Petron unlikely to hike output despite Caltex refinery closure

Petron Corp., the country’s largest oil refiner, said it has no immediate plans to increase its refinery capacity despite the closure of Caltex Philippines Inc.’s facility in Batangas, a company official said.

Petron public affairs manager Virginia Ruivivar said the company will only review the running capacity of its refinery if there is an imminent need for it.

"Not unless Caltex buys from either one of us (Pilipinas Shell Petroleum Corp. and Petron) rather than import products," Ruivivar said.

Ruivivar said at the moment, there are no signs Caltex will tap local refiners for its fuel requirement.

For their part, Caltex corporate communications chief Marian Catedral said the company will source from the most cost-effective supplier.

Shell, on the other hand, has yet to decide if it will increase its refining capacity. At present, Shell’s refinery in Tabangao, Batangas is running at 100,000 barrels per day but its refinery is designed to hold at least 130,000 bpd capacity.

Before its shutdown, Caltex’s refinery has running capacity of 72,000 bpd while Petron’s refinery currently runs at around 130,000 barrels per day as against a total capacity of 180,000 bpd.

Oil companies relied heavily on imported gasoline with the implementation of stricter fuel standards under the Clean Air Act (CAA). Effective Jan. 1 this year, unleaded gasoline sold in the local market should contain 35-percent aromatics content and two-percent benzene.

To comply with the CAA specifications, Petron, Caltex and Shell decided to import blending raw materials. Petron, on the other hand, will be able to produce CAA-compliant fuel with its new $100-million isomerization and hydrotreater facilities. Both Caltex and Shell will remain as importers of CAA-compliant fuels and/or blending materials.

Caltex, with the closure of its refinery, will have no choice but to import fuel requirement that will conform to the CAA specification.

Shell, meanwhile, said it will revisit its plan to put up a refinery facility that will enable it to produce CAA-compliant fuels within the next five years.