Petron Bataan refinery to be on economic shutdown starting January

Updated Dec 16, 2020 | Same topic: Latest Consumer Reports

It would resume operations once the economy improves.

Petron Corporation announced that its oil refinery in Bataan will be closed starting January 2021. This means that the country’s remaining oil refiner that has the capacity to produce 180,000 barrels per day will be halting its operations. 

The fuel company said in a disclosure to the Philippine Stock Exchange that its refinery in Limay, Bataan will be on an economic shutdown starting in the second half of January 2021. Petron said that it will be conducting “maintenance activities on key process units” during the Bataan refinery’s economic shutdown.  

Petron's Bataan refinery

Petron Bataan refinery has the ability to produce 180,000 barrels per day

Last October 2020, Petron President and CEO Ramon S. Ang hinted that the company’s refinery in Bataan would be closed due to economic losses brought upon by the high cost of operations. Ang also mentioned that the uneven playing field between importers and refiners significantly contributed to Petron’s decision to close its refinery in Bataan. 

Ang shared that the hefty taxes imposed by the Philippine government is forcing Petron to shift its strategy. Instead of importing crude oil and refining it in its facility, Petron said that it makes more sense to just import finished fuel products because it’s more cost-efficient.   

To put things in perspective, oil refiners are given a 12 percent value-added tax (VAT) for imported crude oil that will be refined and sold to the market. Then, the finished products also come with a 12 percent VAT and excise tax.

>>> Related: Petron Supercar Collection to be on sale until October 6

Petron Fuel Station

Petron Fuel Station

In a report by Business Mirror, Ang raised this point saying that it results in Petron’s inventory losses when you consider the actual oil price and the tax the fuel company has to pay.  

“When crude oil arrives in the Philippines, we pay VAT and excise tax. You’re just going to take it out of the terminal, you pay tax again. And then, for how much can you sell it only? That’s why there are inventory losses in the actual oil price and the tax that we’re paying. Meanwhile, the competitor that doesn’t have a refinery, pays tax only when they bring out the supply from their terminals,” Ang said.

Petron's refinery in Bataan

Petron's refinery in Bataan

However, it seems that Petron is not yet looking to permanently shut down its refinery in Bataan. Ang mentioned that the Petron Bataan refinery would resume commercial operations once the economy improves. 

As a review, Pilipinas Shell Petroleum Corp. decided to permanently shut down its refining operations in the country after 58 years of service. Shell transformed its refining facility in Tabangao, Batangas into a full import terminal as this move is more cost-efficient. 

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Martin Aguilar

Martin Aguilar

Author

Martin is the Content Editor of Philkotse. His love for cars first started when he got a remote-controlled toy as a birthday present. Then, Martin’s interest in cars was further developed through his family’s humble collection of Japanese cars.

Martin started his writing career as an editorial assistant and writer for various magazines under ABS-CBN Publishing. Before joining Philkotse, Martin was a writer for Autoindustriya then shifted gears in 2017 to become the editor for AutoDeal.

Aside from his interest in cars, Martin loves to read crime-thriller novels, play basketball in the virtual world, eat tapsilog, and go for random road trip adventures.

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