Latest look into the country’s oil and gas industry
In today’s economy, oil and gas are vital resources. They generate energy to power critical facets of the economy, such as transportation and electricity. Oil is also an important material to create products like plastics and chemicals. Thus, the stability of the oil supply, as the Department of Energy (DoE) said, is “of paramount importance to any economy.”From 2000 to 2019, the contribution of oil and natural gas, along with coal and condensate, to the country’s overall economic activity grew from 0.04% to 0.46%, according to the Philippine Statistics Authority.But oil and gas are considered unsustainable sources. For instance, the Malampaya gas field — the country’s major source of natural gas — is projected to be depleted by 2027, while its service contract is set to expire in 2024. Yet, the DoE is seeking to reach energy independence by 2040.Data from the DoE’s Philippine Energy Plan (PEP) 2020-2040 stated that the total petroleum reserves of the country comprise an estimated 68.7 million barrels (MMB) of oil, 637 billion cubic feet (BCF) of gas, and 27.9 MMB condensate as of June last year.In terms of production, the Galoc field in Northwest Palawan and Algeria field in onshore Cebu produced a total of 700,115.83 barrels (BBLs) of crude oil in 2020, with the former contributing 695,247 BBLs and the latter with 4,869 BBLs.Meanwhile, the country’s production of natural gas was at 141,732 million standard cubic feet (MMSCF) in 2020. The total consumption was 133,606 MMSCF, 98.8% of which was utilized by the power sector.According to recent oil supply/demand report by the DoE, crude oil stock was at 342 million liters (ML) and there were 2,077 ML of finished petroleum products recorded (biofuels not included) as of end-June this year.The country’s crude oil imports were at 2,493 ML in year-to-date (YTD) June 2022, 105.5% more than the 1,213 ML in YTD June 2021. The DoE said this is due to the nil crude oil imports in the first quarter of the previous year because of the economic shutdown of the refinery.These crude oil imports in the first half of the year were 100% sourced from the Middle East. Saudi Arabia accounted for 56.79% with 1,416 ML, making it the major crude oil supplier to the country. The United Arab Emirates (UAE) followed with a 22.59% share in crude oil imports, then Iraq with 17.42%, and 3.2% from Qatar.Meanwhile, the country has 10,209 ML total imported petroleum products in the first half of 2022, up by 1.01% from the 10,107 ML in YTD June 2021.Diesel oil was the top imported product with 4,297 ML. Gasoline came in second with 2,552 ML, followed by liquefied petroleum gas (LPG) with 1,544 ML. Imports of fuel oil and avturbo were at 1,544 ML and 563 ML, respectively.China was the top finished petroleum products supplier in the country in 2021. But due to its prior plan to suspend oil export, local oil companies imported mostly from South Korea and Singapore, with respective shares of 34.08% and 20.09%. China’s share in imports went down to 11.74%.Refinery production output also increased in YTD June 2022 by 100% to 2,686 ML from 1,284 ML in YTD June 2021.As travel restrictions became less strict this year, driving economic activity, the demand for petroleum products increased by 9.6% to 13,256 ML in YTD June 2022.Diesel oil topped the product demand mix with 42.1%, up by 6.5% compared with YTD June 2021 figures. Gasoline demand increased by 8.1%, now with a 27.2% share. LPG followed with a 12.1% share. Avturbo demand rose by 99.9%, now accounting for 6.2% in the demand mix. Then, fuel oil has 4.7% in the mix, growing by 11.7%. Kerosene’s share was at 0.3%, which was a 17.5% decrease.Pilipinas Shell Petroleum Corp., Petron Corp., and Chevron — the major oil firms in the country — have 40.77% market share of the total demand. The remaining 59.23% were gotten by other industry players and end-users who imported directly for their own needs.
RoadmapsIn the PEP 2020-2040, the DoE is seeking greater energy independence for the country by 2040.“The DoE recognizes the significant contribution of indigenous conventional energy in providing the energy and power requirements of the Filipinos, supporting economic growth, and reducing dependence on energy imports. Hence, the DoE is continuously promoting the exploration, development, and production of upstream oil, gas, and coal in the country in support of the sector’s goal to reach greater energy independence by 2040,” the department said in the PEP.As per the roadmap for the upstream oil and gas sector laid out in the PEP, it aims to increase reserves and hence seeks to “aggressively pursue” awarding of new service contracts (SCs) as well as discovering new oil and gas field soon. Oil reserves are targeted to increase from 48.7 MMB in 2022 to up to 116 MMB before end-2040. It is also aimed for gas reserves to attain up to 5.9 trillion cubic feet (TCF) by 2040.The DoE also anticipates the drill of six oil prospects over the Northwest Palawan Basin and five gas prospects in the Northwest and Southwest Palawan Basins between 2023 to 2040. Potential recoverable reserves of up to 67 MMB of oil and 3.5 TCF of gas are expected from these prospects.“The DoE will continue to supervise the SCs and monitor the target total production of 66 MMB crude oil and 3.5 TCF of natural gas by 2040,” it also noted.Meanwhile, without the indigenous replacement from Malampaya’s natural gas supply, the DoE concentrates on importing liquefied natural gas (LNG) with the development and operation of LNG receiving facilities. Applications of seven LNG import terminal projects have so far been approved by the DoE.“This strategy not only introduces a new industry, but also stabilizes the country’s natural gas supply that ensures the continued operation of the existing power plants being supplied by the Malampaya,” the DoE said.The department also mentioned in the PEP that natural gas would fuel the more flexible plants, which would serve as support to renewable energy sources.As stated in the PEP 2020-2040, under the clean energy scenario, the country targets to grow the share of renewable energy in its power generation mix to 35% by 2030 and 50% by 2040. — Chelsey Keith P. Ignacio