A Philippine power supplier, First Gen Corp. (FGEN), has placed an order with Shell PLC for approximately 5.46 million cubic feet of liquefied natural gas (LNG) for commissioning activities. The cargo will be delivered by Shell Eastern Trading Pte. Ltd., a Singapore-based unit of the British company, by September, as stated in FGEN's filing with the Philippine Stock Exchange.

FGEN also announced that its floating storage and regasification unit has been successfully moored and secured at the LNG import terminal in Batangas province. This terminal is among the first to be completed out of the seven LNG terminal projects in the Philippines. FGEN operates four gas-fueled power plants with a combined capacity of 2,017 megawatts, which rely on the Malampaya field. However, the field's output has been depleting.

The output from the Malampaya field, located offshore Palawan island, has been consistently declining since 2019. According to the Philippine Department of Energy (DOE), it fell from 155.49 billion standard cubic feet (Bscf) in 2019 to 113.61 Bscf in 2022. Shell had previously announced the completion of the sale of its 45 percent operating stake to local company Prime Infrastructure Capital Inc. on November 1, 2022.

To address the fuel supply gap caused by increasing energy demand, the DOE has approved seven LNG import facility projects. On June 2, the completion of two of these projects was announced, including the one by FGEN. FGEN believes that its LNG terminal will contribute to the energy security of the Luzon Grid and the Philippines, serving the natural gas requirements of existing and future gas-fired power plants.

AG&P International Pte. Ltd., the owner of another completed terminal, announced on April 27 the arrival of the Philippines' first-ever LNG supply from abroad. AG&P had signed a 15-year deal in 2022 with the Abu Dhabi National Oil Co. to supply LNG. This supply was used to restart the Ilijan combined cycle plant in Batangas province, which had ceased operation in June 2022 due to the halt in fuel supply from the Malampaya field.

The introduction of LNG diversifies the Philippines' energy mix and provides flexibility in meeting the country's demand, according to the DOE. The agency projects an annual growth rate in peak power demand of about seven percent from 2020 to 2040. To meet this demand, the country aims to raise its installed capacity more than five times, from 22,317 MW in 2019 to 114,601 MW in 2040, as outlined in the "Power Development Plan 2020-2040" by the DOE.

Coal has historically been the Philippines' primary power source, accounting for 62,052 gigawatt hours (GWh) of the national gross power generation in 2021. However, the government has imposed a moratorium on the issuance of licenses for coal-fired plants since October 2020. In 2021, the government joined the COP26 global pledge to phase out coal power by the 2040s. In terms of natural gas, it contributed 18,675 GWh in 2021, surpassing oil but still behind renewable sources at 23,771 GWh.