05-08-03 Philippine Department of Energy, Shell Petroleum and the Malampaya consortium -- Shell Exploration, ChevronTexaco, and Philippine National Oil Exploration Co -- have signed a Memorandum of Agreement to cooperate in the commercial use of compressed natural gas for the country's public transport sector.
"This agreement is a milestone in our effort to develop the downstream natural gas industry," a DOE official said. "We are setting new standards in the air quality for the transport sector with the use of CNG-fuelled buses, and at the same time, decreasing our reliance on imported fuel," he added.

Under the MoA, the parties will work together to study and evaluate the commercial viability of CNG, technical requirements and the market demand for CNG-fuelled public utility buses. The government has been keen to push the use of CNG as a cheaper alternative to expensive imported fuel since upstart of the Malampaya gas field, which holds estimated gas reserves of 3 tcf.
Under the agreement, Shell Exploration (SPEX) has pledged to fund design, construct and operate an anchor load CNG outlet near the Malampaya onshore gas plant in Batangas. This plant will serve as the CNG anchor load, as from there, gas will be moved to a smaller CNG outlet in Batangas or Laguna, where the smaller outlet can supply CNG for up to 200 CNG-fuelled buses, the official said. This refuelling system is expected to be operational by February 2004.

Meanwhile, the Malampaya consortium has also pledged to sell CNG to Shell Petroleum for the next seven years from next year. Shell will likely sell CNG to buses at an average 40 % discount to current diesel retail prices.
Diesel prices are currently at Peso 15.35/l ($ 0.28/l).