Title.
Section 1
SECTION 1. Title. - This Act shall be known as the "Philippine Natural Gas Industry Development Act".
RA 12120 CHAPTER 1
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Declaration of Policy.
Section 2
SEC. 2. Declaration of Policy. - It is hereby declared the policy of the State to: (a) Promote natural gas as a safe, efficient, and cost-effective source of energy and an indispensable contributor to energy security by establishing the Philippine Downstream Natural Gas Industry (PDNGI) for the benefit of all segments of the nation's population and all sectors of the economy; (b) Develop natural gas as reliable fuel for power plants capable of addressing the peaking, mid-merit, and baseload demand of the country to help achieve energy security, while progressively transitioning to renewable energy sources; (c) Promote natural gas as an energy fuel, with the potential to meet the increasing local demand for fuel, and develop the Philippines as a Liquefied Natural Gas (LNG) trading and transshipment hub within the Asia-Pacific Region. In all cases, the State shall ensure the safe, secure, reliable, transparent, competitive, and environmentally responsible operation of the PDNGI value chain, and ensure alignment with the State's policy on transitioning to a low-carbon future, consistent with the sustainable development goals on increasing the share of renewable energy in the country's energy mix; (d) Provide a conducive industry environment for the promotion and development of the PDNGI through the issuance of regulatory policies, localized codes and standards for products, facilities and its operations based on the Philippine National Standards (PNS), and plans and programs; (e) Promote the conversion of existing fossil fuel-operated equipment and facilities to natural gas use: Provided, That the conversion is technically and financially feasible; (f) Promote and hasten the exploration and development of indigenous natural gas resources and facilities, and prioritize the use of indigenous over imported natural gas to help attain greater energy security without impairment of contracts; (g) Promote the entry of investors under a system of competition, transparency and fair trade, and by providing responsive policy support, with the end goal of attaining low cost energy prices pursuant to Republic Act No. 7638 or the "Department of Energy Act of 1992"; (h) Promote the role of natural gas as an additional energy source and a transition fuel to variable renewable energy by creating a legal and regulatory framework that will govern the promotion and development of the PDNGI; (i) Ensure compliance with the PDNGI product and facility standards on Health, Safety, Security, and Environment (HSSE) and other applicable rules and regulations under a system of safe, secure, high-quality, and environmentally responsible operations and services that afford protection to consumers; (j) Encourage the inflow of private capital through equity participation by the private sector in the development of the PDNGI; (k) Ensure transparent and low-cost pricing of natural gas pursuant to Republic Act No. 7638 and rates for its storage, regasification, transmission, and distribution in a regime of open and fair competition, with full public accountability that shall promote greater operational and economic efficiency and enhanced competitiveness in the global market; (l) Develop the necessary technical expertise and skills of personnel in government agencies and the private sector to support the PDNGI; (m) Promote aggregation whenever economically beneficial for end-users and to contribute to mitigating natural gas supply and price stocks; and (n) Facilitate the development of power and non-power end-uses of natural gas which includes commercial, industrial, residential, and transport applications that promote fuel diversity: Provided, That the power rates from the utilization of natural gas shall be subject to Republic Act No. 9136, otherwise known as the "Electric Power Industry Reform Act of 2001".
Scope.
Section 3
SEC. 3. Scope. - This Act shall provide a framework for the development of the PDNGI, and its transition from an emerging industry into mature industry within a competitive natural gas market. It shall also define the responsibilities of various government agencies and private entities in furtherance of this national goal. It shall apply to the permitting of siting, construction, operation and maintenance, expansion, modification, rehabilitation, decommissioning, and abandonment of PDNGI Facilities for Own-Use or Third-Party Access (TPA). It shall likewise apply to the accreditation of Participants in the trade of natural gas, including but not limited to the purchase, supply, aggregation, bunkering, reselling, and export of natural gas, and any other activities related to the PDNGI. All activities of the Department of Energy (DOE), Energy Regulatory Commission (ERC), and other concerned government agencies relevant to the development and regulation of the PDNGI shall be in accordance with this Act.
Definition of Terms.
Section 4
SEC. 4. Definition of Terms. - For the purpose of this Act, the following terms shall be defined as follows: (a) Affiliate refers to any corporation that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control of another corporation. As used herein, "control" shall mean the power to direct or cause the direction of management policies as an inherent part of decision-making power; (b) Aggregation refers to procurement of indigenous natural gas, combining it with imported LNG, and selling the aggregated gas to gas buyers in the Philippine or abroad, by Participant/s known as aggregator/s. The DOE shall determine the requirements to be an aggregator as well as the minimum percentage of indigenous natural gas for aggregation and pricing mechanism for aggregated gas, taking into account consumer welfare, competitive pricing, the production levels of indigenous natural gas sources, the capacity of existing and future PDNGI Facilities, and other relevant factors to ensure a stable and reliable supply of natural gas; (c) Aggregated Gas refers to indigenous natural gas that has been combined with or supplemented by imported LNG, pursuant to the required minimum percentage of indigenous natural gas, pricing mechanism and competitive pricing as provided in Section 4(b) of this Act. Gas that is a blend or combination of purely imported LNG, without any portion of the gas coming from indigenous natural gas sources, shall not be considered Aggregated Gas; (d) Anti-Competitive Behavior refers to any behavior and/or agreements in violation of the provisions of Republic Act No. 10667, otherwise known as the "Philippine Competition Act"; (e) Bunkering refers to the sale of natural gas by a Participant known as a bunker trader for use of domestic or foreign marine vessels; (f) Capacity refers to the handling design of a system used in the context of its functionality and expressed in a specific measurement, such as volume or flow per time unit or designated measurement unit; (g) Conventional Energy Sources refer to non-renewable fossil fuel energy sources such as coal, oil, and gas; (h) Conventional Transportation System refers to a network of fixed facilities made up of, among others, compressor stations, pipelines, and metering for the purpose of delivering natural gas. This includes both the PDNG Transmission and Distribution Systems; (i) Decommissioning and Abandonment refer to the removal or condemnation of the entire PDNGI Facility installation or a component thereof that has reached the end of its productive life and if applicable, the subsequent restoration of the Facility site to its previous condition; (j) Delivery refers to the transmission or distribution of natural gas and the supply of natural gas at wholesale or retail; (k) Distribution refers to the transportation of natural gas through a PDNG Distribution System; (l) End-user refers to any person who will receive the delivery of natural gas for final use; (m) Indigenous Natural Gas refers to natural gas produced from fields within the territorial jurisdiction of the Republic of the Philippines; (n) Liquefied Natural Gas or LNG refers to natural gas that has been liquefied by cooling at a cryogenic temperature; (o) LNG Storage and Regasification Terminal refers to all component facilities used to receive, unload, load, store, and regasify LNG. It shall include, among others, jetty and unloading/loading arms, cryogenic and non-cryogenic pipelines, storage tanks and pumps, boil-off gas compressors and re-condensers, vaporizers, control facilities, metering, send-out systems, and other relevant components; (p) Natural Gas refers to gas consisting primarily of a mixture of methane, ethane, propane, and butane, with small amounts of heavier hydrocarbons and some impurities, consistent with PNS or other applicable internationally accepted industry standards; (q) Natural Gas Sales and Purchase Agreement or NGSPA refers to any contract or agreement for the delivery and sale of natural gas by and between sellers, suppliers, and buyers; (r) Offshore refers to areas situated at sea, some distance from the shore; (s) Own-Use refers to the exclusive use of the entire capacity of PDNGI Facilities by a Permit Holder or its affiliates; (t) Own-Use Permit refers to an authorization issued by the DOE to an Own-Use Permit Holder; (u) Participant refers to a natural or juridical person who engages in the trade of natural gas either as a supplier, aggregator, bunker trader, or reseller; (v) Permit refers to an authorization issued by the DOE for the siting, construction, operation and maintenance, expansion, modification, rehabilitation, decommissioning, and abandonment of PDNGI Facilities for Own-Use or TPA. It shall likewise apply to the accreditation of Participants in the trade of natural gas, including but not limited to the purchase, supply, aggregation, bunkering, reselling, and export of natural gas, and any other activity related to the PDNGI; (w) Permit Holder refers to a natural or juridical person who owns the PDNGI Facility and is granted a permit by the DOE to engage in the siting, construction, operation and maintenance, expansion, modification, rehabilitation, decommissioning, and abandonment of PDNGI Facilities for Own-use or TPA; (x) Philippine Downstream Natural Gas Development Plan or PDNG Dev Plan refers to the comprehensive plan for ensuring safe, secure, and reliable supply of natural gas and establishing the efficient operations of the PDNGI Facilities and proper management of natural gas demand through appropriate government programs and policies. It shall include the various natural gas supply plans, PLSR Terminal Dev Plan, PDNG Transmission Dev Plan, and PDNG Distribution Dev Plan. This plan shall be incorporated in the Philippine Energy Plan (PEP); (y) Philippine Downstream Natural Gas Distribution Code or PDNG Distribution Code refers to the code formulated by the DOE, which shall set the performance standards for operating a conventional and virtual distribution system; (z) Philippine Downstream Natural Gas distribution Development Plan or PDNG Distribution Dev Plan refers to a comprehensive plan prepared by the DOE, after modeling and taking into consideration the plans prepared by the Permit Holders of all PDNG Distribution Systems and Virtual Transportation Systems containing among others, information on their locations, construction, operation and maintenance, expansion, modification, rehabilitation, decommissioning, and abandonment, whichever is applicable, The plan shall likewise include all studies, programs, and policies for the promotion and development of the distribution sector, which are economically beneficial for end-users; (aa) Philippine Downstream Natural Gas Distribution System or PDNG Distribution System refers to a Conventional and Virtual Transportation System, starting from the receipt of natural gas from the source of indigenous natural gas, LNG Storage and Regasification Terminal, or PDNG Transmission System up to the receiving facility of the end-user; (bb) Philippine Downstream Natural Gas Industry Facility or PDNGI Facility refers to the LNG Storage and Regasification Terminal, PDNG Transmission System, and PDNG Distribution System, and other related facilities; (cc) Philippine Downstream Natural Gas Industry or PDNGI refers to all Permit Holders involved in the siting, construction, operation and maintenance, expansion, modification, rehabilitation, decommissioning, and abandonment of PDNGI Facilities. It shall likewise refer to Participants involved in the purchase, supply, aggregation, bunkering, reselling, and export of natural gas, and any other activity related to the PDNGI as defined in Section 4(bb) of this Act; (dd) Philippine Downstream Natural Gas Transmission Code or PDNG Transmission Code refers to the code formulated by the DOE, which shall set the performance standards for operating a conventional transmission system; (ee) Philippine Downstream Natural Gas Transmission Development Plan or PDNG Transmission Dev Plan refers to a comprehensive plan prepared by the DOE, after modeling and taking into consideration the plans prepared by the Permit Holders of all PDNG Transmission Systems containing, among others, information on their locations, construction, operation and maintenance, improvement, expansion, modification, rehabilitation, decommissioning, and abandonment, whichever is applicable. The plan shall likewise include all studies, programs, and policies for the promotion and development of the transmission sector, which are economically beneficial for end-users; (ff) Philippine Downstream Natural Gas Transmission System or PDNG Transmission System refers to a conventional transportation system starting from the receipt of natural gas from the source of indigenous natural gas and/or from an LNG Storage and Regasification Terminal up to the receiving facility of the PDNG Distribution System; (gg) Philippine Energy Plan or PEP refers to the overall energy program formulated and updated yearly by the DOE and submitted to Congress pursuant to Republic Act No. 7638, as amended; (hh) Philippine LNG Storage and Regasification Terminal Code or PLSR Terminal Code refers to the code formulated by the DOE, which shall set the performance standards for operating an LNG Storage and Regasification Terminal; (ii) Philippine LNG Storage and Regasification Terminal Development Plan refers to a comprehensive plan prepared by the DOE, after modeling and taking into consideration the plans prepared by the Permit Holder of all LNG storage and regasification terminals containing, among others, information on their locations, construction, operation and maintenance, expansion, modification, rehabilitation, decommissioning, and abandonment, whichever is applicable, The plan shall likewise include all studies, programs, and policies for the promotion and development of the regasification sector, which are economically beneficial for end-users; (jj) Renewable Gases refer to hydrogen, ammonia, biomethane, synthetic methane, and other gases derived from renewable sources; (kk) Reselling refers to the procuring of natural gas from a supplier or aggregator and reselling it to gas buyers by a Participant known as a reseller; (ll) Supply refers to the procuring or producing and selling indigenous or imported natural gas to gas buyers in the Philippines or abroad by a Participant known as a supplier; (mm) Third-Party Access or TPA refers to a transparent, fair, reasonable, and non-discriminatory access and utilization by a third-party user of the capacity of PDNGI Facilities; (nn) Third-Party Access Code or TPA Code refers to the code formulated by the DOE, which shall set the performance standards for TPA; (oo) TPA Permit refers to an authorization issued by the DOE to a Permit Holder that allows TPA; (pp) Transmission refers to the transportation of natural gas through a PDNG Transmission System; (qq) Virtual Transportation System refers to any alternative methods of transporting natural gas other than through the conventional transportation system, such as the use of land vehicles or sea vessels, with or without an on-site modular regasification unit; and (rr) Waterfront refers to facilities that are designated for the handling, storing, stowing, loading, discharging, or transporting of dangerous cargo, also called a "waterfront LNG plant".
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