A lawmaker on Wednesday urged the government to takeover Pilipinas Shell Petroleum Corp.’s refrigerated liquefied petroleum gas (LPG) import terminal in Batangas to avoid spikes in cooking gas prices.
Rep. Arnel Ty of LPGMA party-list urged the Department of Energy (DOE) to take over the storage facility in the town of Tabangao, which was permanently shut down by the oil refiner in September last year because of “business reasons.”
The terminal began operations in 1983 and supplies 65 percent of Luzon’s LPG requirement.
“The decommissioning of the import terminal, with a storage capacity of 47 million kilos of LPG, is slowly but surely putting tremendous upward pressure on cooking gas prices at the expense of consumers,” warned Ty.
“Unless the DOE temporarily takes over and runs the terminal now to allow other oil firms to bring in LPG supplies from abroad, we see prices swelling in the months ahead, as cooking gas demand grows along with national economic expansion,” Ty said.
Ty urged the DOE to reactivate the terminal for 12 to 36 months, the time required for other oil firms to put up an alternative facility.
Until it was closed, Shell’s LPG import terminal was the primary source of cooking gas supplies for Southern Luzon. LPG supply in Southern Luzon has now decreased to just 10 million kilos every month, or the volume being locally produced by Shell’s refinery.
“Of the 25 million kilos of LPG that used to come out of the Shell terminal every month, 15 million kilos were brought in by Shell from abroad, while the balance of 10-million kilos came from the local production of Shell’s adjacent oil refinery,” Ty said.
Since the terminal’s closure, Southern Luzon has had a large LPG supply deficit of around 15-million kilos a month, since Shell has stopped importing the cooking gas, Ty pointed out.
Moreover, instead of consumers getting a rollback because of lower rates world market, LPG rates are still at around P800 for 11 kilos because of the scarcity of supply in the local market.
“This has put upward pressure on prices, because some of the supplies meant for Metro Manila and other parts of Luzon are now being diverted to Southern Luzon at higher prices to cover the extra transport costs from the LPG terminals in Bataan,” Ty said.
The transportation from facilities in southern Luzon to Bataan will put an additional P5 per kilo on tank prices.
“Actually, the problem posed by the decommissioning of Shell’s LPG import terminal could hit us earlier than expected, as Shell only recently served notice that it is temporarily shutting down its oil refinery this March for maintenance activities,” Ty said.
Shell’s refinery will also temporarily stop producing Southern Luzon’s leftover supply of 10-million kilos of LPG per month, which is now being stored in a smaller bay tank with a capacity of just three million kilos, according to the lawmaker.
“Thus, the only option left for government, in order to shield consumers from potentially harsh LPG price increases, is for the DOE to takeover Shell’s idle import terminal, and to run the facility, so as to enable other industry players, including the independents, to bring in extra supplies on their own,” Ty said.
Oil tankers on Tuesday started to form long lines along one lane of the street facing Corregidor Island while waiting to be loaded with LPG at the Liquigaz Terminal in Alas-Asin, Mariveles, Bataan.
Forty-six LPG tankers fell in line on Tuesday afternoon but last week about 100 vehicles thronged the road. This was because Pilipinas Shell’s Batangas terminal allegedly stopped selling LPG so its patrons trooped to Bataan.
“The line reached the Maritime Academy of Asia and the Pacific last week,” sources who requested anonymity said.
They said the number of long vehicles went down after a boat from a foreign country arrived and Liquigaz began loading LPG on the tankers on Saturday.