Pilipinas Shell Petroleum Corp. is permanently shutting down its refinery operations in Tabangao, Batangas and transforming the facility into a full import terminal.
The company is shifting from manufacturing to importing fuel products as the price of fuel products has dropped or is now almost equal to the cost of refining crude oil, Shell said in a statement.
It is also part of its strategy to “secure the long-term sustainability of its business and thrive in both the ongoing energy transition and the new normal created by the COVID-19 pandemic.”
Shell last May announced the temporary shutdown of the Tabangao refinery owing to lower demand amid limited mobility as the Philippines implemented community quarantines to prevent the spread of COVID-19.
READ: Shell shuts down Batangas refinery, shifts to imports
“Due to the impact of the COVID-19 pandemic on the global, regional and local economies, and the oil supply-demand imbalance in the region, it is no longer economically viable for us to run the refinery,” Shell president and chief executive officer Cesar Romero explained.
The shift from manufacturing to full import “is a move that will further strengthen the Corporation’s financial resilience amidst the significant changes and challenges in the global refining industry and the change to the new normal brought about by the COVID-19 pandemic,” Shell said.
It is also to prepare the company for a future that will increasingly rely on cleaner energy and other energy solutions.
Shell said it is “in fighting form” after narrowing its quarter-on-quarter net loss from P5.5 billion in the first quarter to P1.2 billion in the second quarter, as crude oil and product prices slightly improved and stabilized during the second quarter.
Net loss booked as of end of June totaled P6.7 billion.
Despite seeing volume and earnings recover in May and June, Shell said it remains cautious given the spike in COVID-infected cases in the country and the consequent reversion of Metro Manila, Bulacan, Cavite, Laguna, and Rizal under modified enhanced community quarantine again.
Shell distributes refined and imported petroleum products through its 27 fuel distribution terminals, 10 lubricants warehouses, and two bitumen import facilities located across the Philippines. It also has another import facility in Mindanao, the Northern Mindanao Import Facility.
