Shell finalizing technical aspect for LNG project

MANILA, Philippines - The local subsidiary of energy giant Royal Dutch Shell is now finalizing the technical aspect of front-end engineering design (FEED) to finally construct its planned liquefied natural gas (LNG) terminal by 2017, a ranking official said.

Pilipinas Shell Petroleum Corp. is currently looking at the Batangas Bay area to put up a floating storage regassification unit (FSRU) LNG terminal, Shell Philippines Exploration B.V. (SPEX) managing director Sebastian Quinones said.

The company needs to iron out the FEED before coming out with a final investment decision.

Quinones said investors and shareholders of the company would only approve the project if there is a “good and viable plus-minus 10 percent estimate” on the total project cost.

“Probably, this would be hundreds and hundreds of millions again,” he said. “I don’t think (the final decision) will be this year. It could be next year.”

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

As supply from the Malampaya deep water gas-to-power project is seen to run out by 2024, building an LNG import terminal would help bridge the need until another gas field is discovered and developed.

Quinones said once the final investment decision is issued, it would take less that three years to build the FSRU LNG terminal.

“Energy projects like this takes a long time. Remember, Malampaya took a decade... that’s why we are already preparing for LNG as a fuel source to replace Malampaya,” he said.

“Hopefully, we can find something in between but now, it’s too late to be able to develop something that can replace Malampaya. So, to bridge the gap between that would require LNG imports,” the Shell official added.

Australia’s Energy World Corp. (EWC) plans to start operating its gas-fired power plant next year, which was originally targeted in December 2014. This project is part of the company’s $800-million LNG facility in Quezon.

First Gen Corp. of the Lopez Group earlier announced plans to start construction of a $1-billion LNG facility next year.

Power distributor Manila Electric Co. (Meralco) is in discussions with Osaka Gas Co. Ltd for a $2-billion LNG project.

With all these parties interested in LNG, Quinones said Shell is still open to partnerships.

“We are always talking to as many people as we can... We are all aiming to achieve an LNG facility,” he said.