After 58 years of continuous operations, Pilipinas Shell Petroleum Corporation will be shutting down its Tabangao Refinery. This is mainly due to the effects of the COVID-19 pandemic. However, it is not all bad news because the Tabangao Refinery will be converted into a “world-class full import terminal.”
“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.
“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 assures that the end of refining operations will not affect Pilipinas Shell’s capability to supply high-quality fuels as the petroleum company shifts its supply chain strategy from manufacturing to import-based. “Shell remains committed to the Philippines and will pursue opportunities where we can leverage our global expertise in line with our growth strategy,” Romero says.
Pilipinas Shell says that the Tabangao facility will be converted into 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 the Visayas and Mindanao region.
The transformation of the refinery means that Pilipinas Shell will maintain its presence in Tabangao, likewise preserving the support to its stakeholders, particularly the communities that benefit from its corporate social responsibility programs.
The petroleum company says it will ensure that employees directly impacted by the transition are well taken care of. “I salute all the men and women whose sacrifices and contributions over the years have made the Tabangao Refinery an icon for Shell in the Philippines, and most especially in Batangas”. Romero says. “We will be guided by our core values of Honesty, Integrity and Respect for People in safeguarding their well-being, addressing their needs sensitively and preparing them for their next journey ahead.”
According to the Department of Energy, 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, compared to February levels. As a result, Pilipinas Shell has suspended operations of the Tabangao Refinery since May 24 in a bid to improve the company’s financial position.