‘Government losing P30 billion to oil smuggling’

MANILA, Philippines - Oil smuggling may cost the government more than P30 billion in foregone revenues, an industry official said.

“Currently we are seeing around P30 billion a year in taxes is lost because of smuggled fuel goods,” said Pilipinas Shell Petroleum Corp. vice-president for Communications Roberto Kanapi, citing data from the Petroleum Institute of the Philippines.

“It could only go up,” Kanapi said.

For instance, average gross domestic product grew by an average of four percent annually from 1997 to 2009, while vehicle registration climbed by an average of 5.7 percent annually in the same period.

However, Kanapi said sales of fuel did not follow the trend of higher vehicle registration and economic growth, signifying that there has been oil smuggling.

Kanapi said direct smuggling is done through small oil tankers and fishing boats that load oil products from a mother ship stationed in international waters.

There is also the problem of technical smuggling through misdeclaration, undervaluation and overquantity.

“There are small things we can do to help. We do testing at times of other products,” Kanapi said.

“As an industry, we can help the government in the testing facilities,” he added.

Meanwhile, Shell is intent on pursuing its plans for a liquefied natural gas (LNG) distribution in the Philippines.

The feasibility study for the $1-billion LNG import terminal that will serve large plants and off-grid facilities will be completed next year.

“The Philippines is now back on the investment map of Shell. That is the reason we announced new investments,” Kanapi said.

Kanapi said that the Philippine office is fighting with other jurisdictions for the parent firm’s investments.

Shell, the world’s top supplier of natural gas, is optimistic in the prospects for LNG given new discoveries of reserves and lower costs compared with traditional fuels.

Kanapi said company tax perks from the Board of Investments would also be beneficial for Shell’s investments in LNG.

In June, Shell signed a deal with the Philippine government for a joint technical feasibility study for a LNG terminal adjacent to Shell’s existing refinery in Batangas.

Shell earlier said it is in talks with several potential buyers of LNG. The potential buyer include natural gas-fired power plants and small firms in industrial areas that want to shift to LNG from the more expensive diesel.