The Shell group of companies in the Philippines is reviewing its liquefied natural gas investment options in the wake of low oil prices in the global market, a senior official said over the weekend.
“All oil companies and the like are in a difficult situation so we all are therefore making sure that it’s really the one with the best technology going forward and the capability of making it happen,” Shell Philippines Exploration B.V. general manager Sebastian Quinones told reporters.
Quinones said Shell would make the final investment decision on the planned LNG facility next year in preparation for the eventual depletion of the Malampaya natural gas field.
“I don’t think it [final investment decision] will be this year… There’s not much money now… it’s very difficult while the oil prices are low,” he said.
He said while the front end engineering and design of the LNG facility in Batangas was already completed, there were other concerns that must be addressed to convince investors and shareholders.
“Even though you say that front end engineering design is completed, there’s still a few more technical things that need to be done. We’re in fact looking at the Batangas Bay area and the sea bed. There’s a lot of things needed to make sure that you can lure a floating re-gasification unit there,” Quinones said.
He said he was not fazed by reports that other companies were now ahead in the LNG industry.
“Energy projects like this take a long time. [We are re] not necessarily [left behind] with the depressed prices we have now,” he said.
Shell country chairman Ed Chua earlier conceded that Shell’s LNG was still a work in progress. He said the final investment decision for the planned LNG facility would depend on the movement of world oil prices.
“It depends especially now with the low oil prices. We’ll have to review the timing,” Chua said.
Quinones, meanwhile, said Shell was in talks with First Gen Corp. for a possible joint venture in the LNG facility.
“Of course we are always talking to as many people as we can. Including First Gen… We are all aiming to achieve an LNG facility,” he said.
“In terms of potential customers, obviously they are the ones who are using Malampaya gas right now. And then you have also others around, Meralco Powergen, Aboitiz, all of them are very keen on getting into LNG gas-fired power plants in the future,” Quinones said.
He said once the final investment decision was made, construction of the LNG facility would take less than three years, still in time for the Malampaya depletion by 2024.
Quinones also said Shell would continue to explore for oil and gas to prepare for the end of the Malampaya gas field life in northwest Palawan.
“All upstream companies will explore, the issue is when. We cannot stop, because as reservoirs deplete, you need to have a replacement otherwise you will not have enough time,” he said.