Pilipinas Shell to export bitumen

PILIPINAS SHELL Petroleum Corp. (PSPC) targets to export the bitumen coming from its Tabangao refinery in Batangas City as the company shifts to producing the road construction material to offset the declining demand for fuel from power plants.

“Southeast Asia as a whole is short on bitumen, including probably China. So those are the countries that need bitumen,” Cesar G. Romero, PSPC president and chief executive officer, told reporters. “Of course, we will also be looking at domestic sales.”

PSPC’s bitumen production facility is inside its Tabangao refinery. It will cater to road contractors and enable the company to be the provider of locally made bitumen.

“The facility is big enough to both be an export facility and a domestic facility, so we will balance both,” Mr. Romero said.

Bitumen is among PSPC’s commercial business segment, which Mr. Romero described as a “come-from-behind” story for the company, a contrast to its “steady growth” retailing business.

“We started the year with about being down 34% in the commercial sector,” he said. “The coal plants started coming in, mining was severely hit, some of our competitors started buying shipping companies so we’ve lost those accounts.”

Bunker fuel is the raw material used to produce bitumen. It is also used to fuel a number of the country’s power plants. With new coal-fired power generation facilities coming online, the share of bunker fuel as energy source has declined.

Mr. Romero said despite starting 2017 with “huge losses,” the commercial segment closed the year with a growth of about 1%.

The company posted a 39% increase in net income to P10.4 billion in 2017 on the back of the strong growth in retail volume and regional refining margins as well as gains in inventory holdings.

Mr. Romero said the P730-million bitumen and asphalt production facility would allow the company to produce bitumen to support the government’s infrastructure program.

The bitumen facility is being developed along with the expansion of the refinery’s supply and logistics facilities. The project is expected to cost around P260 million and will reduce gate-togate time of delivery trucks by half, contributing to cost efficiency, he said. It is targeted to be completed by the fourth quarter this year.

PSPC has earmarked P4.289 billion as capital expenditure for 2018 to cover the year’s outlay for its retail as well as its manufacturing and supply businesses. —