US-based CNG firm eyes Philippine retail chain

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15 June 2009

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US-based Callandra Liquefied CNG Fuels Corp is looking at tapping Philippine petroleum firm Flying V’s retail logistics chain to jump-start its proposed natural gas refilling business in the country, reported local newspaper the Manila Times.

Ramon Villavicencio, Flying V chairman, said that the company has already signed a memorandum of understanding with Callandra for this purpose in order to make natural gas available to the transport sector.

“We have already signed a memorandum of understanding with Callandra. They got interested in us because of our retail network,” he said.

Flying V is one of the oil companies established after the government deregulated the downstream petroleum industry a decade ago. It has over 170 retail stations besides an expensive network of import terminals and storage depots.

Callandra, a unit of multinational firm Callandra Alternative Fuels & Energy, is the first company to be accredited by the Department of Energy for the country’s Natural Gas Program for Public Transport. This program aims to develop natural gas for vehicle use in light of the volatile price of crude in the world market.

The company utilises liquefied compressed natural gas (LCNG) technology to produce automotive grade CNG fuel. LCNG is derived from the compression of gas to liquid form, which allows it to be produced and transported in areas where gas supply chains would normally not be economically viable.

Last year, the company indicated that it would pour an initial investment of $110 million for CNG refueling stations and a processing plant in Metro Manila within the next five to seven years.

Villavicencio said that Callandra would be sourcing its natural gas from the Malampaya field in offshore Palawan, which is run by a consortium led by Shell Philippines Exploration BV.

“Callandra has a tie up with Shell. It will get its CNG from Shell. But its problem is how to make this available to the consumers,” he said, adding that this is where Flying V’s retail network may come in once both parties conclude more concrete agreements.

It would be recalled that in November last year, the Malampaya consortium offered 150 billion cubic feet of natural gas to interested parties from the country’s largest natural gas field, which is estimated to contain 3.7 trillion cubic feet of natural reserves.

Callandra, as well as power generating companies, vied for the gas supply but the Malampaya consortium has yet to announce the winner of the contract.

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