NEWSFLASH

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SHELL BEGINS $2-B PALAWAN GAS PROJECT

Manila, Jan. 2, 1998 - Natural gas from the Malampaya Sound in Palawan will finally be extracted commercially to fuel a 1,200 megawatt power plant Of the National Power Corporation (Napocor) in Batangas.

Shell Exploration BV (Spex) and Occidental Petroleum Inc. (Oxy) are developing the gas source and are still negotiating for another large contract: to supply natural gas fuel for the Lopez-owned 1,500 megawatt power plant in Sta. Rita, Batangas.

Spex/Oxy signed a 20-year supply deal with Napocor this week. It's Palawan gas field could fuel 3,000 megawatts of electricity for 20 years.

With the first purchase agreement signed, Spex/Oxy announced that is now starting to prepare for the implementation of its $2-billion project.

The natural gas will be piped from Palawan to Tabangao, Batangas, where a desulphurization plant will be built to process the natural gas before delivery.