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Shell Exploring LNG Terminal in the Philippines

6/6/2012

 
Pilipinas Shell Petroleum Corp., the Philippine subsidiary of oil and gas giant Royal Dutch Shell Plc, signed a Memorandum of Understanding with the Philippine Government this week.  The MOU commits the parties to a joint feasibility study for an import and regasification terminal for liquified natural gas (LNG) next to Shell's refinery in Batangas.

The feasibility study should be completed in 2012 with operations commencing in 2016 if the project is viable.

The Philippine Department of Energy is developing a Natural Gas Master Plan to diversify the country’s energy sources and address the increasing demand for power.  The government is already pursing a $2.1 billion Batangas-Manila natural gas project.

Shell has been doing business in the Philippines since 1914 and is one of the country's largest investors. The company's existing operations in the Philippines include oil and gas exploration, production, oil refining, distribution and sales to consumers.

John Howley
New York, New York


Will the Philippines Get Public Private Partnerships Off the Ground?

5/14/2011

 
The Republic of the Philippines has announced a number of significant infrastructure projects to be built using a Public Provate Partnership (PPP) structure.  President Aquino has renamed the former Build-Operate-Transfer (BOT) Cente as the Public Private Partnership Centerr, taken it out of the Department of Trade and Industry, and placed it under the direction of the National Economic Development Authority (NEDA).  His administration has also developed a wish list of infrastructure projects that they'd like to pursue, complete with a very attractive web site and a glossy brochure.

Unfortunately, there is very little substantive information about most of the projects.  A number of the projects in the glossy brochure, especially those in the green energy area, appear to be projects on paper only.  It is unclear what financing mechanisms or revenue streams will be available to turn many of these projects into reality.

In an extraordinary opinion piece in The Philippine Star, former Secretary of Foreign Affairs Roberto Romulo places the blame for a slow start squarely on the shoulders of NEDA Director General Cayetano Paderanga, Jr.  The criticism is harsh.  You really need to read the original piece to get the full flavor.  Read it here.

Also of concern is the still unsettled matter of the airline terminal built by the German firm Fraport.  Resolving that dispute in a fair and transparent manner would go a long way to reassure foreign investors.

So far, the Philippines has relied on a Millenium Challenge grant from the US and a concession loan from China to get started on some major transportation projects.  But bilateral and multilateral aid will only accomplish so much.  There must be sustainable revenue streams and adequate assurances of payment.  Foreign investors understand that the types of take-or-pay contracts and guarantees available to construct power plants during the Ramos Administration are unlikely to return.  Investors are waiting to hear what will take their place.

John Howley
Woodbridge, New Jersey

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