The Petroleum Association of the Philippines (PAP) is calling on power generation companies to prioritize the use of domestic natural gas to stabilize electricity rates, arguing that untapped indigenous capacity remains the most effective hedge against volatile global fuel imports.

In a statement, Donnabel Kuizon Cruz, PAPcchairperson said that fully implementing the country’s downstream natural gas framework is essential to lowering the cost of power.

Cruz, who also serves as the chief executive officer of Prime Energy—the operator of the Malampaya gas-to-power project—emphasized that local resources are currently being underutilized despite their clear price advantage over foreign alternatives.

The industry push comes as lawmakers weigh proposals to suspend petroleum taxes in response to escalating tensions in the Middle East.

The PAP is instead advocating for the comprehensive enforcement of Republic Act No. 12120, also known as the Philippine Natural Gas Industry Development Act.

Specifically, the group highlighted Section 38 of the law, which provides a value-added tax exemption for the sale of indigenous natural gas and the electricity generated from it, as a primary mechanism for consumer savings.

The price disparity between local and foreign fuel sources is stark. According to Cruz, electricity generated from Malampaya gas currently costs approximately ₱4.80 per kilowatt-hour.

In contrast, power produced using imported liquefied natural gas (LNG) averages ₱10.30 per kilowatt-hour. Cruz noted that this gap represents a significant burden on the Philippine economy that could be mitigated by shifting the fuel mix toward domestic supply.

Beyond immediate pricing concerns, the association framed the transition as a matter of national security. Cruz pointed to the ongoing conflict involving Iran as a critical reminder of the risks associated with over-reliance on international energy markets.

She credited the 2022 extension of the Malampaya Service Contract as the catalyst for renewed upstream activity, noting that the move has already led to at least one new discovery with additional drilling campaigns underway.

The Department of Energy is currently working with private stakeholders to manage the country’s fuel mix amid the heightened global uncertainty.

While the government continues to award new petroleum service contracts to bolster long-term production, the PAP maintained that the immediate priority must be the displacement of expensive LNG with available domestic stocks.