Shell to pour more investments in Philippines

Royal Dutch Shell is preparing to pour more investments in the Philippines through its new projects—the regasification terminal for liquefied natural gas (LNG) and the $150-million upgrade of a fuel refinery in Batangas.

“The Philippines has always been a major market for Shell. With the developments in good governance, level playing field, we are now putting in more money. This is a vote of confidence to this administration,” said Edgar Chua, country chairman of Shell Companies in the Philippines.

Shell has confidence in the leadership of the government, that’s why the investments are coming in,” Chua said at the sidelines of the Shell Eco-Marathon event Monday night.

“These are the investments that we were looking at before, but which we held back,” he explained. “So really, our confidence is due mainly to the (Aquino) leadership and not just because there is demand for us to conduct the projects. A more important consideration for us is the business environment.”

The company made public its vote of confidence in the Aquino administration despite the numerous lawsuits now facing its downstream unit Pilipinas Shell Petroleum Corp. The unit has been accused of tax evasion and misdeclaration of imported raw materials.

More than just the amount of investments involved, Chua also pointed out that the proposed projects, particularly the LNG regasification terminal, would put the country at par with its neighboring countries in terms of technology, facilities and fuel quality.

These will likewise help the Philippine government attain its goals of diversifying its energy sources.

According to Chua, Pilipinas Shell is currently conducting feasibility studies for the two projects, which are expected to be completed within the year. Once proven viable, the LNG regasification terminal will allow Pilipinas Shell to import and provide gas for Philippine companies by 2016. The cost of the terminal has been estimated at $1 billion.

Pilipinas Shell can easily import the gas from several countries like Brunei, Indonesia and Australia, where other Shell companies operate, Chua said.

Potential customers are power-generation companies and industrial firms that are hoping to convert to natural gas from diesel.

The proposed upgrade, meanwhile, may involve modifications in the design and refining processes of Pilipinas Shell’s 110,000-barrels-a-day refinery in Batangas.

The actual upgrade is set to begin next year. The company expects the modernized facility to start commercial operations by 2015.

By upgrading the facility, Pilipinas Shell will be able to produce more clean fuel, as well as increase production of “white products”—such as liquefied petroleum gas, gasoline and diesel in its refinery—out of the “black yields,” thus helping meet rising fuel demand of the local market.