‘Big 3’ mull joint venture firm for Pandacan oil depot operations

The "Big 3" oil companies plan to put up a joint venture firm to handle the operations of their scaled-down operations in the Pandacan oil terminal.

Pilipinas Shell Petroleum Corp. deputy chairman and vice president for finance Rodolfo C. Naguit, in an interview over the weekend, said the establishment of a joint venture company to run the depot is one of the options being eyed by the oil companies occupying the oil facility.

The Shell official also said the other option they are looking at is that the three major oil firms will jointly operate the scaled-down oil terminal. "We can run the depot jointly. We can adopt a rotating management scheme or a so-called joint operating agreement. We are already doing this in our aviation fuel facility in the airport," he said.

Under the memorandum of understanding signed with the city of Manila, Shell, Petron Corp. and Caltex Philippines Inc. will have to come up with a detailed re-engineering design that will spell out how they would trim down the facility’s operations within three months.

From the present 60 to 70 tanks, the MOU calls for the removal of 28 oil tanks and the de-commissioning of the liquefied petroleum gas (LPG) spheres of Shell.

With the MOU, the oil companies will not have to relocate their facilities in other areas as being proposed before.

But City Hall wants to see the commencement of works for the creation of a safety buffer and green zones surrounding the Pandacan terminal within the next six months.

The city government will be evaluating the performance of the oil firms based on the signed MOU to determine if their license to operate will be maintained or not.

Caltex country chairman Timothy Leveille, for his part, said the operations of the oil depot will not be affected by the scaled-down mode. He pointed out that the three oil majors will work out a scheme that would allow them to optimize their operations.

Shell external affairs manager Robert Kanapi, in a separate interview, explained that the oil companies will plan their logistics carefully where they would just operate based on the existing capacity of the facility and let go of the surplus capacity. "Each oil company, at present, has excess capacity. If we will let go of such surplus capacity we will be running at a capacity that is just enough to serve the demand," he said.

Kanapi said that despite the downsizing, the oil depot will still be able to serve 90 percent of clients in Metro Manila and nearby provinces.