Downstream oil sector seen rebounding

MANILA, Philippines — The Philippine downstream oil sector may recoup its losses this year, riding on the resurgence of demand amid the continued reopening of the economy and the rollout of vaccines.

“The downstream oil industry likely ended 2020 in the red, but we forecast that it will be able to reverse its losses this year,” Regina Capital Development Corp. (RCDC) said in a report.

“Like most industries, recovery hinges on the further reopening of the economy and an effective vaccine rollout,” it said.

Last year, Department of Energy (DOE) Secretary Alfonso Cusi said the agency expects a resurgence in energy demand once the vaccine is rolled out and the economy fully reopens.

While demand for oil is expected to increase this year, the level is not seen to match that of 2019, prior the coronavirus pandemic and lockdowns.

“Demand in oil dropped because our people are not able to move. Whether it will go back to the 2019 level, it’s very difficult to say. But I think it will not be at that level, but it will be within the range, especially if our population will be vaccinated,” Cusi said.

“We’re also seeing the opening up in the transportation sector where even the provincial buses are allowed to operate, so we expect an increase in demand in petroleum. But it may not go back immediately to the 2019 level,” he said.

Fuel demand dropped during the lockdown imposed starting mid-March due to restrictions in travel and commuting to minimize, if not prevent, the spread of COVID-19.

The DOE said the country’s oil demand may not likely reach the 2019 level by end-2020 due to the huge gap caused by the  pandemic.

Based on the latest available data from the agency, total oil demand decreased by 24.7 percent to 16.07 billion liters as of end-September 2020 from 20.68 billion liters in the same period in 2019

For whole of 2019, the country’s total demand was at 27.32 billion liters. This means fourth quarter 2020 demand should be around 6.64 billion liters to match the previous year’s figures.