DOE mandates local gas use, forms oversight committee

The Department of Energy (DOE) has issued new rules requiring power producers and other users to prioritize indigenous natural gas in their supply mix.

The policy is aimed at reducing electricity costs, boosting energy security, and accelerating domestic exploration efforts.

Department Circular No. DC2025-09-0013, signed on September 1, 2025, took effect immediately upon publication.

The circular operationalizes Republic Act No. 12120, or the Philippine Natural Gas Industry Development Act, signed by President Ferdinand “Bongbong” Marcos in January 2025.

It also draws legal authority from the 1987 Constitution and related national energy laws.

Under the rules, power plants must first use local natural gas and only turn to imported liquefied natural gas (LNG) if domestic supply is insufficient.

Pricing for indigenous gas will be pegged to international benchmarks such as crude oil, LNG, or liquid fuel indices.

Price adjustments will be based on a six-month averaging mechanism and reviewed quarterly.

According to the DOE circular, the policy is designed to secure long-term energy supply and protect consumers from global fuel price swings.

It also aims to incentivize upstream gas exploration as the country moves toward a renewable energy transition.

A key feature of the regulation is the introduction of a gas aggregation mechanism that permits blending domestic gas with imported LNG.

This blended gas can be resold in the domestic or international markets to optimize resource utilization.

The rules also require open and transparent access to midstream infrastructure to foster competition.

To ensure proper implementation, the DOE has established the Indigenous Gas Prioritization Review and Evaluation Committee (IGP-REC).

The IGP-REC will be chaired by the Supervising Undersecretary for both the Energy Resource Development Bureau (ERDB) and the Oil Industry Management Bureau (OIMB).

The committee is tasked with reviewing pricing methodologies, monitoring compliance, and resolving development bottlenecks for indigenous gas.

A technical working group led by the ERDB Assistant Director will support the committee’s operations.