The Philippines this week signed a memorandum of understanding with Indonesia to cooperate on energy-related projects.

The agreement included efforts to look into the possibility of the Philippines buying coal from Indonesia on a long-term but below-market-price basis, look into the possibility of the Philippines importing natural gas from Indonesia to supplement the Malampaya gas reserve, and allow the Philippines, through the Philippine National Oil Co., [PNOC] to help develop the geothermal potential of Indonesia.

“Further discussions between PNOC-Energy Development Corp. and Indonesia’s Directorate General of Geology have resulted in an offer by Minister Turmono of geothermal project contracts to PNOC-EDC,” Energy Secretary Vicente Perez Jr. said.

The Philippines is the second-largest producer of geothermal energy in the world after the United States.

The PNOC also signed an agreement with its counterpart –Perusahaan Pertambangan Minyak & Gas Bumi Negara — to study the possibility of a natural gas supply deal. “Based on the DoE’s projections of electricity demand, we would need within five to seven years additional gas beyond what Malampaya can offer,” Perez said.

DoE data showed that the Philippines would need almost 10 000 MW of additional electricity in the next ten years. By next year, natural gas from Malampaya would be running three power plants with a total generating capacity of 2700 MW.

Perez said if any gas supply deals would be made, this could be part of the Trans-Asean Gas Pipeline. He said that if a gas supply deal with Indonesia would mean a pipeline link, that link would form one component of the TAGP.

Earlier, the Asean Council on Petroleum recently identified seven potential gas pipeline interconnections that would link natural gas producers and buyers within the region, including a link between Indonesia all the way to Batangas.