THE Department of Energy (DOE) has assured that the closing of the Shell oil refinery in Batangas will have no immediate impact on the oil industry.
DOE Assistant Secretary Leonido Pulido III told SunStar Cebu the country’s oil supply is still sufficient.
“There’s no immediate impact. First, because the shutdown will not happen immediately. Shell has a plan in place where it will slowly implement the decommissioning of its refinery. Second, there’s no direct impact because whatever products Shell produces from its refinery will be replaced with direct importation. Third, they have adequate stocks right now, minimum inventory requirement, and Shell is compliant with that,” he said.
Closing of Shell’s refinery
Oil and gas industry leader Pilipinas Shell Petroleum Corp. on Aug. 13, 2020, announced that it will shut down its Tabangao refinery in Batangas and will convert it into a full import facility as it racked up losses amid the Covid-19 pandemic.
Oil prices have collapsed as the continued spread of Covid-19 largely halted global travel and slowed down other energy-chugging sectors such as manufacturing.
Shell said it will shift to imports and the Tabangao facility will be converted into a storage terminal for finished products and components.
The Tabangao import terminal will serve customers in Luzon and north Visayas.
The company’s North Mindanao Import Facility in Cagayan de Oro City, meanwhile, will serve the energy needs in the balance of the Visayas and Mindanao.
The company reported a P5.5 billion loss in the first quarter as global oil prices dropped and the economy slowed down.
Pulido said Shell’s move won’t affect the in-country stocks.
“Pursuant to an executive order issued by the two previous administrations it requires oil companies to maintain a certain inventory and Shell is compliant to that. We have enough supply in the event of an emergency for 45 days,” he said.
In the long term, he said there is a possibility of a shortage if an emergency the likes of the attack on Saudi Arabia’s Aramco oil facilities in September 2019 will happen.
However, with the current fundamentals of the market, Pulido said, the possibility of an oil shortage is only minimal.
“Fuel consumption dropped to at least 50 percent,” he said, because of the pandemic.
Meanwhile, prices of oil products slightly increased starting Aug 18.
Chevron, Cleanfuel, Flying V, Petro Gazz, Seaoil and Shell announced that they will hike diesel prices by P0.10 per liter and gasoline prices by P0.60 per liter. (JOB)