Oil and gas
BMI believes that the Philippines will remain a small producer of oil and gas to 2023 and that faster consumption growth than output will see the country remain a net importer of crude oil and oil products, as well as joining the ranks of gas importers.
Crude oil production may well increase by 2018 due to new projects coming online, but BMI does not anticipate any new discoveries from 2018 so production will most likely fall again. Gas production is also set to rise as ongoing developments help to stabilise production at the Malampaya gas field. However, there are no new projects to boost production further.
Refining capacity is expected to remain flat, however, upgrades to the country’s two refineries will help improve utilisation rates and refined oil out put to 2023 according to BMI. Oil consumption will most likely trend upwards of the long term alongside economic growth. But the shotfall of domestic crude and domestic refined oil will see the Philippines continue as a net importer of both crude and refined oil.
Gas consumption is expected to see greater growth than oil as it becomes an increasingly important source of fuel for power generation. The start up of an LNG import terminal in Pagbilao and a likely project at Batagas will allow gas demand in the country to grow beyond domestic gas output. However, BMI has noted that infrastructure delays risk pushing back the country’s gas demand growth beyond 2023.
The Pilipino petrochemicals sector fell behind overall manufacturing growth last year, according to BMI, but it is expected to recover this year as the automotive and construction sectors post stronger growth rates and local producer JGSPC ramps up capacity utilisation at its new cracker complex.
BMI has also said that the country’s petrochemicals sector is set up for strong growth this year with the automotive sector stimulating demand for rubber and engineered plastics with 14.5% growth in output, while the construction sector raises consumption with real growth of 9.6%, increasing demand for polymer products. The Battan refinery upgrade 2 project is due to come into full operation in the first quarter of this year with a new FCC unit, which BMI has said will have a propylene production capacity of 250 000 tpy. The project will also produce other byproducts, such as petrochemicals feedstock which is to be sold to plastic producers. As a result, propylene production will grow by 200%.
Adapted from report briefs by Claira Lloyd