Shell still bullish over LNG prospects

MANILA, Philippines—Pilipinas Shell Petroleum Corp. has expressed willingness to help the government curb the rampant oil smuggling in the country, which has been hurting the government through foregone revenue of up to P60 billion a year.

In a recent briefing, Shell spokersman Roberto S. Kanapi said among the things that the company and the rest of the industry can do is to help the government in testing for product quality to prevent “adulteration” and “misdeclaration,” which are forms of technical smuggling.

“We do testing of our products to make sure we comply. And maybe we can help the government, as an industry, in the testing facilities, if [the government] lacks adequate facilities to test the content of fuels like ethanol and coco-methyl ester (CME),” Kanapi explained.

He noted that fuel products often become more expensive when these are blended with ethanol and CME. Higher prices meant higher taxes to be paid to the government.

But despite such issues, Shell Companies in the Philippines remained bullish about its prospects here for liquefied natural gas (LNG), believing that this alternative fuel may be used in various sectors such as industry, transport and power generation.

The company is currently undertaking studies for the proposed $1-billion LNG regasification terminal, which may be put up near its refinery in Tabangao, Batangas. A $150-million upgrade for the refinery is also being planned.

According to Kanapi, the final investment decision—which will determine whether Royal Dutch Shell will pour in the needed investments for the LNG facility and refinery—is expected sometime next year.

“It’s going to be a commercial decision, an investment decision, because it involves big money. We’re fighting for the same investment kitty that Shell wants to put all over the world. So [there is a need to determine] how this project rates compared with other investment proposals in other countries,” Kanapi said.

“The nice thing now is that the Philippines is back on the investment map of Shell—that’s the reason why we announced programs like the study on refinery, the study on LNG, and bringing in the Shell Eco-Marathon event in the country,” he added.

If proven feasible, Shell will likely proceed with the proposed projects, particularly the LNG facility, even as the government’s major natural gas project—the $2.1-billion Batangas-Manila pipeline—is scheduled to go onstream much later than Shell’s own timetable of providing gas by 2016.