Retail

Pilipinas Shell doubles capital spending in the Philippines

Pilipinas Shell doubles capital spending in the Philippines
Photo courtesy of Pilipinas Shell.

Pilipinas Shell Petroleum Corp. revealed in a regulatory filing that it has doubled its capital expenditure program to PHP 2 billion (USD 38.5 million) from PHP 1 billion (USD 19.3 million) in 2017 to “further cement its foothold in the market with the Shell brand.”

“The target is to put up 70 retail stations and make further inroads into non-fuel retailing through deli2Go and Select,” the company said.

Last year, Pilipinas Shell opened 66 retail stations to close the year with a total of 1,044 nationwide.

Pilipinas Shell also completed its PHP 730-million (USD 14 million) bitumen production facility located at its 110,000- barrel-per-day oil refinery in Tabangao, Batangas in the first quarter. The company said it was in the process of starting up the bitumen facility.

“It has been mechanically completed in first quarter. It is literally being started up now and we should be ready with bitumen sales, most likely export by the end of the quarter or thereabouts,” said Cesar Romero, Pilipinas president.

In addition to domestic sales, Romero said Pilipinas Shell plans to export bitumen to China and other Southeast Asian countries.

Further, the company is expanding Tabangao’s supply and logistics facilities. The project, to be completed in the last quarter of 2018, will cost approximately PHP 260 million (USD 5 million). This expansion will reduce gate-to-gate time of delivery trucks by half. There are no oil product pipelines, nor a reliable rail transport in the country, so fuel delivery is exclusively via tank trucks.

“Heightened efficiency is vital in Pilipinas Shell’s operations with the increase in the throughput of Shell’s Tabangao terminal to as high as 7 million liters a day, following the closure of the Pandacan depot in 2015,” the company said.

The facility upgrade will also allow independent access to the terminal in case the refinery becomes inaccessible due to traffic or repairs.

Pilipinas Shell posted a net income of PHP 10.4 billion (USD 200 million) in 2017, up 39% from PHP 7.4 billion (USD 142 million) in 2016 due to strong growth in its fuel retail business.

Pilipinas Shell is one of two oil companies with oil refining capability in the Philippines. Petron Corp.’s refinery is located in northern Luzon, while Tabangao is located in southern Luzon. There are no oil refineries located in Visayas and in Mindanao, the two other major island groups in the country.

 

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