Expert says government must back development of downstream natural gas sector

The Arroyo administration should ensure the development of the downstream natural gas industry in the country as more generating capacity is required as early as 2005, a power expert said.

In a presentation on prospects of the natural gas industry in the country, Anthony Barker, general manager of BG Philippines, a local subsidiary of BG plc (formerly British Gas), said that based on the projected Philippine Electricity Demand-Supply data, the electricity demand will increase from 8,000 MW in 2002 to 10,000 MW in 2005.

He said while reliable capacity is expected to remain flat, electricity demand will continue to rise in 2009 to about 15,000 MW.

Barker warned that the absence of a steady source of electricity would lead to a possible shortage of power in the next few years.

But Barker said the development of a downstream natural gas industry could be an answer to the looming electricity shortage problem.

Specifically, he said the development of the Sucat power plant could address the potential shortage in capacity. "A power plant anchor load at or near Metro Manila could spur the development of the downstream natural gas industry in Luzon," he said.

He said BG is committed to assist the government in this endeavor. "BG is excited at the prospects to extend its investment in the Philippine gas industry chain through its successful joint venture with First Gas Holdings Corp.," he said.

Recently, BG and First Gas announced that they would invest up to $1 billion in the next 10 years for the development of the downstream natural gas industry in the country. Of this amount, about $500 million will be used to bid and cover Sucat power plant. If the group wins, they expect the conversion of the oil-based to gas-fired power facility to be completed in 2005, in time to offset the shortage in the country’s power capacity.

"BG, the integrated gas major, seeks to add value through investment and management input in all aspects of the gas chain, from upstream, exploration and production activities, to final distribution to customers. The development in the Philippines is consistent with this strategy," Barker said.

According to Barker, BG is experienced in converting power plants like Sucat (a 400-MW oil-based power plant owned by the National Power Corp.) to gas-fired plants and the subsequent development of the downstream gas market. He said they plan to adopt a conversion model, which has been proven successful in Ireland, in converting the Sucat plant.