Shell in exploratory talks with government on LNG plant

SHELL Philippines admitted it held exploratory discussions with the government for a possible partnership on an ambitious liquefied natural-gas (LNG) project, but no firm decision has been made yet.

“We talked to them, with Admiral Lista…we are very open to partnerships with various groups, including the Philippine National Oil Co. [PNOC],” Shell President Cesar Romero said.

PNOC President Reuben Lista earlier said Shell was among parties he had discussions with regarding the plan of the government to build an LNG terminal. No firm offer from Shell was made, Lista said.

“LNG, that’s one area we really want to successfully bring into the country. Kaya lang, it’s a bit tricky because we have to form partnerships…but the key is to be able to understand how economics would work because it is a huge investment,” Romero said.

“An LNG facility costs between $600 million and $1 billion. This is why you need partners to be able to balance it off. Second, the economics must be carefully understood in terms of how the investment will be,” Romero said.

Shell is among the local companies that had expressed intention to build an LNG terminal in the country. The company was mulling over putting up a new entity that would house its LNG business.

LNG is natural gas that has been converted into a liquid state for easier storage and transportation. Upon reaching its destination, LNG is regassified so it can be distributed through pipelines as natural gas. The company’s planned terminal, which will consist of a floating storage and regasifying unit, could power up to 2,000 megawatts (MW) of natural-gas plants.

Lopez-led First Gen Corp. expressed interest to partner with the PNOC for the development of a LNG terminal.

“First Gen acceded to be a minority partner. That I can tell you, but not the details. They have been attending our negotiations, they recognize they need us more,” Lista said.

PNOC plans to put up an LNG terminal consisting of an initial 200-MW modular power plant, storage and regasification facilities.