Pilipinas Shell open to LNG tie-up with PNOC


PILIPINAS Shell Petroleum Corp. (PSPC) is open to a partnership with state-run Philippine National Oil Co. (PNOC) for the development of a liquefied natural gas (LNG) import facility that can house a power plant as well as stations for storage, liquefaction and regasification.

“LNG is an area we really want to successfully bring in the country, but it is a bit tricky because we have to form partnerships with multiple people,” PSPC President Cesar G. Romero said in an interview recently.

“We are very open to partnerships with various people, including PNOC,” he said.

PNOC is currently in talks with foreign partners for possible government-to-government partnership to put up LNG facilities that would include a 200-megawatt (MW) power plant and floating storage and regasification units (FSRU).

PNOC has said LNG represents the “fuel of the future” as it is competitive, clean and flexible, and complements renewables and storage technologies.

“We [and PNOC]had some exploratory conversations about this,” Romero said. However, PNOC earlier said that Shell has yet to submit a formal proposal.

“The key is knowing how the economics would work because it’s a huge investment,” Romero said. “That’s why you need partners to be able to balance it off. Secondly, the economics must be carefully understood in terms of how the investment will be,” he added.

The proposed LNG facility has an estimated investment cost of $600 million to $1 billion.

“PNOC is our partner now in Malampaya so we know how to work with them. They are a legitimate and capable partner so we certainly wouldn’t mind being partners with them in this LNG commercial arrangement,” Romero said.

“Government has been open about it. The trick is, how will you be able to justify the $600 million [investment]? Where will the income come from? What will the economics look like?” he asked.


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