Gov’t urged to attract Chinese firm to build oil refinery in RP

Government has been urged to lure China’s state-run China Petroleum and Chemical Corp. (Sinopec) to put up an oil refinery in the Philippines to help ensure that the country’s long-term demand for finished petroleum products is adequately met.

Catanduanes Rep. Joseph Santiago, reacting to Pilipinas Shell Petroleum Corp.’s reported plan to shut down its refinery in the country by 2008 due to low margins, said that if Shell wants out, then government should consider asking the Chinese, through Sinopec or any other entity, to build an oil refinery here.

"We see no problem if the Chinese will establish a refinery here and export say 60 percent of their finished petroleum products to China, while selling only 40 percent of their output in the local (Philippine) market," Santiago said.

"This is better than having no substitute or added refining capacity at all, that is, assuming Shell is getting out of the business," he pointed out.

He said the Chinese would be less worried about margins, and would be more interested in producing enough refined oil products for their booming economy.

At present, the Philippines has only two oil refineries, both in Batangas, one run by Petron Corp. and the other by Shell.

Petron and Shell refine 180,000 and 110,000 barrels of oil per day (BOPD), respectively. Their combined output of 290,000 BOPD of refined petroleum products is enough to meet 78 percent of the country’s requirement of 376,000 BOPD.

The remaining 22 percent of the country’s demand for finished oil products is being satisfied by importers.

The shutdown of Shell’s refinery means the country would have to rely on imports to satisfy 53 percent of its daily demand for finished petroleum products.

Caltex Philippines Inc. shut down its 86,500-BOPD Batangas refinery in 2003.

Sinopec, an integrated energy and chemical company, is the largest listed company in China. The company’s shares are also publicly traded in New York and London. The firm is 68 percent owned by China Petroleum Corp., which in turn is 100-percent controlled by the Chinese government.

Sinopec is engaged in the petroleum and petrochemical industry. The firm is into the refining of crude oil and the marketing and distribution of refined oil products, including transportation, storage, trading, import and export of petroleum products, and production and sale of petrochemical products. — Mary Ann Reyes<