Petroleum Supply Chain in the Philippines

5/26/2018 Petroleum Supply Chain in the Philippines

1/45Baluyot, Cocabo, Dugan, Falcotelo, Go, Guzman, Salvador

Petroleum

Supply Chain


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Supply Chain Map

Petroleum Supply Chain


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Supply Chain Map


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Upstream Processes



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Crude Sale and Importation

Photo credit to http://files.coloribus.com/


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Once crude oil has been extractedfrom the ground, it is stored in barrelsand offered up for sale in the worldmarket.

As evidenced in recent times, the

selling price of crude oil fluctuatesbased on market supply and demand,in addition to other external factors.


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45.90%

25.80%

15.80%

7.70%4.80%

Philippine Oil Imports for 2012

Saudi Arabia

United Arab Emirates

Russia

Qatar

Others


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The Philippines pays a great deal for fuel fromthese sources. In the first nine months of 2011

alone the Philippines spent $9.43 billion on

84.6 million barrels of oil resources from theaforementioned countries.

51.16

millionbarrelsfor rawcrude

39.36 millionbarrels for

finishedpetroleum

products such asdiesel, kerosene,LPG and lubricant

oil

84.6 millionbarrels of oil

resources


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Crude Transportation



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Once orders are finalized, theyare shipped to the specifiedlocation.

In the case of the Philippines,

imported oil is almost alwaysdelivered via seafaring oiltankers (each tanker can carry160-320 tons of cargo).

Like the price of oil itself, thecost of transporting oil changesrapidly depending on currentsupply and demand.


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The cost to charter an oil tanker from the MiddleEast to the Asia-Pacific region in 2007 had a widespread ranging from $7,085/day to $301,609/day.

While no specific data exists for the Philippinemarket, Japan spent around $1.61 billion onshipping costs in 2009. Since Japan spends twiceas much on oil imports, it is estimated that

Philippine shipping costs in the same period wasat around $700-$800 million mark.


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Location of Major Crude Ports


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Crude Storage

Photo credit to http://mero.cz


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Crude Storage

When the crude oil reaches the Philippines, it is storedin oil depots, which are also known as tank terminals.

Major oil depots in Luzon include the Poro Point Oil

Depot in Pampanga, which services Petron, the CaltexOil Depot in Albay, which services Chevron, and thePandacan Oil Depot, which services Chevron, Shell andPetron.

Outside of Luzon are other major oil depots, such as the

Shell Oil Depot in Leyte, the Petron oil depot in Iloiloand the Chevron oil depot in General Santos City.


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Major Oil Depots in the Philippines

(In Red)


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Crude Storage

The current trend inthe Philippines hasbeen to construct oildepots outside of

Luzon. SEAOIL, forinstance, has recentlyopened a 41 millionliter depot in the

southern province ofDavao in March of2014.


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Downstream Processes



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Refining

Photo credit to www.iraq-businessnews.com


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Refining

Tabangao, Batangas

refinery of Pilipinas Shell

Petroleum Corporation

(Capacity: 93,000

barrels/day)

Limay, Bataan refinery

of Petron Corporation

(Capacity: 188,000barrels/day)

Refineries in the Philippines


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Refining

As to the production mix in thecountry, in 2012, the

Philippines produced 164,700barrels per stream day

(MBSD), in contrast to a total

of 303,300 MBSD demanded.


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Refining

6.80%

14.30%

5.60%

8.90%

37.50%

19.00%

7.90%

Refined Oil ProductsLPG

Premium Gasoline

Regular Gasoline

Kerosene

Diesel

Fuel Oil

Miscellaenous


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Oil Refineries in Luzon (in Red)


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Product Transportation



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Crude oil is transported by oil tankers intothe country.

The crude oil is refined in either of thetwo operating refineries.

The finished products take one of twogeneral routes depending on thedestination.

Transportation of petroleum in the Philippines


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Oil depots of Chevron Philippines and Pilipinas

Shell generally take receipt of products

through barges and the 117 kilometer-long

white oil pipeline owned by First Philippine

Industrial Corporation. The commercial pipeline runs from the Shell

refinery in Tabangao to Manila, along with its

complementing black oil pipeline whichcarries bunker fuel to Sucat.


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Limay-Manila Route

T b M il R


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Tabangao-Manila Route


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On the other hand, deliveries to oil depots ofthe Petron Corporation and smallindependent retailers are facilitated throughtruck tankers.

Finally, LPG follows a slightly different route inhow it is transported first by lorries todesignated refilling stations, where it ispartitioned into retail containers. Trucks then

bring these containers to independentretailers and gas stations


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Product Storage

Photo credit to http://fuelsandlubes.com


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Product Storage

Focused on justdistribution

Maintains 22 oil depotsaround the country

Owns over 30 oil depots


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Product Storage

Arguably, the most relevant oil depot to the

National Capital Region is the complex at

Pandacan, Manila. Pandacan district houses depots

of all three major oil companies, and serves as the

endpoint of the aforementioned FPIC pipeline.


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Product Storage

City of Manila orderedrelocation of PandacanOil Depot by 2026.

Move done in light ofsafety concerns

Potential impact on oilsupply in Metro Manila

if alternative locationnot developed quickly


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Product Storage

Current oil supply at 44 days worth of oil at

any given time.

35 days worth of oil in storage, 9 days worth

of oil in transit.

Government requirement at 30 days.


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Key Agencies and

Institutions



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Key Agencies and Institutions

Republic Act 8180, otherwise known as An Act

Deregulating the Downstream Oil Industry, and forOther Purposes, gives authority of oversight to

pertinent agencies of the executive branch. Their

corresponding responsibilities are listed as follows:


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Department of Energy (DOE)- monitors and publishes daily international oil

prices

- monitors manufacturing, refining and

marketing processes to ensure safety and

cleanliness

- maintains periodic schedule of national fuelinventory


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Department of Justice (DOJ)

- in conjunction with DOE, forms a

special task force to addresscomplaints of unreasonable rises

in fuel price

d


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Department of Trade and

Industry (DTI)

- in conjunction with DOE,ensures fair trade in the

subsequently deregulated

downstream oil industry

d


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Bureau of Product Standards

(BPS)

- in conjunction with DOE, setsand enforces national standards

of fuel quality

K A i d I i i


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Energy Regulatory Board (ERB)- sets wholesale prices of oil during

transition phase mandated by R.A. 8180

- was refocused on electric power afterfull deregulation and eventually

superseded by Energy Regulatory

Commission as provided for by ElectricPower Industry Reform Act of 2001


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Petroleum Issues


P t l I


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Petroleum Issues

Metro Manila relatively has an ample reserve

of oil, which can be used in the event of a

natural calamity.

However, since almost all of the Philippines

oil enters the country through seaports

located in Bataan and Batangas, a strong

enough storm can hamper ships fromunloading their supply.

P t l I


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Petroleum Issues

A natural calamity that damages seaport

infrastructure can also hamper efforts to

deliver fuel to the Philippines even long after

it has become safe for ships to sail again.

Due to the proximity of key depots and

refineries to Metro Manila, a calamity that hits

Luzon will most likely have a devastatingimpact on the fuel supply.

P t l I


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Petroleum Issues

Calamities that affect the refineries in Luzon

will hinder the Philippiness ability to refine

petroleum products which in turn affects not

only Metro Manila, but also the fuel supply inother parts of the country


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End


Petroleum Supply Chain in the Philippines

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