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Shell offers cheaper solution for LNG import facility

The local subsidiary of Royal Dutch Shell plc is dangling a relatively cheaper and quicker-to-develop floating storage and regasification unit (FSRU) technology as a viable solution for the country’s proposed liquefied natural gas (LNG) import facility.

FSRUs are deemed lower cost alternative compared to onshore LNG facilities. For instance, at $1.0 billion land-based LNG terminal, the equivalent investment for FSRUs could just be at $300 million to $400 million, according to experts.

Additionally, the installation process would generally be faster at 2-3 years compared to four (4) years minimum for onshore handling facility’s development.Shell logo

Shell Philippines Country Chairman Edgar O. Chua said they are currently exploring the viability of FSRU facility for the country’s future gas needs. But cost assumptions are still being crunched for that technology option compared to landed LNG terminal.

Chua said they are also evaluating if they would need a partner for that propounded LNG venture – and what extent of demand they should prepare for to serve.

“Shell is quite flexible in all of these things. We’re not looking at doing it by ourselves,” he stressed.

The company executive added that their investment blueprint could be anchored on “partnership with one or more (investor groups).”

Initially, Chua said that the plan will be for Shell to put up a separate corporate vehicle “to invest in LNG import facility.”

The Philippine market’s shift to LNG is seen crucial with anticipated production decline and lapse of the gas sale and purchase agreements covered by the output of the Malampaya field.

Chua added the size of their proposed facility “will depend on demand that we see in the market,” and similarly reiterated that this “is something we are very much interested in because we believe LNG provides a very good, clean alternative as far as fuel for the future is concerned.”