Natural Gas Market Development Strategy

The Government of the Philippines and World Bank are interested in facilitating development of liquefied natural gas (LNG) terminals in the country, including one on the island of Mindanao in the south, which is the second largest island in area and population. The primary goal is to provide access to the international gas market so that a competitive, clean fuel is available for use in power generation.

Mindanao is the poorest of the major regions of the Philippines, and clean and affordable energy is a critical component supporting economic growth. Currently, the region is short of generation capacity and has no access to natural gas, making it dependent on coal to fire most new baseload generation.

The overall objective of this assignment is to identify parallel markets, in addition to the anchor power plant, for gas use in the Mindanao region that will balance the economics of the foreseen LNG import terminal.

CGSI’s scope of work for the project includes:
• A review of background information, including that related to the energy situation in Mindanao, and the policy and regulatory framework for natural gas.
• Coordination with the Bank team working on liquefied natural gas import and infrastructure options for Mindanao.
• Consultation and coordination with national authorities including the Department of Energy (DOE) and Philippine National Oil Company (PNOC).
• Assessment of the potential demand for natural gas in Mindanao.
• Identification of policy, regulatory, financial, technical and other issues that will affect the development of a natural gas market in Mindanao.
• Analysis of the competitive fuel market in Mindanao and assessment of the market segments where natural 
gas will be competitive.
• Analysis of CNG and/or LNG trucking (or barging), and options for bringing demand to the gas such as industrial park 
development etc.
• Assessment and comparison of the infrastructure costs for the different distribution approaches, as well as financial sensitivity analysis for changing demand and economies of scale.