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Shell revives investment plan in LNG

The Shell Group revived plans to join the Philippine liquefied natural gas industry after filing a notice to proceed with a floating storage re-gasification unit, an official of the Department of Energy said Tuesday.

Energy Assistant Secretary Leonido Pulido III said during the Senate committee energy hearing that two other companies—Atlantic Gulf & Pacific Company of Manila Inc. and Vires Energy Corp.—also filed NTPs with the department.

“We had a pre-application conference with Vires Energy which plans to bring in FSRU and also with AG&P which has an initial agreement with San Miguel, and they also intend to bring in FSRU. Another is a subsidiary of Royal Dutch Shell Co., which also intends to bring in FSRU,” Pulido said.

The department is reviewing the NTP applications of AG&P, Vires Energy Corp and Shell Energy Philippines to build LNG terminal projects, according to Pulido.

The Shell Group announced in 2013 its decision to proceed to front-end engineering and design for an LNG import facility in Batangas. Five years later, it decided to push for more oil and gas exploration to find another Malampaya gas field, instead of putting up an LNG terminal.

Meanwhile, AG&P plans to put up an LNG import facility in Batangas City that will supply re-gasified LNG to the 1,200-megawatt Ilijan natural gas power plant.

The project with an estimated budget of $315 million will be adjacent to the Ilijan power plant, which secures natural gas from the Malampaya gas field whose supply contract will expire in June 2022.

SMC Global Power Corp., the independent power producer administrator of the Ilijan power plant, said last year it was in advanced talks with AG&P to provide LNG receiving, storage and re-gasification services to the Ilijan power plant and its expansion unit.

A Brown Company Inc., which bought 99.995 percent of the outstanding capital of VEC, is putting up an integrated floating LNG storage and regasification terminal and a 506-megawatt floating natural gas-fired power plant in Barangay Simlong, Batangas City.

VEC will build the necessary infrastructure to allow the importation of LNG as early as 2022.

Pulido said two companies—First Gen Corp. and Excelerate Energy LP—were on advanced stage of development of LNG projects.

“Others are more or less in the nascent stage,” he said.

Pulido said Batangas Clean Energy Inc. of the Lucio Tan Group was also interested to join the LNG bandwagon.

Excelerate Energy is also putting up an LNG import terminal in Batangas Bay with an investment cost of P11.3 billion ($230 million). Excelerate’s open access LNG project is set for completion by the second quarter of 2022.

The company plans to submit its permit to construct, expand, rehabilitate and modify to the DOE early this year.

Meanwhile, Pulido said the department already issued a permit to construct to First Gen in partnership with Tokyo Gas of Japan.

FGEN LNG Corp., a wholly-owned subsidiary of First Gen, selected three companies to proceed with the next stage of the binding tender process for the charter of an FSRU. The three preferred bidders are BW Gas Limited, Dynagas Ltd. and Hoegh LNG Asia Pte. Ltd.

The project will allow FGEN LNG to accelerate its ability to introduce LNG to the Philippines as early as the third quarter of 2022 to serve the natural gas requirements of existing and future gas-fired power plants of third parties and FGEN LNG affiliates.

Pulido said the department canceled the NTP issued to Tanglawan Philippine LNG Inc. controlled by Phoenix Petroleum Philippines.

“We were constrained to cancel their NTP as they essentially withdrew their plans as they were not able to reach financial close and had a few difficulties regarding their project proposal so it was essentially withdrawn. They are no longer pursuing the project. I believe it is mostly a commercial issue and it’s really the existing anchor market and the availability of land in the area,” he said.

The DOE initially suspended Tanglawan’s NTP application following the request of the company for a suspension in the wake of Udenna Corp.’s acquisition of the entire 45-percent shareholdings of Chevron Malampaya LLC, a wholly-owned subsidiary of Chevron Philippines Ltd. in the $4.5-billion Malampaya gas project.

Phoenix and Udenna are controlled by Davao-based businessman Dennis Uy.

Topics: Shell Group , liquefied natural gas , Department of Energy , Atlantic Gulf & Pacific Company of Manila Inc. , Vires Energy Corp.
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