Pilipinas Shell Petroleum Corporation (Pilipinas Shell) announced on Thursday the permanent shutdown of its refinery in Tabangao, Batangas due to the economic impact of the COVID-19 pandemic.
Tabangao shutdown announced
In an official statement released on its website, Pilipinas Shell acknowledged that the supply/demand imbalance in the region caused by the COVID-19 crisis has prompted the company to halt refinery operations.
“We have the technical capability and financial flexibility to manage and adapt to disruptive conditions. The regional refining margins which have been weak for some time due to the oil supply/demand imbalance in the region, have worsened due to demand destruction from the COVID crisis. As such, it is no longer economically viable for us to run the refinery. It is with a heavy heart that we announce the cessation of oil refining activities in Tabangao,” says Shell president and CEO Cesar Romero.
The facility has been on shutdown since May 24 as part of efforts to streamline operations amid weak oil demand and to protect the company from falling refining margins.
Data from Department of Energy (DOE) stated that compared to February levels, demand for petroleum products declined by 20 to 30 percent in March and by as much as 60 to 70 percent in April during the imposition of the enhanced community quarantine (ECQ).
From refinery to import terminal
Pilipinas Shell intends to transform the Tabangao facility into a world-class full import terminal as part of a shift in supply chain strategy from manufacturing to full import-based. The company says this move will help it adapt to the ‘new normal’ brought about by the COVID-19 pandemic.
“Nonetheless, it is with an equally invigorated spirit that we reveal our plans to transform Tabangao into a world-class import terminal – one that will sustain and grow Pilipinas Shell’s competitive advantages that have continuously evolved to stay relevant with the times ever since we started our business in the Philippines 106 years ago,” Romero reveals.
According to Pilipinas Shell, the Tabangao facility will become a world-class import terminal and will continue to cater to the fuel needs of Luzon and Northern Visayas. Meanwhile, the North Mindanao Import Facility (NMIF) in Cagayan de Oro will serve the growing energy needs in the balance of Visayas and Mindanao region.
The 110,000 barrels-per-day (bpd) Tabangao Refinery was established in 1962 and has been a key part of Pilipinas Shell’s commercial operations.
