Pilipinas Shell Petroleum had to temporarily suspend its refinery operations back in May due to the onset of the COVID-19 pandemic. Now, the company has announced that it is “making strategic choices” for long-term sustainability and will be shutting down the refinery for good.
This refinery in Tabangao will be transformed into a full import terminal through which Shell seeks to improve its cost-and-supply-chain competitiveness. It will continue to cater to the fuel needs of Luzon and Northern Visayas, while Shell’s North Mindanao Import Facility in Cagayan de Oro will cater to the rest of the Visayas islands and the entire Mindanao region.
“We have the technical capability and financial flexibility to manage and adapt to disruptive conditions. Due to the impact of the COVID-19 pandemic on the global, regional, and local economies, and the oil supply-demand imbalance in the region, it is no longer economically viable for us to run the refinery,” said Shell president and CEO Cesar Romero.
Despite this, the company assures the public that it is “in fighting form” going into the second half of 2020. It recorded a quarter-on-quarter net loss of P5.5 billion in Q1, but it narrowed down the corresponding figure to just P1.2 billion for Q2. In addition, Shell claims that it has so far accomplished P1.3 billion out of its P2 billion savings target for the year through cash preservation efforts.
“The pandemic has definitely posed some challenges, but we have a strong balance sheet, retained earnings, and a reasonable gearing of 40%. We intend to maintain financial resilience,” added Romero. “Pilipinas Shell has been here for more than 100 years and we’re here for the long haul. Kasama niyo kami sa bawat biyahe ng buhay.”