The intensified cooperation between the Philippines and Indonesia on energy will greatly help the country address its energy security goals – primarily in the transition period when need for coal plants as well as the increasing shift to liquefied natural gas (LNG) fuel will still bridge domestic energy supply before reaching desired ‘clean energy’ phase.

The deal has been cemented via a memorandum of understanding (MOU) that was signed between the Department of Energy of the Philippines and Indonesia’s Ministry of Energy and Mineral Resources that had been witnessed by President Marcos and Indonesian President Joko Widodo.

In a statement to the media, the DOE stipulated that “both parties agreed to facilitate cooperation between their respective business sectors particularly during periods of critical supply constraints on energy commodities such as coal and liquefied natural gas (LNG).”

By far, coal is still considered a very critical commodity for the Philippine energy sector; and Indonesia is a main supplier of this fuel to the power generating facilities in the country.

As a matter of fact, when Indonesia had imposed a ban on its coal exports in December 2021 to January 2022, the Philippines had been on a dilemma on seamless operation of coal-fed generating assets, hence, that needed to be remedied by the governments of both countries.

On the LNG sphere, the Philippines is still a new entrant when it comes to the use of this fuel in its power plants, hence, a cooperation with Indonesia is seen as a vital step because that ASEAN neighbor has massive gas resources.

Gas, in particular, will have its strategic place in the Philippine energy transition, because that is the flexible fuel that can immediately fill the gap when capacities of renewable energy (RE) facilities would tread on their typical intermittency.

Energy Secretary Raphael P.M. Lotilla emphasized that “the signing of the MOU reinforces and updates the long-term energy cooperation between the two countries,” adding that on the part of the Philippines, “it is an offshoot of our President’s efforts to achieve higher energy security through energy diplomacy.”

The DOE chief noted that previous cooperation were still anchored on the state-run nature of energy systems in the Philippines – because more than two decades ago, power generation had been dominated then by government-owned National Power Corporation.

“Previous bilateral agreements reflected the dominance of state-owned companies in the power sector in the Philippines and the upstream sector including coal mining in Indonesia. The role of the private sector in energy has significantly grown in both countries and adjustments were made to reflect the new realities,” the DOE reiterated.

Beyond coal and LNG as core fuels in the energy mix, the two countries similarly stepped up on collaboration for other technologies, such as those on renewable energy, demand-side management, electric vehicles as well as alternative fuels like hydrogen, ammonia and biofuels.

Another key area of cooperation being strengthened by the two countries would be on geothermal energy – as both markets are well-endowed with these resources; raking them among the world’s biggest producers of geothermal energy.

Lotilla asserted that both Indonesia and the Philippines “share common energy concerns and can benefit from heightened levels of cooperation.”