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Shell to spend up to P20 billion for 5-year expansion
In a virtual briefing yesterday, PSPC president and CEO Cesar Romero said the company would continue allotting P3 billion to P4 billion annually for the expansion of its retail network and supply chain efficiency improvement.
STAR/File

Shell to spend up to P20 billion for 5-year expansion

Danessa Rivera (The Philippine Star) - April 8, 2021 - 12:00am

MANILA, Philippines — Pilipinas Shell Petroleum Corp. (PSPC) is spending up to P20 billion to pursue its five-year strategy plan focused on full-importation, mobility, and low-carbon initiatives.

In a virtual briefing yesterday, PSPC president and CEO Cesar Romero said the company would continue allotting P3 billion to P4 billion annually for the expansion of its retail network and supply chain efficiency improvement.

“Before when we had the refinery, we were spending as much as P1 billion per year for asset integrity and basic maintenance, whereas now, we will be spared of that and we could redeploy the capex to value adding investments in terms of margin or revenue generation or in terms of cost reduction,” he said.

PSPC has laid down its three priorities in the next five years, which are transforming its supply chain from manufacturing to full importation, changing its business model from retail to mobility, and shifting to lower carbon operations and introducing lower carbon products and services.

To increase and strengthen its supply chain across the country, the local unit of Royal Dutch Shell plans to put up two more medium range (MR) capable import terminals with a minimum capacity of 300,000 barrels. It is operating three MR capable import terminals in Batangas, Cagayan de Oro and Subic.

“Logistics is key to winning in this market.  Therefore we plan to have a total of five MR-capable import terminals during this five-year period. We are scouting two more as we plan to operate a network of MR import terminals across the country to ensure we have adequacy and security of supply,” Romero said.

When asked about the possible locations of the new import terminals, Romero said they were looking at Visayas and Mindanao, which are seen as growth areas for the company.

“We believe the growth of the country will continue to be in the south. So, it will be either in Visayas or Mindanao, those are the areas we are keenly looking at. Of course, it does not mean we will not preclude any further investments in the north should growth be in the north,” Romero said.

Meanwhile, PSPC will continue to spend P1 billion to P2 billion in the transformed Tabangao facility in Batangas to maximize its capacity to become a world class import facility.

The transformation of the Tabangao refinery facility into a full import facility last year has enabled PSPC to focus on improving its efficiency and operational standards. It has also reduced capital and operational expense exposure, lessened vulnerabilities to variability and product pricing and brought about growth.

“We believe these transformations allow us to wean away from the unfortunate, very difficult and challenging outlook associated with the refining industry. Bigger, complex, highly integrated export-oriented facilities have been built in the region and therefore, it has significantly depressed margins and worsened by the pandemic. (With the transformation,) we are able to better position our company to perform more robustly in the future,” Romero said.

To better serve the needs of the Filipino consumers, PSPC said its retail business model is shifting from a gas station to a mobility site, which will not only cater to cars and standard vehicles but will also have offers in e-mobility for cyclists and pedestrian customers.

The oil firm aims to build 60 to 80 new sites per year to reach its overall target of 1,500 mobility sites by 2025.

“We have increased our aspiration in terms of new sites per year. Over the last five years, we built an average of 50 to 70 per year. For the next five years, we plan to increase that even further to 60 to 80,” Romero said.

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