Royal Dutch Shell eyes Phl for nat gas supply

MANILA, Philippines - Royal Dutch Shell Plc., the world’s top supplier of natural gas, is looking at the Philippines as a potential area for the production and supply of natural gas.

The country’s power generation and transport sectors will benefit from an abundant natural gas resource, the company’s global executives said.

“Our first priority is to make sure that we develop the indigenous resources of the country,” Andy Brown, director for the international upstream operations of Royal Dutch Shell, said in a webcast.

He said the company’s recent investment decision will upgrade the compression capacity in the Malampaya gas-to-power project.

In June, executives of Royal Dutch Shell and local unit Pilipinas Shell Petroleum Corp. committed to President Aquino a $1-billion investment for the Malampaya Phase 2 and 3 to sustain the level of gas production  under existing contracts.

Malampaya Phase 2 will involve the installation of two new subsea gas wells while Malampaya Phase 3 is composed of new compressors and a platform that will be completed in 2015.

“We are also looking at the Philippines as an opportunity to import liquefied natural gas (LNG). I think that it is going to be an important aspect as we look forward at the opportunities Asia provides,” Brown said.

It will no longer be all about big LNG consumers Korea and Japan, Brown said, as demand for energy is increasing in the Southeast Asian region.

“In many locations across the Asian region, we see LNG will be an attractive alternative certainly [compared with] burning coal for power generation,” Brown said.

Brown said countries like the Philippines, Singapore, Vietnam and Malaysia can also use LNG for the transport sector.

To date, the Malampaya project fuels the 1,000-megawatt (MW) Sta. Rita and 500-MW San Lorenzo power plants of First Gen Corp. and the 1,200-MW Ilijan natural gas power plant of SMC Global Power Holdings Corp., all in Batangas. The three power plants account for roughly 40 percent of Luzon’s power generation requirements.

“We see Asia will have significant increase in LNG demand and will drive the opportunities that we have in our portfolio,” Brown said, adding that the world is experiencing an abundant supply of natural gas.

For Ben van Beurden, executive vice-president for Shell Chemical, there will always be price volatility in the market.

“And it is something that we will have to live with, that we will have to take advantage of or moderate or build value and opportunities for our customers around,” van Beurden said.

Pilipinas Shell will complete a feasibility study for the $1-billion LNG import terminal that will serve large plants and off-grid facilities next year.

In June, Pilipinas Shell signed a deal with the Philippine government for a joint technical feasibility study of putting up a LNG terminal adjacent to Shell’s existing refinery in Batangas.