638 general authority.
Key structural features of RA 12120 [RA 12120, §2–§23, 2025]:
- DOE as lead agency with exclusive regulatory authority over PDNGI
- Two permit tracks: Own-Use Permit (exclusive capacity) and TPA Permit (third-party access) — no franchise required
- Supply priority (§23): Indigenous → aggregated → pure imported LNG; DOE mandates minimum indigenous percentage in aggregated blends
- Aggregation (§17): DOE-designated aggregators may blend domestic and imported gas; only blended gas with indigenous component qualifies for aggregated pricing and VAT exemption
- EVOSS (§18): All permits processed through the Energy Virtual One-Stop Shop
- Renewable gas (§5(q)): DOE develops national renewable gas strategy including hydrogen and ammonia with NREB
For the detailed regulatory framework (permits, TPA, participants, IRR), see Philippine Downstream Natural Gas Industry (PDNGI) .
Fiscal Treatment
Under RA 12120 §38 [RA 12120, §38, 2025]:
| Gas Type | VAT Treatment |
|---|---|
| Indigenous natural gas | Exempt |
| Aggregated gas — indigenous portion only | Exempt |
| Pure imported LNG | Subject to VAT (not exempt) |
| Power generated from indigenous/aggregated gas | Exempt |
The VAT exemption structure directly incentivizes domestic production and indigenous gas blending.
Renewable Gas
RA 12120 explicitly brings hydrogen, ammonia, and other renewable gases under DOE’s jurisdiction (§5(q)). DOE must develop a national renewable gas strategy in coordination with NREB. This positions the PDNGI regulatory framework as the eventual home for the emerging green hydrogen sector. See Hydrogen and its Derivatives for the current hydrogen policy landscape.
IRR
The IRR of RA 12120 — DC2025-04-0005 — was issued March 26, 2025, effective ~April 10, 2025. It repealed DC2024-01-0007. See Digest: DC2025-04-0005 — IRR of RA 12120 (Philippine Natural Gas Industry Development Act) for the full regulatory framework.