After decades of operations, Pilipinas Shell Petroleum Corporation (PSPC) disclosed on Thursday that it will permanently shut down its refinery in Batangas due to the economic impact of the COVID-19 pandemic.
“The regional refining margins which have been weak for some time due to the oil supply or demand imbalance in the region, have worsened due to demand destruction from the COVID-19 crisis. As such, it is no longer economically viable for us to run the refinery. It is with a heavy heart that we announce the cessation of oil refining activities in Tabangao,” PSPC President and CEO Cesar Romero said.
He announced that they are set to convert its oil refinery in Tabangao town “into a world-class full import terminal to optimize its asset portfolio and enhance its cost and supply chain competitiveness.”
He clarified the shutdown of the refinery will not affect the PSPC’s capability to supply fuels as the shift in supply chain strategy.
The Tabangao refinery has been closed since May 24.
According to the Philippines’ Department of Energy, demand for petroleum products declined by 20 to 30 percent in March and by as much as 60 to 70 percent in April.
The demand for fuel products is not yet back to its normal levels, with many of the businesses still suspended or operating below capacity, while travel remains limited due to the varying levels of quarantine restrictions nationwide.
Energy Secretary Alfonso Cusi said he is saddened by the PSPC’s decision to permanently shut down the refinery.
Although the shutting of the refinery “will not affect the oil supply in the country”, Cusi said he is saddened by the plight of the workers that will be displaced due to the closure.