INVESTMENT PORTFOLIO (2007-2014)

In pursuit of the energy sector's agenda to attain energy independence and promote a competitive energy sector, Table 1 summarizes the country's energy investment requirements amounting to Php 1,420.41 billion from 2007 to 2014. The infusion of fresh capital and the firming up of financial commitment from the industry players and stakeholders are the essential factors in realizing the energy sector goals. In line with this, the Department will intensify efforts to encourage active participation of the private sector in the different energy business opportunities.

Fossil Fuel
Renewable Energy
Alternative Transport Fuels
Energy Efficiency
Power
Downstream

FOSSIL FUEL RESOURCES

Oil and Gas

The Philippine Energy Contracting Round (PECR), which also covers the geothermal and coal sectors, continuously encouraged local and international investors in the exploration, development and production of petroleum resources in the country. In the 2005 PECR, four petroleum contract areas were offered to the stakeholders. As a result, the following contracts were awarded in 2006 to the following: (i) PNOC-EC/Nido Petroleum, Pty. Ltd for Area 1 in Southwest Palawan; (ii) Burgundy Global Exploration Corporation for Area 2 in Northeast Palawan Area 3 in Southeast Palawan; and, (iii) the joint venture of Ranhill Berhad and Phil-Mal Petroenergy Corporation for Area 4 in the Sulu Sea basin. These four contracts provided financial commitment worth US$ 155.1 million. Further, it is estimated that US$ 46.2 million in investments will be raised from contracts in West Calamian, West Balabac and Northeast Palawan. On the other hand, in the 2006 PECR, nine petroleum contract areas were offered covering 72,639 sq. kms. in shallow to deep waters within the prospective basins of East Palawan and Mindoro-Cuyo as well as in the promising basins of Cagayan, Central Luzon, Visayas and Agusan-Davao. These contract areas are projected to bring in at least US$ 165 million investments. The bids are undergoing technical, financial and legal evaluation and awarding will be done within the year. Aside from these investments, US$ 136 million were generated from the existing petroleum SCs and geophysical survey and exploration contracts in 2006.

Table 2 shows that the acquisition program on 2D and 3D seismic data will entail Php 0.96 billion and Php 2.55 billion, respectively within the planning period. In addition, Php 8.31 billion is needed for onshore exploratory drilling while offshore well drilling will require Php 45.43 billion in capital investments. Meanwhile, the development and production of domestic oil, gas and condensate will entail Php 341.27 billion. The requirement of Php 398.51 billion for the entire petroleum sector is expected to be provided by the private sector. In 2007, four petroleum service contractors have committed to pour in investments of at least US$ 153 million for offshore drilling of five exploration wells. Malaysia's Petronas Carigali Overseas Bhd. has started drilling one exploration well in Mindoro with a total investment of US$ 23.0 million; Galoc Production Company will drill two production wells in Northwest Palawan and allocated US$ 86.4 million; Japan Petroleum Exploration Company will drill one exploration well in Tañon Strait with an investment of at least US$ 37.0 million and the Singapore-based Premier Oil will drill one exploration well in Ragay Gulf in the Bicol Region at a projected cost of US$ 6.8 million.

Coal

In the 2005 PECR, seven areas were offered but the bids tendered did not meet the technical criteria. Notwithstanding, 15 coal operating contracts were carried out by 11 companies in areas in Luzon, Visayas and Mindanao that generated about Php 290 million in 2005. In the 2006 PECR, 14 coal prospects were offered for the exploration, development and production in Quezon, Negros Occidental, Cebu , Surigao del Norte, Surigao del Sur, Agusan del Sur, Davao Oriental and Zamboanga Sibugay. The bids submitted are estimated to bring in Php 91.97 million worth of investments. Further, the existing COCs in 2006 yielded Php 5,759 billion for the exploration, development and production of indigenous coal.

The total investment requirement for the coal sector in the planning period is estimated at Php 139.16 billion for 1,000 MW as shown in Table 3. From the said amount, Php 20.57 billion will be used to develop potential areas in Luzon, Php 51.43 billion for Visayas and Php 30.86 billion for Mindanao . In addition, the mine investment, which includes capital outlay, operating cost among others, will require Php 36.31 billion.

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RENEWABLE ENERGY

The Department is continuously promoting the use of indigenous and renewable energy resources. As a result, a number of projects had been initiated and implemented by the private sector. With this trend, it is projected that a total investment of Php 258.34 billion will be required in the entire planning period for the development and promotion of renewable energy resources.

Geothermal

In the 2005 PECR, there were no contracts awarded from the 11 areas offered for exploration, development and direct utilization. In the 2006 PECR, on the other hand, three prospective areas were offered in Batangas, Biliran and Compostela Valley . The bids submitted are expected to generate US$ 3.15 million. For the planning period, a total of Php 61.63 billion in investments is required for the operation of geothermal areas including the exploration and development of 580-MW potential capacity all over the country. From this total amount, Php 20.17 billion will come from the government and Php 41.46 billion from the private sector. Table 4 indicates that the projects in Luzon will entail Php 37.82 billion in which Php 10.39 billion will be provided by the government and Php 27.43 billion by the private sector. The Visayas area will need Php 11.50 billion, with Php 8.25 billion to be provided by the government and Php 3.25 billion to be sourced from the private sector. Lastly, the Mindanao area will require Php 12.31 billion in capital investment with Php 1.53 billion coming from the government sector and Php 10.78 billion from the private investors.

Hydropower

To further increase the share of hydropower in the energy mix, there are still 41 potential hydropower sites with a total capacity of 1,025.10 MW that could be tapped. Development of these sites would require Php 114.81 billion in capital investments over the entire planning period. Table 5 shows that in Luzon, the capital requirement is Php 57.97 billion, while Visayas and Mindanao need capital infusion of Php 15.42 billion and Php 41.42 billion, respectively.

Biomass

The private sector has been very active in the implementation of biomass projects. Listed in Table 6 are the biomass projects that could generate a potential capacity of 183.90 MW with a total investment requirement estimated at Php 19.57 billion. These projects are situated in Luzon and in the Visayas region.

Wind

As an offshoot of the Northwind Project in Ilocos Norte, the private sector has been gaining grounds in the development of wind energy. Additional sites have been identified which increased the potential capacity to 556 MW. The total investment requirement detailed in Table 7 amounts to Php 62.33 billion.

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ALTERNATIVE TRANSPORT FUELS

In line with the Government's goal to reduce dependence from fossil fuels, the DOE is continuously promoting the utilization of alternative fuels for transport such as biodiesel (CME), bioethanol, CNG and autogas (auto LPG). The Biofuels Act is expected to further spur investments on the production of biodiesel and bioethanol. In addition, jatropha curcass is gaining popularity as a potential source of biodiesel. The PNOC's Alternative Fuel Corporation is currently conducting studies in the determination of the best variety to be planted, cost effectiveness, efficient processing to biodiesel, etc. Table 8 indicates that the implementation of the alternative fuels program including jatropha would entail Php 83.22 billion.

The implementation of the NGVPPT requires a total investment of Php 14.34 billion for the acquisition of CNG buses for the period 2007-2014. Under the pilot phase implementation program, four out of seven accredited bus companies have acquired CNG-fuelled units while the Shell Group of Companies will put up the CNG mother and daughter refueling stations in Tabangao, Batangas and along South Expressway (north bound) in Brgy. Sto. Tomas, Biñan, Laguna, respectively. Meanwhile, investment for biodiesel requires Php 2.60 billion primarily for the expansion or construction of biodiesel facilities and the establishment of CME blend refueling stations. Investment in the bioethanol sector requires a total of Php 19.84 billion from 2007 to 2014. At present, San Carlos Bio-energy in San Carlos City, Negros Occidental is taking the lead in ethanol production. In addition, several companies such as JG Summit Holdings Inc., Biofuels 88 Corporation, Leyte Agri Corporation and South Bukidnon Bioenergy Inc. are expected to come on stream within the planning period. On the other hand, jatropha facilities such as nursery, plantation and refinery would entail a total of Php 46.44 billion.

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ENERGY EFFICIENCY AND CONSERVATION

The energy sector will continue to undertake an aggressive campaign to promote energy efficiency and conservation. The DOE has lined up several activities which will require Php 48.69 billion in capital investments as shown in Table 9 . From this amount, Php 43.77 billion will be sourced from private investors while the remaining Php 4.92 billion will come from the government. Activities on energy labeling and efficiency standards constitute the biggest share at Php 29.72 billion, followed by the energy management programs at Php 16.10 billion. Meanwhile, the continuing IEC program will entail Php 622 million. On the other hand, the government enercon program will need Php 2.25 billion while the voluntary agreement program will require Php 1.40 million.

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POWER AND TRANSMISSION DEVELOPMENT

In line with the power sector's objective to provide reliable, adequate and quality supply of electricity in the main grid, a total investment of Php 505.63 billion will be required from both the government and private sectors.

Power Generation

Based on the demand forecasts, a total of 4,472.50 MW generation projects for the main grid are expected to reach Php 485.05 billion for the entire planning period. Of this amount, Php 85.56 billion would be infused for committed projects disaggregated as follows: Php 49.64 billion for Luzon, Php 20.49 billion for Visayas and Php 15.42 billion for Mindanao. Table 10 shows a total investment requirement of Php 399.49 billion for the indicative plants to be distributed as follows: for Luzon Php 246.39 billion, for Visayas Php 71.49 billion and for Mindanao, Php 81.61 billion.

Transmission Development

Table 11 indicates that transmission projects require a total capital investment of Php 20.58 billion. Of this amount, about Php 8.15 billion will be utilized for the Luzon grid, while Php 4.27 billion and Php 8.16 billion are needed for the Visayas and Mindanao grids, respectively. The total investment will cover the expansion of sub-transmission lines, transmission projects associated with generating plants among others.

EXPANDED RURAL ELECTRIFICATION

The attainment of the government's target of 100 percent level barangay electrification by 2009 would entail Php 4.23 billion as indicated in Table 12. The electrification of the remaining 2,054 unenergized barangays in the country will be implemented by the DOE and its partners coming from other line agencies, NGOs and private companies. Of the total investment required, the private sector has committed to provide Php 2.10 billion and the remaining amount of about Php 2.13 billion will be borne by the government. The energization of 892 barangays in 2007 will require Php 1.60 billion, and Php 2.64 billion will be needed for the electrification of the remaining 1,162 unenergized barangays in the ensuing years of the planning horizon.

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DOWNSTREAM

The total investment requirement for the downstream sector stands at Php 209.65 billion for the entire planning period.

Oil

Based on the activities undertaken by the oil companies, it is projected that the total investment required for the downstream oil would require Php 10.39 billion. These activities include refining, liquefied fuel bulk marketing, LPG bulk marketing, bunkering, and retail marketing of petroleum products, alternative fuels and lubes.

Natural Gas

The Php 199.26 billion investment in the natural gas industry is required for the establishment of the infrastructure and related facilities. Significant portion of the investment amounting to Php 147.26 billion will be required in the construction of power plants while the construction of LNG receiving terminals for the bulk receipt and storage of liquefied natural gas will require Php 35.28 billion. Another major component is the installation of distribution pipelines which would entail Php 16.64 billion. On the other hand, installation of refilling stations would need Php 0.08 billion as shown in Table 13.

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