Malampaya gas field contract extension boosts Philippines’ domestic LNG production

This poses downside risks for LNG imports to the Philippines. 

The extension of the Malampaya gas field contract will drive the Philippines to continue relying on its domestic natural gas production, a report noted. 

This will likely pose downside risk for liquefied natural gas (LNG) imports to the market, the BMI Country Risk & Industry Analysis also reported. 

The Philippine government moved to extend the Malampaya gas field contract for 15 years to 2039 from the initial 2024 expiration. 

Read more: Philippines renews Malampaya service contract for 15 years

This will allow operators to drill new wells and seek new gas reserves to increase domestic production. 

“This will aid the market's prospects for gas-fired power generation, and place downside risks on the market's liquified natural gas (LNG) imports,” the BMI report read in part. 

“Our Oil & Gas team expects that the Philippines' LNG infrastructure expansion will not grow at an unprecedented rate, and the gas-fired power sector will remain dependent on domestic natural gas production.”

Malampaya currently accounts for about 97.5% of domestic gas production and supplies feedstock for 3,211 megawatts of gas-fired power plants across Batangas province. 

“In the event that more gas production comes online, we believe it will provide a boost to the gas-fired power sector and maintain the baseload power generation from these power plants,” the report also noted. 

“We expect gas-fired power generation to remain a key technology in the Philippines' power mix, contributing about 19% to the mix over the coming 10 years, behind coal's 58% and slightly ahead of non-hydropower renewables' 15%.”