Government Accelerates Natural Gas Push With First Capacity Auction And Malampaya Expansion
- July 27, 2026
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The Department of Energy (DOE) is targeting the launch and award of the Philippines’ first auction for mid-merit natural gas capacity before the end of the year, marking a key step in strengthening grid reliability as the country expands renewable energy while advancing efforts to secure long-term domestic gas supply through the Malampaya Phase 4 Project.
Energy Secretary Sharon Garin said the government is finalizing the auction framework through industry consultations, with contracts expected to be awarded before the close of the year.
The initiative is designed to procure flexible gas-fired generation that can help stabilize the power system as more intermittent renewable energy sources come online.
“We are really targeting to award them (gas deals) before the end of the year,” Garin said.
Flexible Capacity
The planned auction follows the DOE’s issuance of guidelines last month governing the country’s first mid-merit natural gas capacity auction, which identifies natural gas as a transition fuel that will help the Philippines shift toward a cleaner and more sustainable energy mix while maintaining reliable electricity supply.
Mid-merit power plants serve as a bridge between baseload facilities that operate continuously and peaking plants that are dispatched during periods of high electricity demand. Their operational flexibility allows them to quickly increase or reduce output in response to changing grid conditions.
According to Garin, gas-fired power plants are particularly suited for this role because they can respond faster than coal-fired plants without the higher operating costs associated with diesel-fired generation.
She added that frequent ramping up and down of output is less likely to damage gas-fired facilities, making them well-suited to complement solar and wind power, whose electricity generation fluctuates depending on weather conditions.
The DOE said growing investments in variable renewable energy make it necessary to procure more flexible generation capacity to address intermittency while ensuring the reliability and stability of the national grid.
Addressing Grid Challenges
The department said simulations indicate that coal-fired power plants in Luzon are increasingly operating beyond their normal limits because of limited natural gas capacity, raising the risk of forced outages.
Meanwhile, the Visayas and Mindanao grids remain largely dependent on coal- and oil-fired power plants as neither region currently has natural gas generation facilities.
The auction will be open to operators of existing, uncommitted, newly built and upgraded natural gas facilities. However, Garin said the DOE has yet to determine the total capacity that will be procured under the program.
Earlier this month, the DOE’s Natural Gas Auction Committee also conducted technical assessments of the country’s two liquefied natural gas (LNG) import and regasification terminals—the 2,475-megawatt LNGPH Batangas Complex and Prime CoreGen’s 2,011-MW LNG Complex—as part of preparations for the planned auction.
The initiative also builds on Republic Act No. 12120, or the Philippine Natural Gas Industry Development Act, which seeks to promote the development and use of indigenous natural gas resources while reducing reliance on imported fuels.
Malampaya Expansion
As the government prepares the gas auction, it is also pushing forward with efforts to expand domestic natural gas production through the Malampaya Phase 4 Project.
President Ferdinand Marcos Jr. recently conducted an aerial inspection of the project in Palawan, highlighting its role in enhancing the country’s energy security and reducing dependence on imported liquefied natural gas.
“This is an important step toward reducing our dependence on imported LNG and providing a more reliable energy supply for millions of Filipino households,” Marcos said.
The Malampaya Phase 4 Project includes the development of three new wells: Malampaya East-1 (MAE-1), Camago-3 and Bagong Pag-asa-1.
According to the Presidential Communications Office, the MAE-1 and Camago-3 wells were successfully drilled and tested earlier this year, yielding initial estimated reserves of around 222 billion cubic feet of natural gas. The pipeline linking both wells to the existing Malampaya subsea production system was completed in June.
The government expects new gas supply from the two wells to begin by the fourth quarter of 2026 while preparations continue for the drilling of the Bagong Pag-asa-1 well.
The DOE estimates the newly discovered reserves could generate about 31.4 billion kilowatt-hours of electricity, enough to power around 13.1 million households for one year and extend the productive life of the Malampaya gas field from its previously projected depletion in 2027 to 2034.
Natural gas currently accounts for about 14 percent of the country’s energy mix. Its role continues to grow as the Philippines balances energy security, grid reliability, and the continued expansion of renewable energy.
Source:
https://www.philstar.com/business/2026/07/27/2544868/philippines-gears-first-natural-gas-auction
https://bworldonline.com/economy/2026/07/26/765931/gas-auction-expected-for-launch-this-year/
