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Philippine Daily Inquirer: Shell seen opting for refinery upgrade

By Abigail L. Ho
Published: Jun 18, 2007

PILIPINAS SHELL PETROLEUM CORP. is expected to spend about P15 billion to upgrade its existing refinery to pave the way for an in-country production of Clean Air Act-compliant fuels.

An industry source said the amount needed for the refinery upgrade should be at about the same level as that spent by Petron Corp. for its own refinery upgrading project.

Two years ago, Petron inaugurated its new facilities at its Bataan refinery worth $100 million. These made the oil company the first in the country to be able to produce its own Clean Air Act-compliant fuels.

Petrons gasoil hydrotreater and light virgin naphtha isomerization unit can produce 22,000 barrels and 10,000 barrels a day, respectively, of CAA-compliant diesel and gasoline.

Another $300 million was earmarked for the oil firms three-year Refinery Master Plan, which would enable it to extract petrochemicals for both the local and regional markets.

Asked for confirmation, Energy Secretary Raphael Lotilla said he had been informed that the results of the refinery study , which was commissioned by the oil company, should be out by the third quarter.

Shells decision whether to expand its refinery or to just upgrade would depend on the results of that study, he said.

It is not in the same scale as the refinery expansion that they were looking at before, but they will have to upgrade their refinery. It will still be a multi-billion-peso project, he said.

He did not give specific investment figures but, in an earlier interview, he had said a refinery expansion would entail investments of as much as $1 billion to $1.5 billion.

A refinery upgrade would be less costly, considering Petrons total outlay of around $400 million.

Lotilla had earlier said that Shells parent firm, Royal Dutch Shell Plc, had concerns regarding the current incentive schemes in the downstream oil sector.

What they want is for those incentives that were made available at the time they came in to still be available throughout the life of their investment, he said.

Shell country chair Edgar Chua said earlier that a tariff differential could be a big help from the government.

 

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