Shell, Caltex won’t put up infra to produce CAA-compliant fuels

Two of the country’s major oil firms – Pilipinas Shell Petroleum Corp. and Caltex Philippines Inc. – will not put up the infrastructure necessary to produce Clean Air Act (CAA)-compliant fuels even if the government decides to provide incentives for such projects.

The two oil firms’ decision came amidst a move by the Department of Energy to seek clarification from the Board of Investments (BOI) on the incentives that will be extended to oil firms that invest in the upgrade and modernization of their facilities to comply with the CAA requirement.

"In terms of economics, we still do not have plans to put up facility to produce CAA-compliant fuels. We opt to just import finished products and/or blending materials to comply with CAA," Shell external affairs general manager Roberto Kanapi told The STAR.

Kanapi said that unlike Petron, Shell has a ready source of these CAA-compliant fuels in the region. "We can get our requirements from our subsidiaries in Thailand and Singapore," he said.

According to Kanapi, Shell will probably decide whether to put up these facilities in five to 10 years time.

In a separate interview, Caltex corporate affairs manager Marian Catedral said though the incentives will encourage oil firms to put up these facilities, the business climate will still be a major factor.

"It will depend on the business environment and the demand. With the current uncertainties in the market today, we have to carefully plan before we pour in more capital for new investments," Catedral said.

Of the three oil majors, only Petron Corp., partly-owned by the government, decided to invest up to $100 million to put up isomerization and hydrotreater plants that will enable it to produce CAA-compliant fuel.