LNG terminal project set

Royal Dutch Shell has committed to push through with its planned liquefied natural gas (LNG) import terminal project in Batangas, which could provide gas to power generation facilities with a combined capacity of as much as 2,000 megawatts.

Energy Secretary Carlos Jericho L. Petilla announced this Friday prior to a briefing with Shell officials, stressing the significance of this infrastructure in improving the country’s current energy mix.

Aware of the risks the Dutch firm is facing with this project, Petilla said, the government was fully supporting the LNG import terminal project.

In the meantime, Shell officials said Friday that based on the results of a feasibility study, a floating storage regasification unit (FSRU) was the most viable option for an LNG terminal, which will be located near Pilipinas Shell’s refinery in Tabangao, Batangas. The target is to complete the FSRU by 2017.

J. Scott Porter, senior business development manager for the upstream international unit of Shell Eastern Petroleum Pte. Ltd., explained that an FSRU would be faster to put up, less expensive and it would entail small onshore footprint.

According to Porter, Shell has adequate space within its Tabangao complex to accommodate the expansion of the FSRU as the market develops.

Roger Bounds, vice president for global LNG for upstream international at Shell International Exploration and Production BV, added that the company was expected to come up with the final investment decision (FID) within the next 12 months.

Although Petilla said Shell had committed  to push through the LNG terminal project, Bounds said the company had yet to conduct a more detailed study to resolve certain technical and economic issues, and to ensure that it woud be a sustainable investment.

Porter added that apart from securing the market for LNG, the company needed to ensure that there would be a “right regulatory environment.”

“This is a new industry. We are hoping this [project] will jumpstart broader consumption of gas. We are looking at projects like the Batangas-Manila pipeline (BatMan-1) to get off the ground, and for a set of regulations and rules (to be put in place),” Porter said.

Shell’s planned FSRU is an indication of the Dutch firms “faith and confidence in the country,” said Edgar Chua, country chair of Shell Companies in the Philippines.

“Apart from the LNG import facility, there are other projects—like the upgrade of the [Tabangao] refinery and few others that—we’re looking at,” Chua said.