Shell set to pull out of Pandacan

SHELL companies in the Philippines will be completing several major activities in the second half of 2015: advancing its import terminal in Mindanao, starting Euro4 fuel sales, completing its refinery upgrade in Luzon, and closing the Pandacan depot.

The construction of the P6-billion fuel import terminal in Cagayan de Oro City, which expands an existing depot in the area, is underway and should be completed in October, Shell Philippines chair Edgar O. Chua said.

“The work was actually advanced. That was originally planned end of the year as well,” Chua said, referring to the refinery upgrade in Batangas.

The completion of the facility in Mindanao will pave the way for advanced Euro4 sales, most likely from October onward, he said.

“In some places, Euro4 will be made available much earlier. Most likely Mindanao and Visayas,” he said. The official start of Euro4 sales for oil companies is Jan. 1, 2016.

The delivery of Euro4 imports in October will be tied to the refinery upgrade in Luzon.

The P6.7-billion ($150 million) expansion of Shell’s 110,000-barrel-a-day refinery and import terminal in Tabangao, Batangas will be shut down first for a number of days in November to prepare it for the commercial production of Euro4 fuels.

During the shutdown of the Batangas refinery, Shell will be distributing the imported Euro4 fuel that was brought in via Cagayan de Oro. The initial import volume would be about 20 percent of current sales. Possible sources include Korea and Singapore.

When the upgraded Batangas refinery opens before the end of the year, it will provide locally produced Euro4 fuel in Luzon and other areas as needed.

The upgraded refinery will also be taking over fuel distribution in Luzon from the soon-to-be-closed Pandacan depot.

“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.

When natural disasters affect Luzon, it would be especially difficult given the risk of busted bridges or severe flooding at certain points on the route from Batangas to Manila, he said.

On natural gas, Shell is continuing work in an LNG (liquefied natural gas) terminal even as it awaits government’s fuel mix policy, which is supposed to signal support for developing a market for non-coal energy sources.

The facility can initially serve fuel requirements for 2,000MW of power generating capacity but this may be expanded to as much as 5,000MW. Shell has so far undertaken a technical feasibility study as well as engineering and design work on the terminal.