by Danessa O. Rivera – November 27, 2015 – 12:00am
from The Philippine Star
MANILA, Philippines – Pilipinas Shell Petroleum Corp. is looking for partners to finally push through with its planned liquefied natural gas (LNG) terminal in the country, its top official said.
The local subsidiary of energy giant Royal Dutch Shell has long completed the front-end engineering and design (FEED) and is now in talks with partners for the project necessary to have a final investment decision (FID), Shell country chairman and president Edgar Chua said.
“So we’re now working with partners, so hopefully we can proceed with a FID,” he said.
He declined to divulge the number and identity of the companies they are in talks with but noted these are a mix of local and foreign firms.
“We are continuously changing as we have taken an inclusive approach, i.e. discuss with whoever is interested to discuss,” Chua said.
Pilipinas Shell will come out with a FID as soon as it “completes discussions with government and prospective partners,” the company official added.
LNG is natural gas that has been converted into liquid for ease of storage or transport.
Based on its study, Pilipinas Shell can build a land-based or floating storage regassification unit (FSRU) LNG terminal.
Department of Energy (DOE) Secretary Zenaida Monsada earlier said Shell is looking at the business environment to finally push through with the LNG terminal.
The Philippines has been eyeing to build a natural gas pipeline to spur development of LNG projects. Power developers also see the potential of gas-fired power facilities to diversify the energy fuel mix of the country.
Australia’s Energy World Corp. (EWC) reportedly aims to start operating its gas-fired power plant next year, which was originally targeted in December 2014. This project is part of the company’s $800-million LNG facility in Quezon.
First Gen Corp. of the Lopez Group earlier announced plans to start construction of a $1-billion LNG facility next year.
AC Energy Holdings Inc., the power generating arm of conglomerate Ayala Corp., is also considering to add LNG to its energy portfolio but only when it is financially feasible to do so.
Power distributor Manila Electric Co. (Meralco) is currently in discussions with Osaka Gas Co. Ltd for a $2-billion LNG project.
However, Chua noted potential developers of LNG are on a wait-and-see mode as the country remains too dependent on coal and is seen to continue that trend given the number of coal-fired power plants coming in by 2017.
“We see gas as the solution but investors cannot come in to build gas-fired plants, LNG import facilities if there is no guarantee they can dispatch power,” he said.
Chua pointed out earlier the Energy Regulatory Commission (ERC) should look at the competitiveness of natural gas in mid-merit for approval of power purchase agreements.
Pilipinas Shell and the DOE are now in talks to engage the power regulator on this matter.
“I think we’re working with the DOE on changing the view of ERC, that instead of looking at the generation cost for a plant, they should look at it from a portfolio view (to diversify fuel mix),” Chua said.