Shell prepares for 2016 IPO

The Shell Group of Companies in the Philippines has revived a plan to conduct an initial public offering in 2016, a top executive said Wednesday.

“We are preparing for an IPO. All systems are go.  It’s just a question of timing. Some time next year, but  no specific time. But timing should be good [for IPO as] the market should be conducive,”  Shell Philippines country chairman Ed Chua told reporters.

Chua said Shell had not determined what to do with the proceeds from the IPO, as the main objective was to comply with the Oil Deregulation Law of 1998.

The law required oil refiners to list at list 10 percent of their shares in the local bourse.

“We have to look at where we can use the proceeds. Some of it may be to reduce debt, some of it for additional capex [capital expenditures], working capital,” he said.

Chua said Shell was also keen on putting up a liquefied natural gas facility in Batangas. 

“Yes, we continue to look for opportunities especially on LNG,” he said.

Shell announced in 2013 its decision to front-end engineering and design for an LNG import facility in Batangas that will be carried out by Shell’s Technology Centre Bangalore, which delivers advanced technical studies, projects and services for Shell around the world.

The company, however, recently raised concerns on the decision of the Commission on Audit  imposing P53.14 billion in taxes on the contractors of the Malampaya gas-to-power project in northwest Palawan.

Shell was also forced to shut down its oil depot in Pandacan to comply with a Supreme Court ruling directing the oil companies to move out of the Manila residential district.

“We want to settle amicably. We are also looking at all the legal remedies and obviously, the consortium will go through the legal remedies,” Shell Philippines Exploration B.V. managing director Sebastian Quiniones said, when asked about the CoA issue.

Quiniones said talks were ongoing between the Malampaya consortium and the Energy Department on how to settle the issue.

Shell’s other projects are on track for completion, according to company officials.

Shell is currently upgrading its 110,000-barrels-a-day refinery in Batangas which is expected to be completed by end of November.

Chua said Shell’s  North Mindanao import facility in Cagayan de Oro would also be completed before the end of the year while the retail station expansion was also ongoing.

Energy Department officer-in-charge Zenaida Monsada, for her part, said Shell indicated that it would push through with its LNG facility amid a competitive environment.

“They’re looking at the business environment. Is natural gas still needed? They have no indication that they will back out but of course they are looking at if, they can pursue its LNG at the same time as First Gen,” Monsada said.

First Gen Corp. earlier announced a plan to start construction of a $1-billion LNG facility next year.

“Shell looks at land-based and FSRU [floating storage regassification unit]. They are ready for both but construction of terminal takes time while FSRU can be done faster,” Monsada said.

Chua said Shell’s LNG plan was still a work in progress. He said  the final investment decision for the planned LNG facility would depend on the movement of world oil prices.

“It depends especially now with the low oil prices. We’ll have to review the timing [given the falling oil price],” he said.

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