Pilipinas Shell Petroleum Corp., the country’s second biggest oil company, said Thursday it is permanently shutting down its 110,000-barrel refinery in Batangas to transform it into a world-class import terminal amid the coronavirus pandemic that severely dampened oil demand and plunged oil prices to unprecedented low levels.
“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 heavy heart we announce the cessation of oil refining activities in Tabangao,” Pilipinas Shell president and CEO Cesar Romero said.
Shell's Tabangao refinery started commercial operations with a capacity of 30,000 barrels a day in 1962.
The company assured that the closure would not affect its capability to supply high-quality fuel as it shifts from manufacturing to full importation.
The refinery has been on economic shutdown since May 24 to preserve cash for the company and help insulate further deterioration of refining margins.
Pilipinas Shell said the employees directly impacted by the closure would be well taken cared off.
“We wish to reiterate that we are here to stay and remain to be a partner in nation building,” Romero said.