State Policies and

Energy Markets

VINCENT S. PÉREZSecretary

Department of EnergyREPUBLIC OF THE PHILIPPINES

OUTLINE

• State of the Philippine energy sector

• Government thrusts for energy development : Sustainability

– Natural Gas

– Development of New and Renewable Energy (NRE) Sources

– Power Sector Reform

– Cooperation and collaborative actions with ASEAN neighbors

STATE OF PHILIPPINE ENERGY SECTOR

PRIMARY ENERGY MIX Y2000

Imp. Oil45%

NRE30%

Geo8%

Hydro5%

Coal2%

Imp.Coal10%

Total Energy: 249.5 MMBFOE Self-Sufficiency Level: 45%

PROJECTED GENERATION MIX Y2002

Imp. Oil5%

Local Coal3% Nat. Gas

31%

Imp. Coal31%

Hydro13%

Geo17%

51,600 GWhSelf-sufficiency Level: 64%

PHILIPPINE ENERGY THRUSTS

ENERGY THRUSTS

• Stable, secure & efficient energy supply

• Fair & reasonable energy prices

• Consumer welfare enhancement

• Energy efficiency & conservation

• Environmental friendly energy sources

MALAMPAYA DEEP WATER GAS-TO-POWER PROJECT

Depth

0

45 m

850 m

Wells

Two 16” wet gas

flowlines

Offshore Platform

24” dry gas

pipeline

Batangas onshore gas processing

plant

Subsea mainfold

2,700 MW

Power Plants

MALAMPAYA DEEP WATER GAS-TO-POWER PROJECT

A 504-km subseapipeline will bring Malampaya natural gas from offshorePalawan to Luzon

SUBSEA PIPELINE

FINANCIAL IMPACT OF MALAMPAYA GAS PROJECT

• Govt Revenues (20 yrs) US$ 8.1 B• Savings :

– Forex US$4.5 B– Electricity 2.2

B– Environmental 1.1

B

This corridor is composed of more prospective areas near the Malampaya gas field

THE CORRIDOR OF FOCUS

THE EMERGING NATURAL GAS INDUSTRY

Malampaya Gas to Power ProjectIlijan

Sta Rita

San Lorenzo

Other Power Plants

Ind’l. Plants

Transp. Sector

CNG/LNG Tankers

Gas Receiving Plants

Gas Wells

Gas Plants

Trans-ASEAN Gas Pipeline

Bldgs.Distribution Cos.

Traders / Marketers

Renewable Energy:

GEOTHERMAL POWER DEVELOPMENT

PACIFIC RING OF FIRE

GEOTHERMAL POWER IN THE PHILIPPINES

• Installed capacity of 1,931 Mwe

• Leyte Geothermal Field - world’s largest geothermal plant for wet steam

• 2nd largest user of geothermal energy resources for power generation

• Potential of 730 MW from 11 explored prospect areas

112.5 MW Tongonan I Power Plant

1 x 60 MW Mahanagdong B Geothermal Power Plant

WITHIN THE LARGEST GEOTHERMAL FIELDS

NEW RENEWABLE ENERGY DEVELOPMENT

Wind Energy

Solar Energy

Ocean Energy

WIND POWER POTENTIAL SITES

Philippine wind energy potentialcould be as much as 70,000 MW , with high potential wind energyutilization in the following areas:

Ilocos, Mt. Province, Cuyo Is.,Batanes, Catanduanes, Tagaytay,Lubang and Cabra Is., W. Batangas,Guimaras, Masbate, NE NegrosOccidental and Palawan

• Located in Northern Philippines

• Project cost of US$ 54 Million

• Largest wind farm in Southeast Asia

• Installation of 56 units of 750 kW wind turbine generators

40 MW WIND FARM

Translating Goals to Strategies

• Large-scale utilization of NRE sources

• Promotion of energy efficiency and conservation

• Adoption of environment energy systems; and

• Establish synergy between energy development & environmental concerns

INTEGRATED ENERGY-ENVIRONMENT APPROACH

POWER SECTOR REFORMS

MAJOR FEATURES OF THE POWER REFORM ACT

• Privatization of National Power Corporation generating assets

• Creation & privatization of Transmission Company (TRANSCO)

• Creation of Power Sector Asset and Liabilities Management Corporation (PSALM)

• Wholesale Electricity Spot Market

NEW POWER STRUCTURE

• Creation of several Gencos clusters

• Unbundling of electricity tariffs for transparency

• Opening up of high voltage transmission lines for easy access of distributors and large consumers

• Opening up of distribution lines for competitive consumers

COLLABORATIVE ACTIONSIN ASEAN . . .

ASEAN PLAN OF ACTION FOR ENERGY COOPERATION

• Interconnection of energy infrastructure

• ASEAN Power Grid

• Trans-ASEAN Gas Pipeline

• Economic integration

–Regional sustainability

–Supply security

MALAMPAYA’S LINK TO TRANS-ASEAN GRID

• Vast energy potential in various energy sources

• New laws and policies promulgated

• Government’s firm commitment to energy development and industry deregulation

• Economic viability of energy-related projects with 5% to 6% p.a. electricity demand growth

WHY IS PHILIPPINE ENERGYSECTOR ATTRACTIVE?

THANK YOU!

www.doe.gov.ph