* Shell to transform Tabangao into import terminal
* Government says no impact on local fuel supply
* Analysts expect more refinery closures in region
(Adds consultancy JBC Energy's comments in paragraphs 7-8)
By Enrico Dela Cruz
MANILA, Aug 13 (Reuters) - The Philippine unit of Royal
Dutch Shell said on Thursday it will permanently shut one of the
country's two oil refineries, blaming a pandemic-led slump in
margins, with other regional closures likely to follow,
according to analysts.
Pilipinas Shell Petroleum Corp said its
110,000-barrel-per-day (bpd) Tabangao facility in Batangas
province, which began operations in 1962, was no longer
economically viable and would be turned into an import terminal.
Singapore's complex refining margin DUB-SIN-REF , the
bellwether in measuring profitability at Asian refineries, has
been mostly negative since March prompting many refiners to cut
output or temporarily shutter operations.
In the United States and Europe, refiners are permanently
halting processing or weighing lasting shutdowns.
"We definitely see the possibility of more closures in Asia
over the next 6-12 months," said Mia Geng, consultant at FGE,
adding that refineries in Japan, Australia and New Zealand could
be likely candidates for closure.
"Given the uncertainties in demand and our subdued margin
outlook, it would be challenging for those less complex and
efficient refineries to continue running."
The oil refining industry is well on track to registering
more than 1 million bpd of global closures this year alone,
although not all of them will come into effect in 2020,
according to consultancy JBC Energy.
"The picture is fairly telling, with even the most complex
refining margins down to just around 10% of their former levels,
while steam cracking economics are currently at least around the
50% (of former levels) mark," JBC said in a note.
The permanent closure of Tabangao comes after both of the
Philippines' refineries halted operations as coronavirus
lockdowns pummelled oil demand. "Due to the impact of the COVID-19 pandemic on the global,
regional and local economies, and the oil supply-demand
imbalance in the region, it is no longer economically viable for
us to run the refinery," Pilipinas Shell Chief Executive Officer
Cesar Romero said.
The other local refinery, Petron Corp's PCOR.PS
180,000-bpd facility in Bataan province, has been on a scheduled
turnaround since May and will restart on Sept. 1. Energy Secretary Alfonso Cusi sought to allay concern over
domestic fuel supply saying Pilipinas Shell is expected to fill
its market share through imports of refined products.
Wood Mackenzie research director Sushant Gupta said the
challenging environment would put pressure on weaker Asian
refineries, particularly ones in mature markets, or with little
or no integration with petrochemicals.
"We could see closures becoming a reality in many markets,"
he said in a note.
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Asia oil refining margins https://tmsnrt.rs/3ahLHRe
Refiners globally worry demand will not return to pre-pandemic
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