Suppliers to take steps to cushion impact of LPG shortage

MANILA, Philippines - Major suppliers of liquefied petroleum gas (LPG) are set to implement contingency measures to cushion the impact of the prevailing supply shortage of cooking gas in the face of the failure of government to give a firm commitment to repair the damaged bridge in Batangas where trucks from the gas depot pass.

The country’s largest LPG suppliers include Petron Corp., Pilipinas Shell, Total and Liquigaz.

Total president and managing director Ernst Wanten told reporters at the launch of the “Total Day of Service” that efforts would be made to ensure that LPG will reach consumers.

“We are almost ready. I think in a couple of days, we can have a solution where we can have a mobile bridge – a system where we can move the trucks again. We put highest priority in fixing the bridge,” Wanten said.

Wanten expressed optimism that the LPG supply problem would not escalate.

“(The bridge repair) will take three to six months or maybe it will take longer so we need a viable solution for the longer term, so that’s why we are (implementing a solution) without compromising the safety specially since LPG is a dangerous product,” Wanten said.

The Bridge of Promise in Tabangao, Batangas, where an LPG terminal being used by both Total and Shell is located, collapsed a few months ago due to past typhoons but the Department of Public Works and Highways (DPWH) has not completed the repair of the bridge.

The Department of Energy has already been coordinating with the DPWH to expedite the construction of the bridge and the possible reinforcement of the alternate bridge in Taysan town.

Wanten sought the cooperation of all concerned parties to minimize the impact of the supply shortage on consumers.

“We are a bit more confident and more hopeful that we get this sorted out. We talked with the authorities. They tried to help us as much as possible but it’s not an easy task,” he said.

Total LPG manager Dino Cuaycong, on the other hand, said they have been managing to supply the needs of their customers but with some delay.

“In the last two weeks, we are looking for other avenues to source our products locally. As of now, we are prioritizing customers with standing commitment. And there are some delays. So far, we were able to service our regular customers. We have other options that we are looking at this week. We hope to bring everything to speed within a week or so,” Cuaycong said.

Cuaycong gave assurance that Total would try to absorb any price impact that the LPG shortage would bring.

“No, we don’t see any effect on the prices we have now, at least from our end. Of course it has effects on our margins because we have to spend a little more to make the products available,” he said.

Asked if they would continue to absorb the price impact until the problem is resolved, Cuaycong said, “Yes, ideally yes.”

Shell spokesman Roberto Kanapi, meanwhile, said they expect that the government’s solution to the problem will be completed soon.

“Reinforcement target completion is by end-month. Further, Taysan Bridge reduced load limit. As a result, supply disruptions may be likely in the days to come so we’re looking at contingency arrangements. We continue to work with the government to ensure quick resolution,” Kanapi said.

Shell expects the delayed shipment of LPG to have a slight impact on prices.

“We have to study the impact on prices, but there may be some movement,” he said.

Petron sources, meanwhile, said the company is trying to service the needs of other customers of Shell and Total.

Arnel Ty, president of LPG Marketers Association (LPGMA), earlier said if solutions were not carried out, the prevailing supply shortage of cooking gas would linger up to early 2010.

“We expect that the supply shortage will affect the market for two months,” Ty said.

LPGMA increased their LPG prices by P3.50 per kilogram this month, or about P40 increase per 11-kilogram cylinder including value-added tax (VAT). Prices of LPG were increased by P4 per liter in November.

This would increase prices to P620 per 11-kg cylinder tank from the present LPGMA selling price of P580 per tank.

The LPGMA official warned that this shortage would result to more increases in LPG prices.

“In the dealers and outlets side, it (prices) will go up,” he said.

Based on Department of Energy price monitoring data, LPG contract prices abroad reached $660 per metric ton in November and $589 per MT in October.