The Shell Companies in the Philippines confirmed talks with state-owned Philippine National Oil Co. for a possible partnership over a liquefied natural gas terminal in Batangas province.
“We are very open to partnerships with various groups including PNOC,” Shell country manager Cesar Romero said.
“On LNG, we remain very [interested]… That’s one area we really want to successfully bring into the country. But, it’s a bit tricky because we have to form partnerships,” he said.
Romero said there was an “exploratory conversation” with PNOC, which was spearheading the government’s LNG program. PNOC hopes to complete the country’s first LNG terminal by 2021 or 2022.
“But the key is to be able to understand how economics would work because it is a huge investment. An LNG facility is $600 million to $1 billion. That’s why you need partners to be able to balance it off. Secondly, the economics must be carefully understood in terms of how the investment will be,” Romero said.
PNOC president Ruben Lista earlier said Shell expressed interest in the government’s LNG project but the latter had yet to make a formal offer.
“They could be a good partner because they are already our partner in Malampaya,” Lista said.
Shell Philippines Exploration B.V operates the Malampaya gas project in northwest Palawan with a 45-percent interest. PNOC subsidiary PNOC Exploration Corp. holds a 10-percent stake while Chevron owns the remaining 45 percent of the consortium running service contract 38.
PNOC wanted to put up an LNG integrated facility and 200-megawatt power plant in Batangas.
Shell officials asked government to come out with an LNG policy to guide them on their final investment decisin.
“We don’t want to compete with anybody just initiating the project. We don’t even have to be majority. Somebody has to have the storage facility for LNG. And we are putting up the plant for Peza [economic zones] and for the poorest of the poor,” Lista said.