DOE urged to take over LPG depot

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Thursday, January 30, 2014


DUE to the decommissioning of the import terminal of Pilipinas Shell Inc. in Tabangao, Batangas, a party-list lawmaker urged the government to take over the giant oil firm's facilities to prevent the price of the liquefied petroleum gas from further ballooning.

House Deputy Minority Leader and LPG Marketers’ Association (LPGMA) party-list Representative Arnel Ty said that the permanent shutdown of the import terminal can surely place tremendous upward pressure on cooking gas prices at the expense of consumers.

The facility in Batangas can store up to 47 million kilograms (kg) of LPG.

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Ty said that the Department of Energy (DOE) should consider the temporary government take over and manage the terminal now or else face the consequence of a more expensive LPG price.

"We see prices swelling in the months ahead, as cooking gas demand grow along with national economic expansion," Ty said.

For business reasons, Shell has permanently closed down its refrigerated LPG import terminal last September 2013. The facility has been running since 1983.

The lawmaker urged the DOE to reactivate the terminal for 12 to 36 months, which is the enough time required for other oil firms to put up an alternative facility.

He said that the Shell's LPG import terminal was the primary source of cooking gas supplies for Southern Luzon.

"Of the 25 million kg of LPG that used to come out of the Shell terminal every month, 15 million kg were brought in by Shell from abroad, while the balance of 10 million kg came from the local production of Shell's adjacent oil refinery," Ty said.

He added that since the terminal's closure, Southern Luzon suffered a large LPG supply deficit of around 15-million kilos per month, since the giant oil firm has stopped importing the cooking gas.

He said the LPG supply in Southern Luzon is now down to just 10 million kilograms every month which is equivalent to the volume being locally produced by the Shell's refinery.

"This has put upward pressure on prices, because some of the supplies meant for Metro Manila and other parts of Luzon are now being diverted to Southern Luzon at higher prices to cover the extra transport costs from the LPG terminals in Bataan," Ty said.

He also said that the shutdown means that Shell's refinery will also temporarily stop producing Southern Luzon's leftover supply of 10 million kg of LPG per month -- now being stored in a smaller bay tank with a capacity of just three million kilos.

"The only option left for government, in order to shield consumers from potentially harsh LPG price increases, is for the DOE to takeover Shell's idle import terminal, and to run the facility, so as to enable other industry players, including the independents, to bring in extra supplies on their own," Ty added.

The lawmakers invoked Section 14 (e), Chapter IV ("Powers and Functions of the DOE and the DOE Secretary") of the Downstream Oil Industry Deregulation Law of 1998, which states that: "In times of national emergency, when the public interest so requires, the DOE may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any person or entity engaged in the industry." (Sunnex)

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