Shell to spend $150 M for refinery upgrade

MANILA, Philippines - Oil industry giant Pilipinas Shell Petroleum Corp. is spending as much as $150 million to upgrade its refinery in Batangas.

Shell’s investment forms part of the investment commitments generated by President Aquino’s recent trade mission to the United Kingdom.

“The modernized and upgraded refinery will be in commercial operation by 2015. Investment is estimated at $100-150 million,” Energy Secretary Jose Rene Almendras said in an e-mail yesterday.

Almendras said Shell would start the upgrade early next year. To date, the local unit of Royal Dutch Shell Plc. operates a refinery in Tabangao, Batangas with a capacity of 110,000 barrels per day.

“One of the things that came out of the business meetings in the UK and US is the renewed confidence in the Philippine economy,” Almendras said.

The country’s gross domestic product surged 6.4 percent in the first quarter, faster than the revised growth of 4.9 percent in the same period last year, driven by government spending and private consumption.

It is faster than the five to six percent full year target of the government.

Last week, Shell said it is close to completing a technical study to evaluate possible modifications in the design and refining processes of Shells’ refinery.

The study aims to determine the necessary changes in the facility that would allow Shell to meet the new Philippine National Standards for ‘Euro IV’ grade diesel and gasoline set to take effect in 2016.

Almendras said the upgrade, which would result in value-added products, would be for the Philippine market.

Last week, Shell said it signed a deal with the Philippine government for a joint technical feasibility study for a liquefied natural gas (LNG) terminal in Batangas. The proposed site of the LNG import and regasification terminal is located adjacent to Shell’s refinery.

The government has a $2.1-billion natural gas master plan, which includes the construction of an integrated Bataan LNG terminal and several LNG-fired power plants.