Shell chief underscores benefits of regional integration by 2015

MANILA, Philippines - The benefits of regional integration are numerous not just for the different economies but for the private sector as well as it would encourage companies to further improve their services and products, the Philippine chief of a multinational oil firm said.

In a paper on regional integration, Pilipinas Shell Petroleum Corp. country manager Edgar Chua said these initiatives could provide an opportunity for companies like Shell to further improve themselves and compete more “through operational excellence.”

“Hence, we benchmark our product and services against the best of the best in the world. Benchmarking is our way of knowing where we are vis-à-vis our peers and competitors,” said Chua in an article posted on the company’s website.

In Asia, negotiations for various regional integration initiatives have taken off. One such initiative is the negotiations for the proposed Regional Comprehensive Economic Partnership (RCEP).

The proposed RCEP, which includes all the 10 ASEAN economies plus their six free trading agreement partners namely, Australia, China, India, Japan, Korea, and New Zealand, would create the world’s largest free trade bloc with huge impact to the world economy, according to the Asian Development Bank in its ADB Outlook 2013.

The RCEP economies have a combined total population of 3.5 billion, a gross domestic product of $21.4 trillion and trade receipts of $12 trillion, according to the ADB.

Chua said besides the RCEP, the so-called ASEAN economic community (AEC) has also emerged.

With a target implementation by 2015, the AEC envisions the creation of a single market and production base characterized by free movement of goods, services, capital and skilled labor.

Chua said the AEC could be a formidable economic powerhouse with the population of the 10 ASEAN economies at more than 600 million.

“ASEAN economies are even projected to record six – to seven – percent economic growth this year and 2014 based on ADB estimates,” Chua said.

In the area of manufacturing, many businesses have made use of ASEAN Trade in Goods Agreement.

Under the agreement, businesses could manufacture goods from one location and ship those goods to different parts of the region with very little or without barriers.

Chua said as a multinational company, Shell, the country’s second biggest oil refiner, sees the benefit of regional integration.

He noted that the company’s Tabangao Refinery in Batangas undertakes a comprehensive benchmarking exercise every two years via a third party provider, Solomon Associates.

“The Solomon benchmarking encompasses performance indicators in the areas of product yields, energy, maintenance and equipment reliability, utilization of existing capacity, staffing, operational and capital expenditures, net cash margin, and return on investment,” he said.

The results of the Solomon study include a comparison of a site’s performance on the key metrics vs. its peers, according to similarity in configuration, or geographical division,” Chua added.

In addition, Chua said Shell looks at AEC and its growing energy demand as an opportunity to help broaden energy mix in Asia and ensure a more secure supply of energy in the region.

“Another major crucial factor in the success of AEC is the provision of cleaner energy and the promotion of energy efficiency.  All these are necessary for sustainable development,” he said.

Indeed, he said the opportunities that AEC would provide are significant and Shell, being an energy company with more than 100 years presence in a number of ASEAN countries, “is committed to be at the forefront of developing and delivering cleaner, smarter, and innovative energy products and technologies in keeping with its sustainable development platform.”

Department of Energy Secretary Carlos Jericho Petilla, for his part, also highlighted regional cooperation in the power sector.

He said the Energy department is looking to other countries for sources of liquefied natural gas to augment the current supply in the country on the back of growing demand.

The Malampaya deep water-to-gas field in northwest Palawan would eventually be depleted by 2020 which is why the country needs to find other sources of natural gas, he said.