Majah-Leah V. Ravago, Raul V. Fabella, Karl Robert L. Jandoc, Renzi G. Frias

Abstract

Our objective is to gauge the extent of the potential demand for natural gas among firms in the Special Economic Zones (SEZ). Due to their specialized facilities and technology, SEZ locators’ energy demand and intensity are recognizably much greater than those of their non-SEZ counterparts. SEZ locators, those using specialized production technology processes, make them good candidates as direct users of LNG. These ecozone locators currently use the more expensive and less environment-friendly diesel fuel in their heating production process. LNG offers a cleaner alternative to these SEZ locators, which are relying heavily on diesel for their production process. Our objective is to update the profile and activities of the existing economic zones, identify locators with energy-intensive operations in the CALABARZON, Clark, Subic, and Bataan areas and determine the interest of locators in SEZs to convert to natural gas. We find that more locators are not open to switching when we covered manufacturing, information technology, tourism, agro-industrial, medical tourism, and logistics services ecozones. This confirms our findings in the earlier study that the potential is greatest among firms that require intense heat for their production such as boiler, which is generated by burning less environmentally friendly fuels (e.g., diesel or coal, other than natural gas). Hesitancy to switch heavily depends on the intimate knowledge of the properties of natural gas, and how natural gas can be integrated with the locator’s present production processes. A major consideration for switching is the presence of needed infrastructure on-site (e.g., regasification facilities inside the ecozones). This points out the critical nature of logistical and infrastructure improvements before natural gas can be widely utilized.