Shell eyes setting up import terminal for LNG in Batangas

MANILA, Philippines—The Pilipinas Shell Petroleum Corp. has committed to explore the potential of putting up an import regasification terminal for liquefied natural gas (LNG) in the Philippines, adjacent to its existing refinery facility in Tabangao, Batangas.

This commitment was formalized through the memorandum of understanding (MOU) signed at the United Kingdom on Wednesday (Philippine time) by Edgar O. Chua, Pilipinas Shell country chairman, and Energy Secretary Jose Rene D. Almendras, on behalf of the Philippine government.

The signing came at the heels of President Aquino’s two-day visit to the United Kingdom.

“This memorandum of understanding is indicative of our support to the Philippine government’s aspiration to diversify its energy sources as embodied in its natural gas master plan,” Simon P. Henry, chief financial officer of the Royal Dutch Shell Plc, said in a statement issued Wednesday.

“We believe this feasibility study for an LNG terminal is a timely activity as it firmly supports the government’s thrust of achieving energy security and promoting cleaner energy,” Chua added.

The construction of an LNG terminal may require hefty capital investments as the proposed regasification facility and terminal under the Philippine government’s $2.1 billion Batangas-Manila natural gas project will already require some $1 billion.

Apart from the investments, the terminal will also help secure the country’s energy supplies.

According to Shell, the MOU called for the cooperation and coordination efforts between the Philippine government and Shell over the conduct of a technical feasibility study, which shall determine the viability of the development, construction and operation by Shell of an import and regasification terminal.

The feasibility study is expected to be completed by 2012 with a “first gas” target date in 2016.

The Philippine government, through the Department of Energy, is developing a natural gas master plan in order to diversify the country’s energy sources to address the increasing demand for power and support the economic growth of the country.

Meanwhile, Chua informed President Aquino, who was one of the witnesses to the MOU signing, that Shell would soon complete a technical study evaluating possible modifications in the design and refining processes of Shells’ refinery facility in Tabangao, Batangas.

Chua explained that the study aimed to determine the necessary changes in the facility that would allow Shell to meet the new Philippine National Standards (PNS) for “Euro IV (PH)” grade diesel and gasoline set to take effect in 2016. This again will mean additional capital investment in the Philippine energy sector.