Shell in talks with local gencos for LNG deal

MANILA, Philippines - Global energy giant Shell is in talks with local power generation companies for possible off-take agreements as it firms up its plan to build a liquefied natural gas (LNG) terminal in the Philippines.

On the sidelines of Shell’s Powering Progress Together forum held at the Manila Hotel yesterday, Edgar Chua, chairman of Shell Companies in the Philippines, said this is among the steps the company is doing as part of its plan to put up an LNG terminal in the country.

At the same time, he said Shell continues to wait for the Department of Energy (DOE) to finally come out with a fuel policy mix.

“We are engaging different parties so we can finalize an off-take agreement and we’re hoping the government will come out with an energy mix policy,” Chua said.

However, Chua did not identify which companies they are eyeing to partner with for possible off-take agreements.

For now, local companies that have expressed plans to also get into the LNG business are the Lopez Group’s First Gen Corp. and Manila Electric Co. (Meralco), a company chaired by business tycoon Manuel V. Pangilinan.

Shell’s planned LNG terminal in the Philippines will have a capacity of up to 5,000 megawatts, more than the available capacities for the Luzon and Visayas grids combined.

The terminal would be completed in phases, with the first phase as the floating storage and re-gasification facility.

LNG is natural gas that has been converted into liquid for ease of storage or transport.

Chua said the contract for the front-end engineering and design (FEED) for the planned LNG facility has already been awarded.

In July last year, Shell announced its decision to proceed with the FEED for the terminal, which is envisioned to be a floating storage and regasification unit in the country.

However, Chua said what is crucial is how the government’s final fuel mix policy would turn out and how LNG would fare in the whole equation of fuel use in the Philippines along with coal and renewable energy.

Initially, the DOE is looking at a fuel mix that would have 30 percent natural gas/liquefied natural gas and 35 percent coal with the rest renewable energy.