=== pep-2023-2050-vol2-section-a-page-012.pdf === President Ferdinand Marcos, Jr. witnessed the signing of the IEB Circular between DOE Sec. Raphael P.M. Lotilla and MENRE Chief Minister Ahod Ebrahim on 16 July 2023. Another significant policy is the Intergovernmental Energy Board (IEB) Circular on the Joint Award of petroleum SCs and COCs in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) between the DOE and the Ministry of Environment, Natural Resources, and Energy (MENRE) of BARMM. The milestone event, held on 06 July 2023, was witnessed by President Ferdinand Marcos, Jr. The IEB Circular operationalizes the provision of Republic Act No. 11054 or the Organic Law for the BARMM, for the implementation of the joint exercise of the power to grant rights, privileges, and concessions over the exploration, development and utilization of uranium and fossil fuels such as petroleum, natural gas, and coal in the territorial jurisdiction of BARMM. Oil and Gas The Malampaya Deep Water Gas-to-Power Project is the largest and only commercially producing gas field in the country. Since its commercial operation in 2001, Malampaya gas field has been the major supplier of natural gas of the five (5) power plants in Luzon (Ilijan1, Sta. Rita, San Lorenzo, Avion, and San Gabriel). With the Malampaya contract (SC No. 38) having concluded in February 2024, the government’s renewal is imperative to ensure a continued and uninterrupted supply by strengthening the exploration and development of petroleum resources in the country. Gas Sales Purchase Agreement (GSPA) ended in June 2022 1 2 Philippine Energy Plan === pep-2023-2050-vol2-section-a-page-013.pdf === The Renewal Agreement signed by President Ferdinand R. Marcos, Jr. on 15 May 2023 extended SC 38 for 15 years until 22 February 2039. This will allow for the continued production of the Malampaya gas field to ensure that the remaining gas reserves, estimated at 147 billion cubic feet (BCF), are further produced. On 15 May 2023, President Ferdinand Marcos, Jr. signed the Renewal Agreement of SC 38 on 15 May 2023. On photo with the President are (L-R) Chief Presidential Legal Counsel Juan Ponce Enrile, Executive Secretary Lucas Bersamin, House Speaker Martin Romualdez, DOE Secretary Raphael P.M. Lotilla and DOJ Secretary Jesus Crispin Remulla, among others. Aside from continuing the production operations, the SC 38 Consortium is required to conduct a minimum work program consisting of geological and geophysical studies and the drilling of at least two (2) deep water wells during the Sub-Phase 1 from 2024 to 2029 under the Renewal Agreement. The firm work program is designed to help unlock the potential of the existing gas field and nearby prospect areas to provide incremental production. Ratio Petroleum, the operator of SC 76, has also identified two possible petroleum plays within their contract block following the completion of the first phase of their work program in October 2020. The area is located in the northern side of the East Palawan Basin covering an area of 648,000 hectares (ha), with water depths ranging from 80 to 1,700 meters (m). Available seismic datasets show that the basin comprises a well-developed slope-to-basin channel system and its location can provide a potential for large structures and excellent reservoirs. On the other hand, Nido Petroleum Philippines Pty. Ltd., the Operator of SCs 6B and 54 proceeded with the site survey of drilling locations until the last quarter of 2022, which paved the way for the drilling of two wells from the fourth quarter of 2023 to the first quarter of 2024. For SC 6B, the Cadlao 4 appraisal well for the Cadlao oil field could lead to early oil production by the 1st quarter of 2024, with a potential volume of 6.2 million barrels of oil. Likewise, the drilling target for SC 54 located in the Northwest Palawan basin is the Nandino prospect, with a potential volume of 15 million barrels of oil. The successful development of the Nandino prospect will give way to the possible development and tie up with the existing two discoveries, namely Tindalo and Yakal. Vo l u m e 2 3 === pep-2023-2050-vol2-section-a-page-014.pdf === 2022 PRODUCTION 558.27MB 112.17BCF OIL 2.71MMB CONDENSATE GAS At present, 18 active SCs are being supervised and monitored by the DOE, 12 of which are in the exploration phase while six (6) are in the production phase (Table 1 and Figure 1). In 2022 alone, the three (3) producing oil and gas fields - SCs 14 and 38 in offshore Northwest Palawan and SC 49 in onshore/offshore South Cebu, generated 558.27 thousand barrels (MB) of oil, 112.17 BCF of gas, and 2.71 million barrels (MMB) of associated condensate. Table 1. Active Service Contracts (As of 31 December 2023) Exploration Phase Production Phase Operator 1 2 SC No. Nido Petroleum Philippines Pty. Ltd 6B NPG Pty. Ltd. 14C1* The Philodrill Corporation 14C2* Location Area (Has.) Northwest Palawan 108,146,587 Northwest Palawan 70,887,520 3 PNOC Exploration Corporation 37 Cagayan 4 Prime Energy Resources Development B.V. 38* Northwest Palawan 36,000 63,000 5 Forum Exploration, Inc. 40 Northern Cebu (Visayan) 340,000 6 China Int’l Mining Petroleum Company Ltd. 49* Southern Cebu (Visayan) 197,000 7 The Philodrill Corporation 53 Onshore Mindoro 43,515 8 Nido Petroleum Philippines Pty. Ltd. 54 Northwest Palawan 56,000 968,000 9 Palawan55 Exploration and Production Corp. 55 West Palawan 10 PNOC-Exploration Corp. 57 Northwest Palawan 712,000 11 Nido Petroleum Philippines Pty. Ltd. 58 Northwest Palawan 1,344,000 12 PNOC Exploration Corporation 59 Southwest Palawan 1,478,000 13 Forum (GSEC 101) Limited 72 Recto Bank 880,000 14 PXP Energy Corp. 74 Northwest Palawan 426,800 15 PXP Energy Corp. 75 Northwest Palawan 616,000 16 Ratio Petroleum Ltd. 76 East Palawan 648,000 17 SK Liguasan Oil and Gas Corporation 77 Cotabato 72,000 18 PNOC Exploration Corporation 79 East Palawan 932,000 *Producing In April 2022, SC 77 was awarded to SK Liguasan Oil and Gas Corporation. The prospective area covers 72,000 ha in the Cotabato basin in Sultan Kudarat, Maguindanao, and North and South Cotabato. SC 79, on the other hand, was awarded to PNOC EC in August 2023. The area located in the East Palawan basin covers 932,000 ha. As of December 2022, the country’s reserves are estimated at 3.74 MMB of oil, 273 BCF of gas, and 6.5 MMB of condensate. On the other hand, the undiscovered resources are at 195 MMB of oil, 4,268 BCF of gas, and 65 MMB of condensate with cumulative production of 80.67 MMB of oil, 2,623 BCF of gas, and 92.26 MMB of condensate (Table 2). Table 2. Petroleum Reserves, Resources and Production (As of December 2022) Classification Reserves Contingent Resources/Reserves1 Undiscovered Resources 2 Cumulative Production Oil (MMB) Gas (BCF) Condensate (MMB) 3.74 273.00 6.273 195.00 4,268.00 65.00 11,104.00 54,532.00 291.00 80.67 2,623.53 92.26 Notes: 1 Values are in-place volumes based on available information/data from PSCs; Estimates (2C-best estimates of contingent resources) of volumes drilled and discovered with no current plan of development. 2 Estimates of volumes (2U-best estimates of prospective resources) of mapped prospects and leads that have not yet been drilled or discovered. 3 Based on 23 barrels/million standard cubic feet (MMSCF) condensate to gas ratio 4 Philippine Energy Plan === pep-2023-2050-vol2-section-a-page-015.pdf === Figure 1. Philippine Petroleum Service Contract Map Vo l u m e 2 5 === pep-2023-2050-vol2-section-a-page-016.pdf === Plans and Programs In support of the global energy sector’s shift toward energy transition, fossil fuels remain a reliable source of energy. As such, the petroleum sector remains dedicated to fulfilling its roles and obligations to develop its domestic reserves through exploration, development, and utilization of its indigenous petroleum resources. Figure 2. Upstream Oil and Gas Roadmap Short Term 2023-2024 Increase potential resources with an additional 4.5 MMB1 - 15 MMB3 of oil and gas to 217 BCF3 Reserves Additional Discovery Drill at least 2 oil and 1 gas fields/prospects Produce 1.2 MMB crude oil and 220 BCF of natural gas Production 1C – Low estimate of Contingent Resources in-place 1U – Low estimate of Prospective Resources in-place 2C – Best estimate of Contingent Resources in-place 5 2U – Best estimate of Prospective Resources in-place 2 3 4 6 Philippine Energy Plan === pep-2023-2050-vol2-section-a-page-017.pdf === Medium Term 2025-2028 Long Term 2029-2050 Increase potential resources with additional 8.77 MMB2 -1,923 MMB4 of oil and 2.6 TCF2 and 5 TCF4 of gas fields/prospects Increase potential resources with an additional 1,436.5 MMB3 - 4,039 MMB4 of oil and 11. 7 TCF3- 24.3 TCF4 of gas fields/prospects Drill at least 2 oil and 4 gas fields/prospects Drill at least 6 oil and 6 gas fields/prospects Produce 15.9 MMB crude oil and 522.4 BCF of natural gas Produce 42.14 MMB crude oil and 4.6 TCF of natural gas Vo l u m e 2 7 === pep-2023-2050-vol2-section-a-page-018.pdf === The DOE with its critical role in energy supply security, wealth creation, and employment generation, will implement its roadmap for the upstream oil and gas sector in consonance with the attainment of the United Nations (UN) Sustainable Development Goals (SDGs) and energy trilemma. Specifically, the DOE will continue to work on providing energy security, energy equity, and environmental sustainability (Figure 2). The projections on reserves and production were based on the following considerations: MEDIUM - TERM RESERVES PRODUCTION LONG - TERM 1. Highest rank/mature prospect within the existing program or the target activities by active petroleum service contracts in the next 5 years. 1. Based on the projected commercial volume for oil ( ≥ 100 MMB) after applying 15% recovery factor (industry standards for oil) and gas ( ≥ 2,000 BCF) applying 80% recovery factor (industry standards for gas) 2. Based on tieback potential of existing/previous production wells 2. Based on tieback potential of existing/prev ious production wells Oil: 15 % Recovery Factor; Gas: 80 % Recovery Factor For the short-term action plans (2023-2024), the DOE aims to further strengthen exploration and development in the country and foresees an increase of potential resources by an additional of 4.5 MMB2 to up to 15 MMB3 of oil and 2173 BCF of gas. This can be achieved by drilling two (2) oil and one (1) gas fields/prospects. Moreover, the DOE aims to produce an estimated 1.2 MMB of crude oil and 220 BCF of natural gas as part of the sector’s action plan. The strategies for the medium-term (2025-2028) to strengthen exploration and development in the country include targeting an increase of potential resources of 8.77 MMB4 to up to 1,9235 MMB for oil and 2,6034 BCF and 5,0355 BCF for gas. The achievement of additional resources may be achieved by drilling two oil and four (4) gas fields/prospects. For the long-term, the forecasted drilling of six each for oil and gas fields/prospects will allow the entry of potential resources of 1,436.53 MMB up to 4,0395 MMB of oil and 11,686 BCF3 up to 24,2715 BCF of gas. Further, the DOE also aims to produce an estimated 15.9 MMB of crude oil and 522 BCF of natural gas for the mediumterm while an estimated 42.1 MMB of crude oil and 4,582.4 BCF of natural gas for the long term, including volume from Camago-Malampaya reserves and Malampaya East resources. These targets aim to further exploration and development and support the country’s direction towards achieving energy independence. As part of its policy-making responsibility, the DOE continues to issue policies to accelerate the exploration, development, and utilization of indigenous petroleum resources, simplify and clarify the implementation of SCs, and provide an enabling environment to attract more investments in oil and gas exploration. The relevant policies to be issued in the short-term include the following: • • • • • • DC providing guidelines on petroleum data declassification and free data access; DC providing guidelines for additional incentives to promote oil and gas exploration activities6; DC providing guidelines on the awarding of new petroleum service contracts (PSCS) through direct negotiation; Amendment of DC2014-08-0013 providing guidelines in the registration of all contracts and agreements entered into by the petroleum service contractors and coal operating contract operators; Amendment of DC2018-03-0006 or the omnibus rules and regulations governing tax-exempt importations for petroleum operations and coal operations to cover the validity of the taxexempt certificate (TEC); and, Amendment of DC 2007-04-0003 providing clarity on the DC for all transfers that may potentially affect the implementation of the SC. 1C – Low estimate of Contingent Resources in-place 1U – Low estimate of Prospective Resources in-place 2C – Best estimate of Contingent Resources in-place 5 2U – Best estimate of Prospective Resources in-place 6 An Act Granting New Incentives to Petroleum Service Contractors, and for This Purpose Amending Certain Sections of Presidential Decree 87, As Amended, Otherwise Known as "The Oil Exploration and Development Act of 1972" 2 3 4 8 Philippine Energy Plan === pep-2023-2050-vol2-section-a-page-019.pdf === To further stimulate the exploration and development of oil and gas resources, the DOE has proposed a project titled “Philippine Gradiometry and Seismic Geophysical Survey Project,” which aims to acquire new geophysical data to provide a comprehensive and in-depth analysis of the country’s underexplored sedimentary basins. This will enable the DOE and the prospective investors, from the upstream petroleum industry, to gather information for better understanding of petroleum prospectivity and geologic features within the coverage area that can lead to identifying potential new oil and gas fields in the country. For the medium- to long-term, as part of the upstream sector’s efforts on energy transition, exploration studies on other naturally occurring gases, such as hydrogen, will be undertaken by considering the acquired exploration techniques. Likewise, the skills and understanding on the petroleum reservoirs will be good inputs on the Carbon Capture and Storage (CCS) studies on finding good geological storage for carbon capture. Investment and Employment Opportunities The DOE aims to further strengthen the petroleum industry through the conduct of local and international roadshows under the PCECP. In March 2023, the DOE participated in the South East Asia Petroleum Exploration Society (SEAPEX) in Singapore to showcase the PCECP. Before the end of 2023, two roadshows were conducted in Calgary, Canada during the World Petroleum Congress in September 2023 and AAPG-International Conference and Exhibition in Madrid, Spain in November 2023 to attract potential investors in North America and Europe, respectively, to boost exploration and development of oil and gas in the country. The following investment incentives are offered under Presidential Decree No. 87 (PD 87) or the “Oil Exploration and Development Act of 1972”: • • • • • • • • • Service fee of up to 40.0 percent of net production; Cost reimbursement of up to 70.0 percent gross production with carry-forward of unrecovered costs; Filipino Participation Incentive Allowance (FPIA) grants up to 7.5 percent of the gross proceeds for SCs with minimum Filipino company participation of 15.0 percent; Exemption from all taxes except income tax; Income tax obligation paid out of government’s share; Exemption from all taxes and duties for the importation of materials and equipment for petroleum operations; Easy repatriation of investments and profits; and Free market determination of crude oil prices. The DOE is optimistic that awarding of new petroleum SCs will result in more drilling activities to augment domestic reserves and production of indigenous oil and gas in the country. In relation to this, the awarding of PSCs will not only generate significant investments for the country but will also provide employment opportunities to the Filipinos, which is pursuant to Section 31 of PD 87. Relative to the additional production targets in the sector’s roadmap, the total projected investment by the end of the planning horizon is expected to reach PhP145.2 billion for oil and PhP2.2 trillion for gas (Table 3). Table 3. Projected Investments from Oil and Gas Development and Production Oil Additional Production (MMB) Gas Investment (PhP Million) Additional Production (BCF) 2,941 Investment (PhP Million) Short Term 1.20 220 90,059 Medium Term 15.90 38,975 522 213,684 Long Term 42.14 103,295 4,582 1,875,674 Total 59.24 145,211 5,324 2,179,417 Note: Assumed offshore gas production at PhP 0.41/cft (development and production), which is adjusted based on inflation Source: Wall Street - http://graphics.wsj.com/oil-barrel-breakdown/ Vo l u m e 2 9 === pep-2023-2050-vol2-section-a-page-020.pdf === COAL The International Energy Agency (IEA) reported in December 20227 that the strains caused by the global energy crisis resulted in a spike in coal demand for power generation in the international coal market. Coal supplies, which is a third of global electricity generation, will continue to play a crucial role in industries, such as cement, iron, and steel until newer technologies are available.8 In the Philippines, coal remains an important fuel for electricity generation as it provides a reliable and stable source of energy. In 2022, coal accounted for almost 60.0 percent of the country’s power generation. As oversight, the DOE continues to supervise and monitor the 29 existing COCs, including COC 208 of Vintage-21 Coal Mining Corporation (located in Lingig, Surigao del Sur and Boston, Davao Oriental) which was awarded on 20 March 2023. To date, 20 COCs are in the development and production stage, while nine (9) are in the exploration stage (Table 4). The total coal production in 2022 reached 16.06 million metric tons (MMMT)9, with Semirara Mining and Power Corporation as the major contributor domestically. Meanwhile, coal consumption for the same period registered at 36.14 MMMT wherein fuel input for coal-fired power plants comprised 32.45 MMMT (89.8 percent), while cement plants and other industries (i.e., food, metals, and non-metallic, among others) accounted for the remaining 3.69 MMMT (10.2 percent). 2022 STATISTICS 16.06MMMT 36.14MMMT PRODUCTION CONSUMPTION Table 4. Active Coal Operating Contracts (As of 30 June 2023) Exploration Phase Development/ Production Phase Operator COC No. Location Semirara Mining and Power Corporation 5* Antique 2 Adlaon Energy Development Corporation 9* Cebu 2,770 3 PNOC-Exploration Corporation 41 Zamboanga Sibugay 6,000 4 Filipinas (Prefab) Systems, Inc. 68 Oriental Mindoro 8,000 5 Filipinas (Prefab) Systems, Inc. 78 Zamboanga Sibugay 4,000 6 A Blackstone Energy Corp. 93 Zamboanga Sibugay 1,000 7 D.M. Wenceslao and Associates, Inc. 116 Cagayan Valley 3,000 8 PNOC-Exploration Corporation 122 Isabela 9,000 9 D.M. Wenceslao and Associates, Inc. 123 Cagayan Valley 1,000 10 Lima Coal Development Corporation 125 Albay 1,542 11 Daguma Agro Minerals Inc. 126 South Cotabato & SultanKudarat 10,000 8 9 10 13,000 1,400 12 Samaju Corporation 128 Albay 13 Samaju Corporation 129 Albay 547 14 Sultan Energy Phil. Corp. 134 Sultan Kudarat & SouthCotabato 7,000 5,000 15 Great Wall Mining and Power Corp. 145 Surigao del Sur 16 Abacus Coal Exploration and Development Corp. 148 Surigao del Sur 7,000 17 Guidance Management Corp. 151 Negros Occidental 3,000 18 Lima Coal Development Corp. 153 Sorsogon 3,000 19 Titan Mining and Exploration Corp. 159 Davao Oriental 7,000 20 BBB Mining and Energy Corp. 173 Cebu 4,000 21 Titan Mining and Exploration Corp.** 166 Zamboanga Sibugay 4,000 22 Blackgem Resources & Energy Inc.** 169 Davao Oriental 6,000 23 Dell Equipment & Construction Corp.** 170 Saranggani & South Cotabato 10,000 24 MEGA Philippines Inc. 188 Sultan Kudarat & Saranggani 3,000 25 PNOC-Exploration Corporation 204 Zamboanga Sibugay 2,000 26 EFH Energy Tribe Corporation 205 Cebu 9,000 27 Sunwest Oil and Gas Incorporated 206 Albay 3,960 28 Grand Thermal Power Corporation 207 Agusan del Sur 7,000 29 Vintage 21 Coal Mining Corporation 208 Davao Oriental 4,000 *Producing **With application for conversion to development/production contracts 7 Area (Has) 1 Source: https://www.iea.org/news/the-world-s-coal-consumption-is-set-to-reach-a-new-high-in-2022-as-the-energy-crisis-shakes-markets Source: https://www.iea.org/fuels-and-technologies/coal Run of Mine Philippine Energy Plan === pep-2023-2050-vol2-section-a-page-021.pdf === The commercial operation of the first supercritical coal plant in the Philippines in 2019 - the 528.1-MW San Buenaventura Power Ltd. Co (SBPL) in Mauban, Quezon paved the way for the other supercritical coal-fired power projects to operate in pursuit of potentially reducing the impact of coal to the environment: • 351.8-MW plant in Masinloc, Zambales by Masinloc Power Partners Co. Ltd., which started its commercial operation in December 2022; and, 2 x 725-MW plant in Mariveles, Bataan by GNPower Dinginin Ltd. Co. (the two units commenced operation in December 2021 and October 2022). • Two (2) supercritical coal-fired power projects in Masinloc, Zambales (Top) and Mariveles, Bataan (bottom) supply baseload power capacity in Luzon As a result of the strengthened implementation of PCECP for coal, the DOE awarded the following COCs between 2021 and 2023: • • • • • COC No. 204 of Philippine National Oil Company Exploration Corporation or PNOC-EC (2 coal blocks in Malangas, Zamboanga Sibugay) effective 03 September 2021; COC No. 205 of EFH Energy Tribe Corporation (9 coal blocks in Asturias, Carmen, Compostela and Danao City, Cebu) effective 27 May 2022; COC No. 206 of Sunwest Oil and Gas, Inc. (9 coal blocks in Rapu-Rapu, Albay) effective 22 July 2022; COC No. 207 of Grand Thermal Power Corporation (7 coal blocks in Trento, Agusan del Sur and Bislig City, Surigao del Sur) effective 22 July 2022; and COC No. 208 of Vintage-21 Coal Mining Corporation (4 coal blocks in Boston Davao Oriental and Lingig, Surigao del Sur) effective 20 March 2023. Plans and Programs As highlighted in the sector’s roadmap (Figure 3), the target is to increase indigenous coal resources by the end of the planning horizon to contribute to the country’s energy requirements. For the planning period 2023-2050, the sector intends to achieve the discovery of additional resources by 110 MMMT coming from COCs and small-scale coal mining permits (SSCMPs). This will also be complemented with the production of 175 MMMT from the active and producing COCs. Figure 3. Upstream Coal Sector Roadmap Short Term Medium Term Long Term Additional Resources Discovery Increase resources by 60 MMMT from COCs and SSCMPs Increase resources by 5 MMMT from COCs and SSCMPs Increase resources by 45 MMMT from COCs and SSCMPs Production Produce 30 MMMT Produce 80 MMMT Produce 65 MMMT 2023-2024 2025-2028 Vo l u m e 2 2029-2050 11 === pep-2023-2050-vol2-section-a-page-022.pdf === With the iteration of coal as an important energy source towards a reliable and resilient energy system, the DOE will continue to pursue the issuance of policies to further mitigate the effects of coal mining, trading, transport, distribution, and utilization to the environment. • • • • Guidelines on Coal Trading, Transport, Distribution, and Utilization in the Philippines. The objective of the proposed policy is to strengthen the monitoring of coal trading, transport, distribution, and utilization, and to address the issues in the downstream coal sector. Guidelines and Procedures to Implement a Program that will Allow Small-Scale Coal Mining (SSCM) to address the current situation and conditions in the small-scale coal industry. Amendment of DC2018-03-0006 or the Omnibus Rules and Regulations Governing Tax-Exempt Importations for Petroleum and Coal Operations to cover the validity of the Tax-Exempt Certificate (TEC). Guidelines in the Registration of all Contracts and Agreements entered into by the COC Operators with Service Providers. Since coal remains an integral part of the country’s energy mix in the short-, medium- and long-term scenarios, the DOE will strategize how to source coal should there be another disruption in the coal supply by monitoring world market prices and major coal producers as part of the energy resiliency and security. There is a need to diversify the coal importation sources in order to adapt to the ever-changing supply and demand market. To further accelerate the PCECP for coal, the DOE will strive to accomplish these strategies in the short- term: • • • Attract more potential investors in the Philippine coal industry through the conduct of investment promotion activities; Award more COCs; and Accelerate the exploration, development, and production of indigenous coal resources in the country. In an effort to create a more sustainable future, the DOE is also looking into carbon capture, utilization, and storage (CCUS) technology to reduce environmental impacts by removing carbon dioxide (CO2) emissions from the utilization of coal in power generation and industrial processes. The Philippines participated in the Southeast Asia CCS Accelerator (SEACA) initiative in May 2023, which focused on the near-term commercial deployment of the CCS framework and roadmap. This is aligned with the activities under the ASEAN Forum on Coal (AFOC) that aims to develop guidance on regulations, identify policy gaps, and accelerate investment, among others. 2022 COAL RESERVES 2,366.7MMMT RESOURCE POTENTIAL 347MMMT POSITIVE RESERVES 315MMMT IN-SITU RESERVES 194MMMT PROBABLE RESERVES 386MMMT MINEABLE RESERVES Investment and Employment Opportunities As of 2022, the country’s 17 coal regions have total resource potential of 2,366.7 MMMT with the largest coal resource in Semirara Island, Caluya, Antique estimated at 550 MMMT. 12 Philippine Energy Plan === pep-2023-2050-vol2-section-a-page-023.pdf === The projected investment requirement for exploration activities of COCs that will yield additional resources in the planning period is about PhP5.62 billion. A higher investment requirement of PhP428.63 billion is expected from COCs under the development and production phase as this will contribute to additional coal production of 175 MMMT (Table 5). Table 5. Projected Investments on Coal Exploration Additional Resources (MMMT) Development and Production Investments (PhP Million) Additional Production (MMMT) Investments (PhP Million) Short Term 60.00 3,066 30.00 73,479 Medium Term 5.00 256 80.00 195,944 Long Term 45.00 2,300 65.00 159,205 Total 110.00 5,622 175.00 428,628 Notes: (a) Investment for exploration ranges from PhP 43.42 to PhP 45.85 per ton (b) In estimating investment requirements, the average (PhP 44.63) is used (c) The unit investment cost is adjusted based on inflation Source: APEC Energy Demand and Supply Outlook 6th Edition B. DOWNSTREAM INDUSTRY NATURAL GAS INDUSTRY Natural gas is considered as the cleanest among fossil fuels having only one (1) carbon atom10, thus it can contribute to the country’s long-term goal of attaining a low carbon future. In 2001, the Philippine natural gas industry progressed with the discovery of Malampaya, and with its commercial operation and production, the energy supply has been augmented for the next two (2) decades. With the current Malampaya field’s projected depletion by 2027 and with the end of Service Contract No. 38 (SC 38) by 22 February 2024, President Ferdinand Marcos, Jr. signed the Renewal Agreement on 15 May 2023 extending SC 38 for another 15 years (until 22 February 2039). The renewal is seen to be an enabler in fully maximizing Malampaya’s remaining gas reserves and a move to design a work program that will seek the potential of other prospective areas nearby. Other identified potential basins that indigenous gas can be explored will take a minimum of 20 years from the exploration to commercialization phase. The existing gas power plants will also see the end of its gas sales purchase agreement (GSPA) with Malampaya by 2024. In 2022, natural gas accounted for 4.2 percent of the country’s total primary energy supply (TPES). In terms of power generation, it supplied 16.0 percent of the country’s electricity needs, specifically fueling five (5) existing gas-fired power plants11 with a combined capacity of 3,730.6 megawatts (MW). The shift in focusing supply to liquefied natural gas (LNG) is a result of Malampaya’s anticipated depletion and the realization of ensuring supply continuity for the large natural gas plants situated in Southern Luzon providing power to the Luzon grid. The expiration of Ilijan’s GSPA in June 2022 with Malampaya resulted in the loss of 1,200 MW capacity in the Luzon grid leaving four (4) gas plants utilizing Malampaya gas. As part of the DOE’s efforts to diversify the energy resources, the country welcomed the entry of two (2) reception and regasification facilities for imported LNG by Linseed Field Corporation and First Gen Corporation. Their entry will complement domestic natural gas and provide a flexi fuel supporting variable renewable energy (VRE), as well as reduce greenhouse gas (GHG) emissions. The characteristics of natural gas make it ideal as an energy transition fuel that will bridge the growing needs of the country, while more renewables (such as solar, wind, and hydro projects) are developed together with an energy storage system (ESS). Relatedly, to further its role in energy transition, methane abatement measures (in equipment and operational techniques) including low-carbon hydrogen production with carbon capture, utilization, and storage (CCUS) must be in place. 10 11 Compared to solid and liquid with six (6) and above count of carbon atoms per molecule Avion (130.8 MW), Ilijan (1,436.5 MW), San Gabriel (442.9 MW), San Lorenzo (586.5 MW), and Sta. Rita (1,133.9 MW). Installed capacities as of December 2022. Vo l u m e 2 13