Major oil players’ market share shrinking

GENERAL SANTOS CITY—The major oil companies’ hold of the total petroleum products market in the Philippines continued to decrease over the years as competition at the pump stations tightened as a result of market deregulation.

Major players (Petron Corp., Chevron Phils. and Pilipinas Shell Petroleum Corp.) got 60.4 percent share of market in 2015 (from 68.9 percent in 2014), according to data from the Department of Energy’s “Oil Supply/Demand Report.”

Minor oil players and direct importers captured 39.6 percent of market in the same year. These include PTT Philippine Corp. (PTTPC), Total Phils. and partner Filoil Energy Co., Seaoil Corp., TWA, Phoenix, Liquigaz, Petronas, Prycegas, Micro Dragon, Unioil, Isla LPG Corp., Jetti, Eastern Corp., Perdido, SL Harbour, Petrotrade Phils. Inc., Marubeni, JS Union, JS Phils Corp. and South Pacific. Direct importers are end users who import most of their requirements.

In terms of base of operation and sourcing, local refiners (Petron Corp. and Pilipinas Shell) that import crude oil for processing captured 53.5 percent of the total market in 2015, down from 60.9 percent in 2014, while 46.6 percent (up from 39.1 percent) was credited to direct importers/distributors.

In 2014, major oil players cornered a combined 68.9 percent of the total petroleum market. Minor oil players and end users who directly import part of their requirements took up just 31.1 percent of the market. The minor oil industry players named at the time were PTT Philippine Corp. (PTTPC), Total Phils., Seaoil Corp., TWA, Filpride, Phoenix, Liquigaz, Petronas, Prycegas, Micro Dragon, Unioil, Isla LPG Corp., Jetti, Eastern Corp., Perdido and Filoil Gas Co.

Industry experts said oil firms’ volumes were up across the board even though market share might have shrunk. However, some are skeptical of the data, noting that figures on market share may appear skewed in the sense that some fuel orders may have been reported twice (once by the refinery and once by the client, say, a minor oil player) which leads to “double counting.” Another concern raised was that formerly smuggled goods were now being reported to authorities.

It is notable that the so-called Big 3 oil players (Petron, Chevron and Shell) used to corner nearly 100 percent of the Philippine petroleum market before the passage of the Downstream Oil Industry Deregulation Act of 1998. The Big 3 saw their combined market share decline to 85 percent in 2006.

And since Pilipinas Shell sold its stake in Shell Gas (LPG) Philippines Inc. to Isla LPG Corp. in 2012, the LPG market share of the oil refiner was reduced.

On refinery production, the DOE said total crude oil processed as in 2015 rose by 26.2 percent from 61,372 MB in 2014 to 77,478 MB. The DOE attributed the increase to higher refinery utilization at 74.4 percent in 2015 from 59 percent in 2014 because of extended emergency/ maintenance shutdown of the refineries during that time.

With increased refinery use, local petroleum refinery production output also went up by 27.7 percent from 59,301 MB to 75,751 MB. The 2015 average refining output was at 207.5 MB per day.

Volume wise, refinery output of diesel oil grew by 31 percent compared with the 2014 level. Unleaded gasoline and kerosene/avturbo also increased by 54.3 and 19.1 percent, respectively.  LPG production was also up by 54.4 percent.

As for fuel oil, a decrease of 44.3 percent was recorded since one of the local refiners ceased to produce it as finished products as previously cited but used the same as raw materials for their other downstream processing units.

Diesel oil continued to dominate the production mix with a share of 38.2 percent, followed by gasoline and kerosene/avturbo with 22.6 and 10.1 percent share, respectively. Next was fuel oil and LPG with shares of 8.4 and 7 percent, respectively.