Pilipinas Shell Petroleum Corp. ended last year with a net loss of P16.18 billion due to one-time charges that came with the transformation of its Batangas refinery and the global drop in crude oil prices.
In a regulatory filing on Friday, the listed oil company said of last year’s losses, 73% or P12 billion were one-off charges “related to the cessation and transformation” of its refinery in Tabangao into an import facility.
It also said P4.8 billion of the net loss was “due to the drastic decline in crude prices.” The company posted a net income of P5.62 billion in 2019.
Pilipinas Shell President and Chief Executive Officer Cesar G. Romero said in a statement, “Transforming the refinery into a world-class import terminal last August was a difficult but vital decision to make given the negative outlook for the refining sector worsened by the Covid 19 pandemic.”
He said the move was a “very hard decision for Pilipinas Shell but necessary to be more competitive and ratable in the future.” The firm has transformed its shuttered Tabangao re finery in Batangas into an import facility, which now serves Luzon and northern Visayas. The former refinery used to produce 110,000 barrels per day.
Pilipinas Shell also said that it posted a core net income of P400 million by the end of the fourth quarter, swinging from the third quarter’s year-to-date core net loss of P700 million.
In the fourth quarter, the firm’s marketing volume delivery saw a 30% increase compared with the level in the second quarter. However, the firm ended the year with a total volume of 5.1 billion liters, 13% below its pre-pandemic value.
“We are slowly seeing the results of our agility and decisiveness to thrive from the challenges posed by the global pandemic. We are confident about driving fuel mobility and getting the country back on track as the country recovers from the impact of the pandemic,” Mr. Romero said.
The firm added that it was able to “keep its balance sheet strong” as it was able to reduce its gearing to 41% in the fourth quarter. This was supported by positive cash flow from operations.
Pilipinas Shell also reported that it had exceeded its cash conservation targets, with P3.9 billion in capital and operating expenditure savings, almost double the P2 billion target it set for itself in 2020.
The company detailed its plans to add two more medium-range import terminals by 2025. It said that it is allotting a yearly capital expenditure of around P1 billion per year to “strengthen its supply chain across the country.”
Shares in Pilipinas Shell, the country’s second-largest in terms of market share, rose 1.46% or 30 centavos to close at P20.80 apiece on Friday.
NOTICE TO PROCEED
In a separate development, the Department of Energy (DoE) has issued a permit to a Shell company in the Philippines to proceed with its liquefied natural gas (LNG) project.
“Shell was issued the Notice to Proceed (NTP) recently on March 16, 2021,” said Ma. Laura L. Saguin, division chief at the DoE’s Oil Industry Management Bureau- Natural Gas Management Division, in an e-mail on Thursday.
This came after DoE Assistant Secretary Leonido J. Pulido earlier said in a virtual event that the department was evaluating the applications of two prospective LNG terminal builders.
Ms. Saguin did not give further details on the Shell unit that received the NTP, and whether the notice covered an onshore LNG facility or a floating storage and regasification unit.
Pilipinas Shell Communications and Social Performance Manager Cesar C. Abaricia said in a Viber message, the notice to proceed “will enable us to further explore the opportunity of importing LNG into the Philippines.”
“The Philippines is an important country for Shell,” he said.
Mr. Abaricia added that the group “is keen to continue working with the country to meet its growing energy requirements. Shell continues to pursue opportunities where it can leverage its global expertise to provide more and cleaner energy solutions.” — Angelica Y. Yang
