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Gov’t assures enough fuel supply despite refinery shutdown

The Energy Department on Friday assured the public of adequate fuel supply despite the shutdown of two refineries amid the low demand caused by the coronavirus pandemic.

It said the country had more than two months of fuel supply as of May 18, enough to meet local demand.

“Overall, we have sufficient supply, with over two months worth [67.2 days] of available supply, based on their May 18 inventory reports,” the department’s Oil Industry Management Bureau said.

Petron Corp. shut down its 180,000-barrel-per-day refinery in Bataan on May 5 for maintenance activities while Pilipinas Shell Petroleum Corp. implemented a one-month shutdown of its 110,00-barrel-per-day refinery in Batangas  on May 24.

“The shutdown of Petron and Shell was due to very low demand. Both refiners, however, could easily resume their operations once demand increases,” the department said.

The agency said demand for petroleum products declined by 20 percent to 30 percent in March and by as much as 60 percent to 70 percent in April during the imposition of the enhanced community quarantine, compared to the February levels.

“We have experienced very low demand for the months of March, April and May, but is expected to gradually increase by June, as quarantine restrictions are eased in an attempt to restart our economy,” the agency said.

Pilipinas Shell said earlier it was shutting down its Batangas refinery for a month starting mid-May as part of its “cash conservation measures”.

The spread of the COVID-19 pandemic led to the implementation of the ECQ in Luzon and selected provinces nationwide which impacted the country’s economic activity.

“In response to the drastic decline in local product demand and the significant deterioration of regional refining margins brought about the COVID-19 pandemic, the company will temporarily shut down its refinery operations for approximately one month starting mid-May 2020,” Pilipinas Shell said.

The Tabangao refinery commenced commercial operations with a nameplate capacity of 30,000 bpd in 1962 and completed its refinery upgrade in 2015.

“The temporary shutdown will help insulate the company from further potential drops in refining margins and will also aid in its cash conservation initiatives. Nonetheless, the Refinery will retain the flexibility to do a start-up immediately should market and demand conditions improve and stabilize,” Pilipinas Shell said.

The company said it was building the flexibility to switch from refinery production to full import of petroleum products, and therefore safeguard the continuous and cost-effective supply of high-quality fuels to the country.

Pilipinas Shell said the North Mindanao Import Facility in Cagayan de Oro City completed in 2016 could pursue product importation if needed.

Both Petron and Pilipinas Shell suffered losses in the first quarter because of low demand and low oil prices.

Topics: Department of Energy , fuel supply , coronavirus disease 2019 , COVID-19
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