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All.BizUnited KingdomNewsPower marketShell set to invest $1B more in Malampaya

Shell set to invest $1B more in Malampaya

19 Jan 2011 10:21 | Power market

The Philippine unit of Royal Dutch Shell Plc plans to invest as much as $1 billion in the development of the second phase of the Malampaya deep-water-to-gas power project off Palawan.

Speaking at the joint membership meeting of the Makati Business Club and Management Association of the Philippines, Royal Dutch Shell CFO Simon P. Henry said the investment will help extend the life of the Malampaya wells, which currently provide natural gas to to the 1,200-megawatt Ilijan plant of Korea Electric Power Corp. (Kepco); 1,000-MW Sta. Rita and 500-MW San Lorenzo plants, all in Batangas.

Royal Dutch Shell, through Shell Philippines Exploration BV, has a 45 percent stake in Service Contract 38, which covers the $4.5-billion Malampaya power project. Chevron Malampaya LLC owns the other 45 percent stake, while the local PNOC Exploration Corp. holds the remaining 10 percent.

For this year alone, Spex intends to spend $75 million to begin preparations for the planned extension, especially if the exploration drilling to be conducted this April yields favorable results, Henry said.

The Shell official noted that the company was looking for more natural gas, which Henry dubbed as the fuel of the future, as Shell believes that this particular resource will help address the world's growing power demand and requirements.

In a separate interview with reporters, Energy Undersecretary Jose Layug Jr. noted that the planned phase 2 development of the Malampaya project, which will have to be shouldered by all consortium members, may even run up to as much as $1.2 billion.

Source:  inquirer

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