Shell bullish on Batangas LNG facility

KUALA LUMPUR – Royal Dutch Shell Plc is optimistic on the viability of its planned liquefied natural gas (LNG) import facility in Batangas.

In a briefing with reporters here on the sidelines of Shell’s two-day Innovation Summit, Maarten Wetselaar, Shell executive vice president for Integrated Gas, said there is a market for LNG import facilities such as the one the company is eyeing to build in Batangas.

“There are two types of terminals in the region. One type is the type that receives LNG and delivers gas and then depending on the pipeline, has a certain reach. Another type of terminal will be the trading type of terminal. Investments we are making are more on the first type of terminal. We are now in the detailed engineering design on our LNG terminal in the Philippines. Where we can see a market behind that is growing is the type of terminal we are investing in, but I think both (terminals) will flourish,” he said.

Wetselaar also expressed optimism that the Philippine government would be able to put up the 105-kilometer Batangas-Manila (BatMan) natural gas pipeline.

“We are indeed in conversations with the government about the fate of the Batman pipeline. I think everybody including the government, the World Bank and most major businesses in the Philippines believe it will be built. The question is exactly when, and how is it going to be funded. As far as these industrial infrastructure investments go, it just makes imminent sense and so I have a strong belief that the pipeline will be there to transport gas when needed,” Wetselaar said.

Without the pipeline yet, Wetselaar said there are also power plants that would be built within the vicinity that could provide a case for an LNG terminal.

 â€œThere’s also in the immediate vicinity of the plant terminal, there are plans for power plants to be built that could provide a case for an LNG terminal,” said Wetselaar.

He said Shell may import the LNG from Asia or Africa or wherever there is enough supply.

“That is the beauty of the business. We have so many supply points. We source the energy from Brunei and many other places. It could come from as far as Nigeria and as nearby as Brunei,” he said.

Earlier this month, Energy Secretary Carlos Jericho Petilla urged Shell and First Gen Corp. to explore possible supply partnerships that could be critical in jumpstarting the country’s LNG industry.

The planned BatMan natural gas pipeline faces delays and may not be in place in five years, Petilla has said.

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

Wetselaar declined to identify possible power companies that Shell may partner with.

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

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

Philippine National Oil Co., the state-owned company 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 government and the government of Australia under a capacity building technical assistance project from the Asian Development Bank (ADB) and the Canadian government to enhance the investment environment for the Aquino administration’s Public-Private Partnership (PPP) program.

Initially, a 105-kilometer transmission pipeline under the Batangas-Manila natural gas pipeline project would 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 liquefied natural gas (LNG) receiving plant and the installation of compressor stations, metering stations, valves as well as control stations.