Petron Corp., Mandaluyong City, Philippines, plans to indefinitely suspend operation of its 180,000-b/d Bataan refinery—now the country’s only—at Limay, about 150 km southwest of Manila.
Petron will suspend operations at the refinery beginning in the second half of January 2021 to minimize losses resulting from weak refining margins, the operator said in a series of mid-December filings to Philippine Stock Exchange Inc. (PSE).
During what the company refers to as an “economic shutdown,” Petron said it plans to execute maintenance activities on unidentified key process units at the refinery.
The operator assured the market no supply disruptions will occur as result of the shutdown given existing, healthy product inventories and the company’s plan to replenish necessary supplies via importation of finished products from abroad.
Petron’s filings followed PSE’s requests for clarifications on comments made by Ramon S. Ang—Petron’s president and chief executive officer—published in local media reports in which Ang cited “an uneven playing field between oil importers and refiners” as the reason for the impending closure.
Alongside confirming Ang’s reasoning for the refinery’s planned shutdown in its PSE filings, Petron also confirmed Ang’s assurance that the Bataan site “would resume commercial operations if and when the economy improves.”
The company, however, offered no definitive timeframe for how long the refinery could remain shuttered.
Petron, which maintained steady operations during the thick of the coronavirus (COVID-19) outbreak, was in the processing of carrying out a project to expand and upgrade production capacity at the Bataan refinery (OGJ Online, Mar. 23, 2020; Jan. 3, 2020; July 24, 2018). The operator has yet to reveal details regarding how or if the proposed project will be impacted by the upcoming shutdown.
Permanent regional closure
Confirmation of the Bataan refinery’s seemingly temporary closure follows Royal Dutch Shell PLC subsidiary Pilipinas Shell Petroleum Corp.’s (Pilipinas Shell) announcement earlier in the year that it is permanently shuttering crude oil processing operations at its 110,000-b/d Tabangao refinery in Batangas City, Philippines, as a measure to improve the operator’s financial resilience amid changes and challenges facing the global refining industry precipitated by the COVID-19 pandemic (OGJ Online, Aug. 14, 2020).
With manufacturing at the Tabangao refinery no longer economically viable, Pilipinas Shell is proceeding with plans to convert the site into an import terminal as part of its commitment to continue supplying high-quality fuels to the regional market.
According to details provided in Nov. 13, 2020 filings to PSE reporting earnings for the financial quarter ending Sept. 30, 2020, Petron—which plans to spend at least ₱1 billion during the next few years to fully transform the Tabangao site into an import terminal—already was in the process of winding down manufacturing activities at the refinery.
