Philippines finds new gas reserve as Malampaya field nears depletion

Philippines has announced a significant new natural gas discovery near its only producing offshore gas field, which could boost the country's rapidly depleting domestic energy reserves.

President Ferdinand Marcos Jr. announced on Monday that approximately 98 billion cubic feet, or 2.8 billion cubic metres, of natural gas had been discovered near the Malampaya gas field off the coast of Palawan. The newly discovered resource is about five kilometres east of the existing field and could power an estimated 5.7 million households for a year.

The discovery comes at a critical time for the Philippines, which has some of Southeast Asia's highest energy costs and growing concerns about energy security. The Malampaya field currently supplies roughly 40% of the power needs of Luzon, the country's main island, but production is expected to fall sharply and possibly cease within the next few years.

President Marcos stated that the find was the first new gas discovery near Malampaya in more than a decade and could indicate the presence of additional reserves in the area. He stated that initial testing revealed that the well was capable of producing approximately 60 million cubic feet of gas per day.

"This discovery helps sustain Malampaya's contribution and strengthens our domestic gas supply for many years to come," he said in a statement, adding that further evaluation would determine the full commercial potential of the discovery.

The Philippines continues to rely heavily on imported fossil fuels, particularly coal, which accounts for more than half of all power generation. The country also experiences periodic power outages and shortages, particularly during periods of high demand.

Domestic gas production has long been regarded as a critical component in reducing dependence on imports and lowering energy costs. However, exploration activity has decreased in recent years. In 2022, the previous administration halted oil and gas exploration in areas of the South China Sea that China also claims, citing geopolitical tension.

China continues to assert broad territorial claims in the South China Sea, despite an international arbitration tribunal's 2016 ruling that Beijing's historical claims lacked legal basis. The dispute has complicated energy exploration in several Southeast Asian countries, including the Philippines.

According to energy analysts, while the new discovery will not completely replace Malampaya's output, it may help ease the transition as the country seeks to diversify its energy mix, including through renewables and liquefied natural gas imports.