Singapore's Callandra to invest $160 million in CNG project in RP

MANILA, Philippines - Callandra Liquefied CNG Fuels Corp. will invest about $160 million for its compressed natural gas projects in the Philippines, a top company official said.

Company president Randall Antonio said they are holding talks with various banks to raise 70 percent of the planned investment.

He said the remaining 30 percent will be infused by Callandra investors, composed of investment houses based in London and the United States. Callandra’s holding firm is based in Singapore.

The investment would cover the establishment of six CNG refilling stations and a processing plant, he pointed out.

Antonio said this project will be implemented three phases. The first phase is expected to be completed in mid-2010 with the company serving 2,000 CNG buses. The second phase will involve 3,500 buses and is expected to be completed by 2012.

By 2014, the project is expected to be in full commercial operation involving 5,000 CNG buses.

Six CNG stations are likely to be located in Manila, Las Pinas, Pasig, Quezon City, Pasay and Monumento.

The CNG processing plant, on the other hand, will be built in the Batangas area.

Antonio said if they would be able to commercially operate their CNG project in the Philippines, they could offer their CNG 25 percent cheaper than the diesel. He said this price could even go lower if the government would provide subsidies from natural gas projects’ royalties.

“In all practical essence, costing should be subsidized by somebody. Maybe the government or Shell (operator of the natural gas project in Northwest Palawan). As a matter of fact in the US, the buses are federally funded 80 percent and 20 percent by the city. The infrastructure to fuel those buses is also being funded by federal and city governments,” he said.

If these subsidies apply, he said the price of CNG can go 40 percent lower than diesel.

Callandra has signified interest to enter into the CNG business in the country three years ago but has not been able to push for the project due to the continuing volatility of oil prices and supply of natural gas.

In November 2008, the Malampaya consortium offered 150 billion cubic feet of natural gas to interested parties from the country’s largest natural gas field, which is estimated to contain 3.7 trillion cubic feet of natural reserves.

Callandra was among those that joined the bidding for the additional gas from the Malampaya field.

The Department of Energy (DOE) has been receiving numerous proposals for the construction of CNG refilling stations in the country. At present, there is only one CNG refilling station in the country located in Laguna and run by Shell.

The DOE is now working out a way to allocate a portion of the additional gas to be produced from the $4.5-billion Malampaya gas project in Palawan to the transport sector.