"We would be working with the industry and with the Department of Energy (DOE) to look for deferment of the second phase of CAA if possible," Caltex Phils. Inc. country director Nick Florio said.
He said the second phase of the CAA is capital intensive. "The amount of investment is very significant. It could be up to $150 million. Its a real concern for us," Florio said.
According to Florio, the oil firms are discussing with the government the possibility of the delay in the implementation of the second phase of the CAA which is supposed to be carried out by 2003 to 2004. "I think, it’s very important that we defer until such time that we can economically justify the investment. Right now we couldn’t justify it," he explained.
Pilipinas Shell Petroleum Corp. communications manager Reynaldo Gamboa said they are coordinating with the working group, composed of representatives from the industry, DOE and the Department of Environment and Natural Resources to assess the current situation.
"We will try to inform them (government) of the economic impact of such compliance with the provision of the law (CAA). It will be up to the government to decide whether to postpone the imposition of the requirement of the second phase of the CAA," Gamboa said.
Gamboa said Shell will also invest a substantial amount for the retooling of its refineries. He said they are exploring the possibility of just importing high-grade fuel products to conform with the CAA requirement. "We are studying if it is economically viable for us to retool our refineries or just import," Gamboa said.
Florio admitted that if they would invest $150 million for retooling, it would translate to roughly P2 per liter in pump prices. "It is going to be the effect of full compliance with the CAA. That’s just too much. We know we can’t pass it on so we’ll have to absorb it and it would be very difficult," Florio said.
Petron Corp., on the other hand, said they would be investing up to $100 million for their isomerization and hydrotreater plants.
The oil firms will have to put up their respective isomerization and hydrotreater plants to be able to comply with CAA specifications. By 2004, they are expected to bring down the sulfur content of their diesel to 0.05 percent from the present level of 0.2 percent. – Donnabelle Gatdula