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Downstream Natural Gas

The birth of the Philippine natural gas industry brings the country closer to its goal of harnessing environment friendly fuels to ensure a stable, diverse and secure energy supply. However, the growth of this industry is anchored on the development of additional gas-generated capacity, other non-power applications and the necessary infrastructure that is to bring the natural gas to its potential markets. The infrastructure includes the appropriate pipeline transmission and distribution networks, LNG terminals and facilities, gas refilling stations for CNG-run vehicles and ancillary facilities.

In the absence of the law for the natural gas sector, the stage for the industry’s development has been set with the preparation of a gas policy framework, industry rules and regulations. A clear and concise policies, objectives, programs and strategies formulated by the DOE, together with the critical cooperation and participation of the private sector, development  of a natural gas industry is ensured.

While there is still much to be done, the DOE will be at the forefront of efforts to rally the participants in this new industry to success.


Applications for Permit in the Downstream Natural Gas Sector

Documents to accompany application for permit for the construction, operation &    maintenance, expansion,   extension   and   modification of natural gas transmission & distribution pipeline projects

(Source : DOE Circular No. 2002-08-005)

All applications for Pipeline Permits shall be accompanied by such documents as are applicable and relevant, in the form of exhibits, including but not limited to the following:

  1. Certificate of Registration with the Securities and Exchange Commission, if applicant is a corporation; or Certificate of Filing of Amended Articles of Incorporation and By-Laws, for existing corporations when applicable;
  2. Company/Corporation profile and organizational structure (Philippines and abroad) indicating complete names and positions of personnel and their respective roles and assignment;
  3. Complete name and complete address of company/corporation (abroad and/or in the Philippines);
  4. A certified true copy of applicant’s articles of incorporation and by-laws, if the applicant is a corporation;
  5. A List of the names and business addresses of applicant’s officers and directors, or similar officials, if the applicant is not a corporation;
  6. If the applicant or any of its officers or directors, directly or indirectly, owns, controls, or holds with power to vote, ten (10) percent or more of the outstanding voting shares of any Person or organized group of Persons engaged in Production, Transmission, Distribution, or pricing of Natural Gas, or of any Person or organized group of Persons engaged in the construction or financing of such enterprises or operations, a detailed explanation of each of the above relationships, including the percentage of voting strength represented by such ownership of shares. If any Person or organized group of Persons, directly or indirectly, owns, controls of holds with power to vote, ten (10) percent or more of the outstanding voting securities of applicant a detailed explanation of each such relationship;
  7. A certified true copy of the application for Environmental Compliance Certificate with the DENR including its Environmental Impact Statement;
  8. A certified true of Applicant’s Pipeline Concession or Franchise or charter where the applicant is a government-owned or controlled corporation;
  9. A certified true copy of the applicant’s Service Contract where the Pipeline is to be constructed and operated as part of Petroleum Operations;
  10. A geographical map of suitable scale and detail showing:
    1. Location, length and capacity of the Pipeline;
    2. Location and size (rated horsepower) of compressor stations;
    3. Location and designation of each point of connection of proposed facilities with Customers and Franchises showing communities and Customers taking delivery of more than 10,000 MCF or 283 MCM of gas in any calendar month; and
    4. Whether the locations designated in 3) are to be served at wholesale or retail, and gas fields, or other sources of gas supply.
  1. A flow diagram showing daily design capacity reflecting conditions with proposed facilities in operation, including:

  1. Diameter, wall thickness and length of pipe proposed to be installed;

  2. Size, type and number of proposed compressor units, horsepower required, horsepower proposed to be installed, quantity of Natural Gas to be used as fuel, suction and discharge pressures and compression ration;

  3. Pressures and volumes of Natural Gas at the main line inlet and outlet connections at each compressor station;

  4. Pressures and volumes of Natural Gas at each entry and exit point at the beginning and terminus of the proposed pipeline;

  5. Maximum deliveries which applicant’s proposed Pipeline would be capable of achieving under most favorable operating conditions with utilization of all facilities with and without compression.

I. A description of engineering design data to support the diagrams above-mentioned and the proposed project, which explain:

  1. Assumptions, bases, formulae and methods used in the development and preparation of such diagrams and accompanying data;

  2. A description of the pipe and fittings to be installed, specifying the diameter, wall thickness, yield point, ultimate tensile strength, method of fabrication and methods of testing proposed;

  3. When a pipeline is to be looped by construction of a parallel pipeline, the length and size of the pipeline each loop;

  4. If the daily design capacity shown in subsection (j) is predicated upon an ability to meet each Customer’s maximum contract quantity on the same day, explain the reason for such coincidental peak-day design. If the design day capacity shown in subsection (j) is predicated upon an assumed utilization factor, state that factor and explain its derivation.

  1. A statement by applicant describing:

  1. The Service Contract areas accessible to the Pipeline that contain sufficient existing or potential Natural Gas supplies for the initial and subsequent stages of a proposed development project associated with the construction or extension, and of the Pipeline; and

  2. How the Service Contract areas are to be connected to the Pipeline;

      n. the proposed route of the Pipeline together with:

  1. A map showing surface land-use and occupation;

  2. A list of the names of the landowners; and

  3. A copy of the proposed access agreement or easements to be entered into with landowners.

Provided that the submission of requirements 2 and 3 herein may be deferred to anytime before the Permit is issued by the DOE.

o. A system-wide estimate of the quantity of Natural Gas and rate of delivery during each of year of the Pipeline’s full operation as well as the period when the Pipeline is used for commissioning and build up of delivery, together with;

  1. Names and locations of Customers, showing the number of residential, commercial, firm industrial interruptible industrial, and other types of Customers and the names and locations of each firm and interruptible Customer whose estimated consumption totals 283 MCM or more in any calendar month or 2,830 MCM or more per calendar year together with an explanation of the end use to which each of these industrial Customers will put the gas;

  2. Where applicable, applicant’s total annual and peak day or hourly gas requirements by classification of service in subsection (1) above, divided as follows:

  1. For each Gas Distribution Utility where Natural Gas is sold by applicant at retail;

  2. For each buyer under a Gas Sales and Purchase Contract;

  3. For all main line direct industrial gas Customers; and

  4. Pipeline use and unaccounted for Natural Gas for both the applicant and each buyer under a Gas Sales and Purchase Contract;

  1. Explanation and derivation of basic factors used in estimating future requirements, and full details concerning all other sources of Natural Gas supply available to applicant and to each of its Customers;

  1. If it is assumed that proposed Customers in new areas or firm and interruptible direct industrial Customers whose estimated consumption totals 283 MCM or more in any calendar month or 2,830 MCM or more in any calendar year, will convert from other fuels to Natural Gas, to the extent possible, state the basis for such assumption and include a study showing estimated cost of converting Customer’s facilities to Natural Gas. The study should indicate the number of Customers of each of the other fuels which the applicant anticipates will convert to Natural Gas and the current cost of fuel to be displaced compared to the cost of Natural Gas on an equivalent Joule basis;

  1. A detailed estimate of total capital cost of the Pipeline for which application is made, showing cost of construction by operating units such as compressor stations, main Pipelines, laterals, measuring and regulating stations and separately stating the compensation for right-of-way, landowner damages, surveys, materials, labor, engineering and inspection, administrative overhead, fees for legal and other services, allowance for funds used during construction and other contingencies. Include a brief statement indicating the source of information used as the basis for the above estimate. If not otherwise stated, submit data on preliminary bids, if any, for the proposed facilities and recent experience cost data for facilities of similar character;

  1. Plans for financing the proposed facilities for which the application is filed, supported by documents describing:

  1. The ratio of equity and debt to total financing;

  1. For equity financing, names and addresses of stockholders, the respective equity contribution by value (paid-up and not paid-up) and type;

  1. For debt financing, type of debt instruments, their maturities, respective share in total debts, source of debt financing, i.e., whether domestic or foreign.

  1. A statement of anticipated cash flow, including provision during the period of construction and the first three (3) full years of the Pipeline’s capital requirements including interest and dividends;

  1. A balance sheet and income statement for three (3) years from the most recent date available;

  1. Certified true copies of all applications and supporting exhibits, registration statements or other similar submissions, if any, to the Securities and Exchange Commission, including all supplements, changes or modification of the above.

  1. Any additional data and information upon which the applicant proposes to rely in showing the adequacy and availability to it of resources for financing the Pipeline.

  1. A concise statement settling forth arrangements for supervision, management, engineering, accounting, legal or other similar services that will not be performed by employees of the applicant, including references to any existing or contemplated agreement to be entered into in connection with the construction or operation of the Pipeline together with a statement showing any affiliation between the applicant and any parties to such agreements or arrangements referred to in paragraph (f) above;

  1. Provide reference tariff, Indicative Tariff as well as any Tariff for which approval will be sought from the ERC, and depreciation rates calculated according to the prescribed methodology and rate settling procedures of the ERC.

  1. Pro-forma copies of contracts to be entered into with third parties for the Transmission or Distribution of Natural Gas, including any code of operations of transmission policy.


  1. Feasibility Study of the Project

  1. Geologic survey and study of the area (land, soil, rock formations, above ground, underground, undersea, seafloor, under the seafloor, water) where the infrastructure for the project will be erected.

  1. Atmospheric survey and study of the area (weather system, typhoon paths).

  1. Zoning/Locational Clearance and/or Certificate of Approved Land Use Conversion if proposed site is not within an industrial or commercial zone

  1. Barangay Business Clearance

  2. Mayor’s Business Permit

  1. Building Permit

  2. Mechanical Permit

  1. Sanitary / Plumbing Permit

  2. Electrical Permit

  1. Fire Safety Inspection Certificate from the Bureau of Fire Protection (BFP)

  2. National Water Regulatory Board Permit, if applicable

  3. System Handover Manual

  1. Health, Safety, Security, Environment (HSSE) Plan

  2. Emergency Response Procedure/ Safety and Emergency

  3. ManualOperation and Maintenance Manual

  1. Fire and Gas Electrical Checklist Manual

  2. Certification of Personnel Training Conducted including results of competency assessment.

  3. Certificate of Calibration of All Metered Units

  4. Certificate of Final Electrical Inspection

  5. Certificate of Occupancy

  6. Insurance coverage of the project (certified true copy). It should comply with and satisfy the Health, Safety, Security and Environment (HSSE) Plan. The immediate locality and its people near the facility should be covered and protected by the insurance.


Committee on Legislative Franchises 3/F Ramon V. Mitra Building

House of Representatives Quezon City

Committee Secretary – Mr. Jose Ronald T. Ayad

Tel/Fax Number – 932-3906

Trunkline – 931-5001 loc. 7159

  1. Approval of company registration with Securities and Exchange Commission (SEC) or the Department of Trade and Industry (DTI).

  1. Drafting of the Franchise Bill. Company may seek assistance from the Committee on Legislative Franchises (House of Representatives) in drafting a Franchise Bill or secure a copy of sample bills.

  1. It is preferred that the company securing a franchise shall select the sponsor of the bill who has jurisdiction of the district where the proposed public utility operation shall be located.

  1. Filing of the bill at the Bills and Index Division (House of Representatives).

  1. Franchise Bills originate at the House of Representatives and shall undergo the process on how a bill becomes a law.

Note: detailed list of documentary requirements for Franchise Applications may be obtained from the Committee on Legislative Franchises, House of Representatives, including the overview and procedures involved in the legislative process.