Edgar O. Chua, Chairman, Shell Philippines
Edgar O. Chua, Chairman, gives an insight into the remarkable growth of the Shell Philippines remarking that, “it is the biggest of six Shell Business Services Centers across the globe. Its expansion is testimony to the Filipino professionals’ world-class service and a significant contribution to the Shell Group’s operational excellence.”
Given that the Philippines critically needs to reduce its dependency on imported fossil fuels, do you believe the current energy roadmap is geared towards exploring the country’s indigenous resources in order to assure energy stability and security?
We have seen improvement in how the Philippine government addresses the issue of the future of energy. Given the expanding population in the country and its corresponding energy needs, the government has tried hard and continues to address the issue of resource constraints and dependency on imported fossil fuels through energy mix planning. Unfortunately, efforts to address these issues are frequently stalled by different policy regimes every change of administration. As a result, energy investments run the risk of encountering serious problems if and when new administration comes up with new regulations. Hence, it has become imperative for the new administration to articulate a firmer and stronger energy mix policy—one that incentivizes the use of cleaner energy. I’m not saying the government should subsidize it as I don’t believe in subsidies. The incentives can come in a number of different ways that government planners should think long and hard about.
Shell is considered a pioneer in the Philippine oil exploration industry as your legacy can be traced back to 1897 (introduction of Shell Kerosene, office since 1914). What has been the winning formula for Shell Philippines’ success over the decades?
The key to our success is the company’s long-term view in every investment we place. We look at how our investments can impact local communities, and how we can generate employment and business growth in the areas where we work. In every project we do, we always keep our values and business principles anchored on the core values of honesty, integrity and care for people. We don’t exist for profit alone. Shell Philippines is a trusted brand. Long-term commitment to our stakeholders is the key to our success.
And all these you can see through our 100 years of legacy in the Philippines. From a small trading firm formed in 1914 selling kerosene for Filipino household use, Shell Philippines has grown to be a leader in the power, energy, and gas technology sectors worldwide and is today a part of Philippine national life.
What has been the impact on the local community?
Shell Philippines has always worked hand in hand with our communities. We also make sure that they are all engaged in our investments, projects and activities. Through our local content policy, we have used local materials and employed local talent in all our projects throughout the country. In 1982, we even put up the Pilipinas Shell Foundation Inc. to manage and implement all the social projects of Shell.
To date, Shell Philippines has impacted more than 8 million Filipinos through our programs on education, health, agriculture, livelihood, entrepreneurship training, promotion of arts and culture, science and technology among others. Shell Philippines is also an active supporter in relief and rehabilitation programs. In the recent calamity that hit the country, Shell donated USD 2.25 million to its partner organizations to extend relief such as food and water, medical supplies and personal hygiene products, and fuel to impacted communities. Its staff participated in volunteer activities such as telethons and the repacking of relief goods. Indeed, Shell’s impact to community development and nation building are our legacy in the Philippines. And all these we are highlighting as we celebrate our 100th year Anniversary in the Philippines.
On top of our impact to the communities, Shell has also made a huge economic contribution to the Philippines through its multi-billion investments in retail network expansion, oil and gas refinery management and operations, and by employing employees in downstream, upstream and business process outsourcing companies. From six employees in 1914, it now employs more than 4,000 Filipinos. The company has also started reaching more provinces and more consumers by diversifying its products and installing depots in strategic areas. During our Centennial celebration, Shell Philippines will be carrying out the biggest innovation event in Asia Pacific: the Shell Eco-marathon (SEM) Asia 2014. Shell Eco-marathon Asia, to be held at the historic Rizal Park, will showcase technologically advanced cars designed by student teams from various Asian countries. The event will also feature an interactive energy fair and an international conference on water-energy-food nexus.
Where do you see the growth of Shell Philippines today? Where do you see the biggest opportunities for the coming years?
The growth of Shell Philippines is in our Shell Business Service Center (SBSC-Manila). SBSC provides processing services related to finance, human resources, procurement, customer services and other business needs of Shell companies around the world. SBSC-Manila has grown from less than 50 staff in 2004 to more than 4,000 employees in 2014, making it the biggest of six Shell Business Services Centers across the globe. Its expansion is testimony to the Filipino professionals’ world-class service and a significant contribution to the Shell Group’s operational excellence.
In addition, we are building more retail sites and upgrading our refinery. In terms of the biggest opportunities in the coming years, natural gas will definitely be one of them. That is why we are looking at putting up an import LNG facility.
What is the current status of the Malampaya Natural Gas project, the “golden boy” of Shell Philippines?
Since it began operations in 2001, the Malampaya project has produced cleaner-burning natural gas that supplies three power plants in Batangas, with a combined capacity of 2,700 MW. Natural gas from Malampaya is currently used to provide approximately 30 percent of the country’s power needs.
The project is now in its next stages of development, Malampaya Phases two and three, which aim to maintain current levels of natural gas production. Phase two recently drilled two more production wells using the ENSCO 8504 drill rig’s innovative drilling technology. The Shell team worked hard to safely maintain gas production from the current production wells while drilling was on going. Phase three is the addition of a second gas platform beside the existing one. This will house two additional gas compressors to sustain the flow gas from the Malampaya gas reservoir. This platform, by design, is being fabricated in the country which will enable technology transfer to the country to allow the country to position itself as a credible supplier of services, construction of platforms and other fabrication requirements for the oil and gas industry.
On top of that, we are building our first ever oil platform, which will enable us to position the country as a credible supplier of services, construction of platforms and high tech requirements for the oil and gas industry.
We have constantly promoted energy security for the Philippines. This is because we have always believed that the Philippines can be a stronger nation if it produces cleaner energy to meet the rising energy needs of Filipinos. That is why we developed a project that sources natural gas from our own shores: the Malampaya Deep Water Gas-to-Power Project.
Historically, foreign companies faced ownership challenges when entering the Philippines, but we hear that immediate opportunities lie in potential joint ventures in petroleum and coal areas. Shell Philippines has already partnered with Chevron and PNOC exploration in Malampaya, which is considered a showcase joint venture in the Philippines. What do you have to say about it?
Our joint venture of Shell Philippines Exploration B.V.Chevron Malampaya LLC and the Philippines National Oil Company Exploration Corporation, state art facility off the coast of Palawan, has generated a substantial amount of our power since 2001, as I mentioned before.
To date, Malampaya supplies up to 30 percent of the country’s power needs. The gas project also has deliberately implemented various social and environmental projects through the Malampaya Foundation in our host communities as a way of creating positive legacy in our host communities.
This project stands as a symbol of pride in our beloved country, as it has resulted in less importation of oil from abroad. With the Malampaya Deep Water Gas-to-Power Project, what once was a dream of Philippines energy independence has been turning into a reality.
Malampaya has also been recognised by the United Nations Environmental Program and the International Chamber of Commerce with the 2002 World Summit Business Award for Sustainable Development in Partnerships, in Johannesburg, South Africa, in recognition of the careful balance of the social, environmental and economic components in the course of development.
What are the criteria that you look for prior to making investments in the upstream sector?
The usual criteria will be the economics benefit and the operating environment meaning stability. One of the many innovations we take pride in at Shell is our Tabangao refinery. Situated in Batangas, this refinery has consistently met Filipinos’ energy needs for more than 50 years. Known as one of the most energy-efficient refineries in the world, the Shell Tabangao Refinery has continuously done its part in preserving the environment through lowered emissions and continued efforts to keep neighbouring Batangas Bay clean. Today, it has the capacity to produce 110,000 bbl/d, enough to meet the country’s substantial demand for fuel. Because of our refinery, Filipinos are given a constant and reliable supply of fuel that allows farmers to transport their produce to markets, public utility vehicle drivers to make a living on the road and parents to bring their kids to school, among many others. And in the years to come, our dedicated people behind the refinery remain deeply committed to providing precious energy for our beloved country. The Shell Tabangao refinery is one of our many projects to help bring the Philippines forward on our 100th year.
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