Ecozone firms seen keen on switching to natgas

LOCAL manufacturing and agro-industrial firms in special economic zones (SEZs) are open to shifting to natural gas (natgas) for heat-intensive activities, according to a study published last month on Elsevier.

Forty firms out of the 105 entities surveyed in 2019 considered the compatibility of machines and equipment as their top consideration in switching to natural gas, according to the journal article “Gauging the market potential for natural gas among Philippine manufacturing firms.”

“This gives us an indicator that the use of natural gas is more feasible among firms that operate boilers and other heating equipment in their production process. Firms which mainly depend on electricity for their operations are unlikely to shift to natural gas,” the study said.

The results are based on an online survey conducted among manufacturing and agro-industrial firms located in SEZs under the Philippine Economic Zone Authority in the third quarter of 2019. These zones are in Laguna, Batangas, Cavite, Cebu, Pampanga, Benguet, Bulacan, and Metro Manila.

“Most of these firms are using the more expensive diesel as fuel for their burning or heating process [but using] natural gas as fuel is cheaper. [Natural gas] can potentially lower the cost of their product (or) whatever they’re producing,” Majah-Leah V. Ravago, the lead author of the study and an associate professor of economics at Ateneo de Manila University, told BusinessWorld last week.

The study’s findings also showed that 18 firms considered price and 17 firms pointed to environmental concerns as their top reasons for considering natural gas in their operations.

The study said its ideal sample size for its survey is 91.

The report also identified SEZs in Metro Manila’s Pasay City as having “very high” chance of switching to natural gas, while ecozones in Carmona, Cavite; Calamba, Laguna; and Bauan and Malvar, Batangas have “high” likelihood of switching to the fuel source.

“While we cover only manufacturing and agro-industrial firms in ecozones, the results indicate that markets for natural gas outside of electricity generation exist… From a policy point of view, our results suggest a potential growing market for LNG (liquefied natural gas) in the Philippines in addition to the requirement to fill the gap due to the depletion of Malampaya [gas field],” it read.

According to the report, SEZ exports accounted for around 85% of the country’s total exports in the first quarter this year.

Ms. Ravago said that in order for the Philippines to position itself as an LNG hub in Asia and attract investors, it must find other uses for the fuel aside from electricity generation.

“Based on what we’ve read, the Philippines only uses natural gas for electricity generation because we are just [getting it from] our indigenous source [or the Malampaya gas field]. But other countries like Japan are importing LNG and using it to heat their homes,” she explained.

The published study is supported by the Gas Policy Development Project, and funded by the US Department of State and the University of the Philippines’ Emerging Interdisciplinary Research Program.

The authors of the study said that the funding entities were not involved in the preparation and writing of the article.

The country’s LNG industry is still in its infancy stage. This as the reserves of the offshore Malampaya field is set to be completely depleted in 2027, based on estimates from the Energy department.

Still in its infancy stage, the country’s LNG industry relies solely on the reserves at the Malampaya offshore gas field, which the Energy department estimates to be completely depleted by 2027.

In March, the Department of Energy (DoE) urged investors to consider LNG investment opportunities in the country as it promoted the Philippines as an LNG hub that can serve the energy needs of Southeast Asia.

This comes a few months after DoE Secretary Alfonso G. Cusi tagged LNG imports as the best option to address the country’s power needs in the coming years. — Angelica Y. Yang

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