Petroleum refining facilities are being closed as a result of the pandemic-caused blow to many industries, Even for giants like the multinational firm Shell Oil.
As a result of low need for fuel as most travels are limited, many companies have temporarily stopped operations to cut costs. But as the pandemic drags on without uncertainty when the economy can recover, some petroleum refining plants all over the world are seeing permanent shutdowns.
Not fine refinery for Shell Oil
On Thursday, the Shell Oil Company’s Philippine arm announced their decision to permanently close its refinery with a capacity of 110,000 barrels a day. Pilipinas Shell Petroleum Corp. placed the blame on the ongoing health crisis and the virus’s toll on fuel demand. With the low requirement for fuel as the country imposes hard lockdowns and restricted most travels, Pilipinas Shell said prices for their products were reaching levels of less than the cost of refining.
The company bled 6.7 billion Philippine pesos (US$137 million) for the first half of the year. For comparison, last year’s profit for the same January-June period amounted to PH₱ 3.7 billion (US$ 75 million). In May, the refinery had paused operations for a month.
Photos show the aerial view of the Tabangao refinery in Batangas province on Thursday. Pilipinas Shell Petroleum Corp….
Repurposing the facility
According to its chief executive and president Cesar Romero, “Due to the impact of the COVID-19 pandemic on the global, regional, and local economies, and the oil supply-demand imbalance in the region, it is no longer economically viable for us to run the refinery.”
Pilipinas Shell’s 60-year old Batangas facility is among the only two petroleum refineries in the Philippines. The plant will be converted into a “world-class full import terminal.” It would process and store petroleum products before being distributed to their retail stations.
Other operation shutdowns
In the United States, the largest American refining company in terms of volume capacity, Marathon Petroleum, also intends to convert its refineries in California and New Mexico into an oil-storage plant. Their two plants are being rested amid the low demand for gasoline and jet fuel, per Bloomberg.
Gunvor Group also reckons of shutting its refinery in Antwerp, Belgium. Their 110,000 barrels-per day capacity is hanging on by a thread as the pandemic continues to pose a threat to its viability in terms of costs.