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Refinery closures not seen to affect energy security in short, medium-term

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Department of Energy (DoE)

A DEPARTMENT OF ENERGY (DoE) official said that the shuttering of oil refineries would not affect the Philippines’ energy security in the short to medium term due to the abundance of finished petroleum products across the region.

“So far, in the short and medium term, we don’t see any potential difficulties, considering that there’s so much finished petroleum products available within the region currently,” DoE Assistant Secretary Leonido J. Pulido III said on Tuesday during the second day of the committee hearing on the midstream natural gas industry act or Senate Bill No. 1819.

He said this in response to Senator Risa N. Hontiveros-Baraquel’s question on whether the closing of all refineries across the country would affect the Philippines’ energy security in the long run.

“Of course, there’s an impact. It’s ideal to have your own refinery in your country,” Mr. Pulido said.

Petron Corp. and Pilipinas Shell Petroleum Corp. earlier that they would be shuttering their respective refineries.

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Petron President Ramon S. Ang said that the firm would close its 180,000 barrel-per-day (bdp) refinery in Limay, Bataan due to poor refining margins and an uneven playing field.

In a disclosure on Tuesday, the listed oil company said that it was infusing around P3 billion to improve its refinery operations, but added that the plant’s economic shutdown would still push through “early this year.”

Meanwhile, Pilipinas Shell announced that it was shuttering its 110,000-bpd plant in Tabangao, Batangas in August due to the worsening regional refining margins caused by the global health emergency. It added that it would be transforming the facility into an import terminal.

PETROLEUM RESERVES
During Tuesday’s senate hearing on SB 1819, Mr. Pulido also said that the DoE was working on a draft bill and draft department circular to establish a strategic petroleum reserve (SPR) in the country.

The said bill will put the Philippine National Oil Co. (PNOC) at the “forefront of ensuring petroleum security in the country”, the DoE official said.

In May last year, DoE Secretary Alfonso G. Cusi said that the department was prioritizing a program that seeks to establish an SPR, with regulations being prepared and a feasibility study led by PNOC in the works.

The Senate hearing on Tuesday sought to listen to energy stakeholders’ comments on SB 1819, which aimed to regulate the country’s midstream natural gas industry. The industry covers various operations down the pipeline such as aggregation, supply, importation, receipt, unloading, loading, processing, storage, regasification, transmission, and transportation of natural gas in its original or liquefied form.

The proposed bill was introduced in light of the thinning reserves of the offshore Malampaya deepwater gas-to-power project. The project is spearheaded by the DoE, and developed and operated by Shell Philippines Exploration B.V. on behalf of joint venture partners.

The Malampaya project, which supplies fuel to five Luzon-based power plants with a combined capacity of 3,200 megawatts, accounted for 21.1% of the country’s gross power generation in 2019. The Energy department estimated that its reserves would be depleted in six years’ time. — Angelica Y. Yang

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