By Myrna M. Velasco
Amid crash-dive in demand for fuel in the country due to restricted mobility of people, Pilipinas Shell Petroleum Corporation announced that it opted to temporarily shutdown the operations of its refining facility in Tabangao, Batangas for at least a month.
The cease in its refinery operations will start middle of this month and will last for 30 days or until mid-June.
Shell said this is part of its prudent step to enforce “financial resilience through cash conservation measures,” given that oil demand in the country had plunged significantly since the enhance community quarantine (ECQ) was enforced by the Duterte administration starting mid-March.
“The temporary shutdown will help insulate the company from further potential drops in refining margins and will also aid in its cash conservation initiatives,” Shell stressed.
The country is already into its two-month stretch of lockdown to curb the spread of the lethal coronavirus, but on the flip side, that has impacted on the national economy that subsequently triggered plunge in oil demand – as the commodity is considerably one that underpins economic undertakings and expansion.
The temporary shutdown, Shell said, will correspondingly “position the company for the subsequent economic recovery of the Philippines from the crisis.”
The oil firm expounded its refinery “will retain the flexibility to do a start-up immediately should the market and demand conditions improve and stabilize.”
With that interim arrangement, the oil company said it will be exercising flexibility on its operations, by switching from refinery production to full importation of petroleum products.
That way, it stressed, the oil firm would be able to leverage on product procurements that will be cost-effective, given the plummeting oil prices in the world market.
The company emphasized that the commissioning of its North Mindanao Import Facility (NMIF) four years ago has been an underpinning game plan – and had been a clear indication of such direction that industry players could resort to depending on the economic sense of the strategy that they will be taking.
Shell further indicated it will also use the refinery shutdown “as an opportunity to conduct proactive maintenance activities in the refinery,” which could then prep the facility for return-to-operation once the Philippine economy reopens.
Despite that decision on its refining operations, Shell emphasized that it guarantees the public and the government that it can still comply with the minimum inventory requirement being enforced by Department of Energy (DOE) rules.