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Shell Philippines says will exhaustively challenge 53.14 billion peso tax claim

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The Philippine unit of Royal Dutch Shell (RDSa.L) will exhaust all legal means, including international arbitration, to challenge a 53.14 billion peso (£751.8 million) tax claim against its Malampaya natural gas project, a company official said on Friday.

Shell Philippines Exploration B.V, is the operator of Malampaya in the southwestern Philippines, along with partners, Chevron Malampaya LLC, a unit of the U.S. energy firm (CVX.N) and the Philippines’ state-owned PNOC Exploration Corp.

The companies are challenging a 2011 finding by the Philippines’ Commission on Audit that the project partners owed the government 53.14 billion pesos in taxes in addition to royalties on the gas produced. However, the Department of Energy said the taxes were already included in the government’s royalty take of 60 percent of the project’s net income.

“The joint venture partners are looking at all legal options,” Paulo Gavino, spokesman for Shell Philippines, said by telephone when asked to comment on a local newspaper report that the company had filed a case with the Singapore International Arbitration Centre to counter the tax case.

“Arbitration is always an option,” Gavino said.

Malampaya supplies gas to power plants operated by First Gas Power Corp, a unit of First Gen Corp (FGEN.PS) and San Miguel Energy Corp, a unit of conglomerate San Miguel Corp. (SMC.PS). The plants produce electricity for a third of the Southeast Asian nation’s homes and businesses.

Malaypaya is the country’s first natural gas find and provides all its natural gas. It is due to run dry in 2024.

(Reporting by Neil Jerome Morales; Editing by Christian Schmollinger)

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