OIL AND GAS
Maintaining poise while keeping top-of-the-line commitment to service is definitely possible in one of the trickiest energy-sector markets
When you’re involved with an oil and gas company — especially nowadays — and you’re probably its most public figure, chances are you’ll live every day dealing with the ups and downs of the industry, not to mention trying to calm down the public especially when it comes to soaring prices.
Nevertheless, looking beyond all the hoopla in this sector will show you that it has its rewards and benefits — both for the company and, more importantly, the local consumers.
So for Roberto “Bobby” S. Kanapi, it could have been worse.
“To the customers, having a deregulated [oil] market is a bonus because [today’s] prices are cheaper than what it could have been,” Kanapi, vice-president for communications at Pilipinas Shell Petroleum Corporation, told
Khaleej Times during the recent Shell Eco-marathon 2014 held in Manila.
The Philippines’ oil industry is governed by a deregulation law, put into place with the aim of bringing oil prices down and encourage industry players to compete against each other. It has, though, been a constant subject of controversy between oil companies and the public, with the former being accused of taking advantage and profiteering.
Kanapi — the very amiable Pilipinas Shell spokesperson — was quick to shoot down those allegations.
“We did a study that if today [the industry] was still regulated, prices would have been much higher than it is now,” he said. “So how do I view it? I think it’s pretty much a huge improvement to what it was before in terms of choices and products… in terms of the quality of the product, we have no choice [but to bring the best] to the public.”
Official figures from the website of the Philippines’ Department of Energy on Friday show that, as of March 20, gasoline prices per litre in Metro Manila range from 49.35 pesos to 58.55 pesos ($1.11 to $1.32), while diesel — a staple for the country’s massive transportation network mainly composed of jeepneys and buses — are from 41.15 pesos to 48.05 pesos ($0.93 to $1.08). Price rollbacks do come, but not as frequently as hikes. Kanapi says that a lot do not understand or have a misconception about the deregulation law. To regulate the market again, he says, means that oil companies would be needing subsidies to ensure there will be no big changes in prices.
The subsidies would be borne by the government, which it may not be prepared to do and not exactly a viable option, he says.
Shell, however, “will survive in either environment”, Kanapi stressed. “But why should you go back to a regulated market when the deregulation law is working?”
A century of service
Pilipinas Shell — the subsidiary of global giant Royal Dutch Shell in the Philippines — is celebrating its 100th anniversary of operations in the country this year, which was made even more special with the arrival of the Eco-marathon in Manila. While Shell’s kerosene reached Philippine shores in 1897, its corporate presence began in 1914; back then, its number of employees — which could be counted with your fingers — literally peddled Shell’s products.
Kanapi, who has been with Shell for 38 years and has touched all aspects of the business, can say he has seen it all.
“Before it was pretty straightforward; all you had to do was to make sure your costs were down and you were guaranteed a return on investment,” he said.
Not to mention there was fewer competition back then; today, there are 68 players in the Philippine oil and gas market, coming “in all shapes and sizes”, as Kanapi put it. Shell is among the majors in the country, along with Chevron, Petron, Petronas, PTT and Total.
He recalls that when prices were up during the regulated days, others would just abandon their stations temporarily. But the serious players, he says, would stick it out and develop more. “This is where you can see the efficiency of our stations — then and now,” he said.
Shell is currently No. 2 in the Philippines, and Kanapi says that they have close to 1,000 retail outlets in the country. While this may be only half of the 2,000 stations that top player Petron has, Shell prides itself in putting the same volume of gas into its network. And both these companies are the only ones in the field that have its own refinery in the Philippines, with others importing their products.
Philippine potential
Back in the 1950s, Kanapi said, traces of hydrocarbon, especially on land, were found in the Philippines. However, it was not until the late 1980s when the real offshore exploration started; Shell found gas in the western province of Palawan at that time.
Since then, the real question about trying to dig oil in the country was simple: who is really willing to come in and take the risk?
“If you ask about oil, there is potential… but it is extremely difficult to find it. Most of the oil they say is offshore — deep-sea oil; there are traces of onshore oil but there are no reports of commercial quantities yet,” he said. “[Companies] would go to Indonesia or Malaysia instead, where the potential is much higher.”
Kanapi bared that Shell — which is “happy to be here, happy with the potentials its sees in the Philippines” — has expansion plans in the pipeline, especially with its refinery in the country.
“We have to meet Euro-4 standards by 2016, as we are mandated by law [to do so]… it’s either we upgrade our facilities or import Euro-4-compliant products into the Philippines.” In simplest terms, Euro-4 is under the European emission standards, which define the acceptable limits for exhaust emissions of vehicles.
And as for sustainable energy — a highlight of the Eco-marathon — Kanapi says Shell is committed to supporting the Philippines. The country, he says, can start with a sustainable policy and keep it going, then “this is where Shell comes in, with all our knowledge, technology and expertise”.
He is also confident on renewable resources in the Philippines, such as geothermal and hydroelectric power, although Shell is not involved in this.
“The market is very good in the Philippines… and the beauty is that the government has been very supportive of the environmental policies we are proposing; they have an open mind,” he said.
“We are growing every year; we need to support the Philippines and its population going forward,” Kanapi said.
“There are over 7,000 islands that we care for here.”
We need to support the Philippines and its population going forward... there are over 7,000 islands that we care for here
Bobby Kanapi