DoE to look into Shell’s pipeline project proposal

The Department of Energy said it would study the proposal of Pilipinas Shell Petroleum Corp. to take an active part in the construction of the $2.1-billon Batangas-Manila natural gas pipeline project, even as it had expressed reservation in allowing the entry of private companies in this venture.

At the sidelines of the Platts Forum on Wednesday, Energy Undersecretary Jose M. Layug Jr. said the pipeline should ideally be put up by the government to ensure that the facility would be able to jumpstart and support the entire natural gas industry.

Layug said that if the government would fully own and operate the pipeline, it would be able to manage the cost and, consequently, minimize the cost burden on the consumers. Also, all stakeholders of the natural gas sector would be assured of a level playing field and equal access to the pipeline.

“The policy of the government, especially concerning liquefied natural gas (LNG), is anchored on two basic principles—to achieve optimal cost to ensure lower costs for consumers and open access. We are looking at a model that would somehow ensure a more efficient cost,” Layug said.

The energy official was reacting to Pilipinas Shell’s statement that it wanted to have equity participation in or to provide technical support for the construction and operation of the natural gas pipeline.

The pipeline, according to Shell country chairman Edgar Chua, will help create markets for its proposed $1-billion LNG regasification terminal.

Layug said the areas open to the private sector were Phases 2 and 3 of the BatMan 1 project, which would be auctioned off.

The proposed BatMan 1 gas project will be implemented in three phases.

Phase 1, which will be spearheaded by a new entity to be called PNOC Pipeline Corp., will involve the construction of a $200-million 105-kilometer gas pipeline, to be undertaken by the government. The second and third phases will involve the construction of the receiving terminal and a 600-megawatt power plant.

In the meantime, the Japan International Cooperation Agency (JICA) has offered to do the next phase of the pipeline component of the project, which is the conduct of a detailed technical engineering feasibility study. There are also indications that JICA was open to helping fund the pipeline project, Layug said.