‘Oil smuggling rampant again’

MANILA, Philippines - Oil smuggling has become rampant again starting in the third quarter of 2013 after a significant reduction in the first half of the year, Pilipinas Shell Petroleum Corp. country chairman and president Edgar Chua said.

“Last year there was significant improvement, but in the third quarter, medyo bumalik (it came back). We suspect people anticipated the revamp in the Bureau of Customs (BOC),” Chua told reporters last Friday.

The BOC, the agency tasked to curb smuggling, experienced a major revamp of all Customs collectors and ranking officers, which culminated in the resignation of Ruffy Biazon as commissioner in December.

Chua said Shell experienced a sharp decline in sales, as a result of the resurgence of oil smuggling activities. He, however, declined to provide specific figures.

He expressed optimism that under the new leadership of newly appointed Commissioner John Sevilla, Customs would put in place a more permanent solution to the problem.

“We’re very optimistic under the new leadership. Because even if you put good people, you need to support it with changes in the procedures and systems,” he said.

Chua also did not identify which companies are behind the resurgence in oil smuggling.

Oil industry sources said those with pending cases may still be engaged in the practice since there has been no prosecution yet.

“It’s hard to identify or name names but just look at the existing cases. They have not been resolved,” one source said.

The BOC has previously filed smuggling cases against independent oil players Jetti Petroleum, Phoenix Petroleum and even Shell itself.

For their part, companies with smuggling cases said accusations of smuggling whether in the past or at present are unfair.

“If the statement points a finger at those who have pending cases, then this is nothing but a reckless and baseless accusation where competitors are made convenient excuses to acts they have no participation and knowledge in,” said Raymond Zorrilla, Phoenix Petroleum vice president for external affairs.

An oil industry source who also declined to be named said there must be prosecution.

“The best way to discourage it is to have prosecution. Otherwise, it would appear as just hearsay,” the source told The STAR.

Oil companies estimate that P20 billion to P30 billion are lost to oil smuggling every year.

Among the smuggling schemes employed by unscrupulous oil traders is the entry of finished products in special economic zones such as in Subic and Bataan and selling them in the domestic market tax-free.

In early January, the Criminal Investigation Group in Northern Mindanao intercepted an alleged attempt to smuggle crude oil in Misamis Oriental by unidentified men aboard a motorized vessel with about 1,000 liters of crude oil.

The big three in the local petroleum industry – Shell, Petron Corp. and Chevron Philippines – have all been complaining about rampant smuggling.

Chua said that addressing the problem could significantly level the playing field for both big and small petroleum players.

In all, he said Shell is very bullish on the Philippine economy.

Oil smuggling has been a problem for many years now. In 2011, for instance, oil demand reached 106.9 million barrels but BOC data only recorded 67.6 million barrels of oil or a discrepancy of 39.3 million barrels that entered the country through smuggling.