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Oil firms move to avert supply shortage

By Amy R. Remo
Philippine Daily Inquirer
First Posted 19:44:00 12/09/2009

Filed Under: Oil & Gas - Downstream activities

MANILA, Philippines -- Oil firms Total Philippines Inc. and Pilipinas Shell Petroleum Corp. are eyeing to implement contingency measures to ensure the continued supply of liquefied petroleum gas and other fuel products, amid reports of possible shortages.

The move is meant to address logistics problems in bringing fuel supplies from the Tabangao refinery in Batangas to various distribution points in Luzon and Metro Manila. A typhoon that hit Southern Luzon in October had caused the "Bridge of Promise" to collapse.

Roberto S. Kanapi, Shell vice president for communications, admitted that "supply disruptions may be likely in the next days to come so we're looking on contingency arrangements."

The Bridge of Promise, according to Kanapi, remains closed and it may take as long as 18 months to finish the construction of the bridge, even as the Department of Public Works and Highways already has the budget for it.

"Bridge construction assessment (is) still ongoing," he added.

In the meantime, Kanapi said Shell, along with other industry players, has been looking at reinforcing the Taysan bridge as an alternative route for the trucks that would bring fuel from the Tabangao refinery to various distribution points.

"Industry is working closely with local governments and the DPWH to strengthen the Taysan bridge to accommodate heavier trucks," Kanapi added.

He further disclosed that Shell has been targeting to complete bridge reinforcement efforts -- the costs of which would be shouldered by industry players -- by the end of the month.

Currently, the Taysan bridge could only accommodate trucks that weigh 10 metric tons at the most, said Total president and managing director Ernst Wanten.

On the part of Total, Wanten said that they have been similarly mulling to implement a number of contingency measures to ensure adequate fuel and LPG supply.

These measures would include having a so-called "mobile bridge" (similar to the Roll On Roll Off concept) -- a system that would enable Total to move its trucks from the refinery and across, Wanten explained.

"We are quite convinced that although we are assured that they will put highest priority in fixing the bridge, the repair will take three to six months or maybe it will take longer, so we need a viable solution (over) the longer term without compromising safety," Wanten explained.

Total LPG manager Dino Cuaycong added that over the past two weeks, the oil company has been looking for other avenues to source its products locally. He, however, declined to disclose the company's alternative sources, citing reasons of industry competition.

"As of now, we are prioritizing customers with standing commitment. There are some delays but so far, we were able to service our regular customers. With the options that we are looking at this week, we hope to bring everything to speed within a week or so," Cuaycong said.

"The products that do not flow (in terms of supply) as fast as it used to flow, they can still buy from our dealers. But it depends on the timing," he added.

Total, however, assured the public that the current logistics problem would not have an effect on the prices of LPG and its other fuel products, adding that it would completely absorb the possible financial impact.

"Of course, it has effects on our margins because we have to spend a little more to make the products available," Cuaycong added.

Wanten explained that the additional cost was due to the use of the alternative route that added two to three hours of travel time for the company's trucks.



Copyright 2011 Philippine Daily Inquirer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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