Pilipinas Shell to complete refinery upgrade, fuel import terminal by year-end

Pilipinas Shell said it will complete several major projects by the second half of 2015, including the upgrade of its 110,000-barrel-per-day Batangas refinery on Luzon island and construction of a PHP 6 billion (USD 132 million) fuel import terminal in Cagayan de Oro City on Mindanao island. The Cagayan de Oro terminal entails expanding an existing depot, which should be completed by October.

The completion of the facility in Mindanao will pave the way for the introduction of Euro 4-compliant fuel products as early as October in Visayas and Mindanao, according to Pilipinas Shell Chairman Edgardo Chua.

“In some places, Euro 4 will be made available much earlier. Most likely Mindanao and Visayas,” he said. The Philippine Department of Energy has announced that Euro 4 fuel standards will be in effect by 2016.

Meanwhile on the main Philippine island of Luzon, introduction of Euro 4-compliant fuels will have to wait for the completion of the PHP 6.7 billion (USD 148 million) upgrade of the Tabangao refinery in Batangas. The refinery is expected to start producing these products before the end of the year. The refinery will also serve as Shell’s fuel distribution point in Luzon, following the closure of Shell’s operations in the contentious Pandacan oil depot, which has been the distribution hub not only for Shell, but also the two other major oil players, Petron and Caltex (Chevron Philippines) for decades. Chua said Shell is closing its Pandacan oil depot in Manila in the second half of this year.

“We’re trying to meet the deadline set by the Supreme Court [to leave Pandacan] sometime November,” Chua said. He said Shell started demobilization in early May, when it received the court order, which was final and executory.

“We’re just using up the stocks since we are not moving the facility elsewhere. It will simply be closed,” Chua said.

Shell faces logistics challenges because without its depot in Manila, its fuel distribution trucks will have to make deliveries all the way from the refinery in Batangas, which is more than 100 kilometers south of Manila. Manila, which is the main metropolis, has a truck ban during peak hours, is highly congested and prone to flooding during the rainy season.