DOE urges Shell, First Gen to consider LNG supply partnership

MANILA, Philippines - The Department of Energy has urged global oil and gas giant Royal Dutch Shell plc and Lopez owned First Gen Corp. to explore a possible supply partnership that could jumpstart the country’s liquefied natural gas (LNG) industry.

The planned Batangas-Manila (BatMan 1) natural gas pipeline faces delays and may not be in place in five years, Energy Secretary Jericho Petilla said.

As such, Petilla said these industry giants should look into supplying their natural gas to other takers even without the pipeline yet.

“I wouldn’t count BatMan to be in place in the next five years. That’s the timetable of PNOC (Philippine National Oil Co). To do the feasibility study, it would take about 16 to 18 months and then three months to convert this into a commercial (project). And then it would be bid out. The construction will happen in the next two to three years. If you look at the timeline, it is really going to take too much time,” Petilla said.

Earlier, the DOE said it was looking at starting the construction of BatMan 1 between 2015 and 2017.

In July, Shell announced its decision to proceed with the front-end engineering and design (FEED) for a LNG import facility in Batangas.

First Gen, on the other hand, can be an LNG customer given its planned 1,300 megawatts of natural gas facilities in the next five years.

State run, PNOC has tapped the Project Development and Monitoring Facility (PDMF) to study the feasibility of constructing the pipeline.

The PDMF is a revolving pool of funds from the Philippine government and the governments of Australia and Canada under a capacity building technical assistance project from the Asian Development Bank (ADB) to enhance the investment environment for the Aquino administration’s Public-Private Partnership (PPP) program.

The PPP Center will be conducting the study with the help of the Japan International Cooperation Agency (JICA), to be completed possibly by the end of the year or within the first quarter of 2014.

Petilla said industry players such as Shell should take into consideration every available usage of LNG in coming up with their respective LNG plans.

“They should maximize every available usage of LNG and not rely on just one. BatMan is just one,” Petilla said.

Initially, a 105-kilometer transmission pipeline under the Batangas-Manila natural gas pipeline project will be constructed to transport and supply natural gas to targeted markets located along its route from Batangas, Laguna, Cavite and eventually to Metro Manila.

Included in the project is the construction of a LNG receiving plant and the installation of compressor stations, metering stations, valves as well as control stations.