Philippines: Bureau of Customs Needs Compromise Deal With Shell

Malou Espina,Corporate Affairs Manager at Total Philippines said “No single oil company can fill the void if a major player experiences a severe supply shortage.” Espina added that “increasing inventory levels would require higher working capital, not to mention increased business risk given the volatility of international oil prices.”

She then stressed that several factors have to be considered before any player can increase importation, if only to respond to government’s request into helping close the supply gap. Espina noted that “supply nominations are usually made 6 to 8 weeks ahead,” and a more pressing concern would be on having excess storage capacity “to accommodate bigger volume.” She further emphasized that "additional logistics, like barges and lorries, will be needed to bring product to customers.”

The BoC’s proposal as to filling up the supply void has been simplistic, noting that it can just talk to the other players – primarily Petron Corporation, Chevron Philippines and Total, to jack up their importation volumes.  Even major players Petron and Chevron Philippines though have expressed apprehensions over that proposition, noting that the predicament is more difficult to resolve in real terms than imagined.

Malacañang’s intervention has been sought on the fuel shortage concern, but all that Presidential son and House committee on energy chairman Mikey Arroyo can offer will be for both parties (Shell and BoC) to strike a “compromise deal.”  The Customs bureau is going after Shell’s purported deficient tax payments of P7.3 billion for its catalytic cracked fuel imports (CCG).  When its payment demand is defied, the BoC threatened to seize the oil firm’s future CCG imports, thus, resulting in forced closure of the country’s only other refinery, aside from Petron’s.

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