Bloomberg reported that the local unit of Royal Dutch Shell Plc plans to invest as much as USD 1 billion to expand the Malampaya natural gas project in Palawan and extend its life.

Mr Simon Henry CFO of Royal Dutch Shell Plc said that the plan is to invest USD 75 million in Malampaya in 2011, in part for drilling that may start in April 2011.

The expansion project aims to increase gas production to fuel a new 300 MW power plant. The Malampaya natural gas field currently fuels three power plants in Batangas province with a combined capacity of 2,700 MW Sta Rita, San Lorenzo and Ilijan.

Mr Jay Layug energy undersecretary told reporters at the sidelines of the Makati Business Club joint membership meeting that Shell and partners planned to increase gas production and provide a steady supply to the Batangas power plants.

He added that "The USD 1 billion is not a one time investment. You’ll need to make sure that you maintain the project and to maintain is not cheap."

The Malampaya gas field is expected to produce until 2024.

Mr Layug said that Shell and partners Chevron and state owned PNOC Exploration Corporation were negotiating with potential gas buyers. Shell and Chevron own 45% of the Malampaya gas project while PNOC Exploration controls the balance.

The USD 4.5 billion Malampaya project provides about half of the requirements of the Luzon grid and 30% of the entire power needs of the country.

Manila Electric Co, the largest power retailer, meanwhile, plans to spend USD 150 million to build a power plant with a capacity of as much as 150 MW. The power plant will begin operations in 2012. The company expects 2010 profit of around PHP 11 billion.

Meralco plans to put up a 120 MW to 150 MW combined cycle aero jet fueled power plant in Calamba.

(Sourced from www.bloomberg.net)