Philippine private-sector refiner Petron will shut its 180,000 b/d Bataan refinery next month, citing weak refinery margins and "an uneven playing field between oil importers and refiners".
The shutdown from the second half of January will be temporary and Bataan will restart operations when it is economical to do so, said Petron chief executive and president Ramon Ang. Petron will carry out maintenance and turnarounds during the "economic shutdown".
Petron's shutdown leaves the Philippines with no refining capacity after Shell permanently shut its 110,000 b/d Batangas refinery in August because of regional oversupply and the impact of the Covid-19 pandemic.
Petron earlier this year threatened to close Bataan as it pushed for more government support to create a "level playing field" for the industry. The government increased import taxes on crude earlier this year that raised costs for refiners. Philippine President Rodrigo Duterte imposed the additional 10pc import tax on crude and products in May to help fund its Covid-19 costs.
The Philippine product market is fragmented with Petron and Shell controlling 43.1pc of market demand, while 56.9pc is controlled by at least 26 direct importers and consumers.
Philippines is a net importer of jet fuel, gasoline and gasoil and the closure of Bataan will lead to more import reliance, according to traders. The beneficiaries will be South Korea and China that already export about 30,000 b/d of gasoline and 85,500 b/d of gasoil respectively.
Asia-Pacific refining margins have suffered this year from economic and travel lockdowns because of the impact of Covid-19, causing unprecedented reduced demand for transportation fuels.
Argus fob Singapore 10ppm gasoil margins averaged $15.50/bl in 2019 compared with $6.834/bl so far this year. Argus fob Singapore 92R gasoline margins averaged $5.39/bl in 2019 compared with $1.69/bl for 1 January-14 December 2020.
