Key Manila Depot Slated to Close

An oil depot which supplies nearly all of the lubricants consumed in the Philippines is set to be closed in January 2016.

The Pandacan Oil Depot is a 33-hectare compound that houses the storage facilities and distribution terminals of Petron, Shell and Chevron. It is located along the banks of the Pasig River on land that was tagged as an industrial zone in the 1920s but which is now reclassified as a high-density commercial/mixed-use zone.

At present, the Pandacan Oil Depot is the largest and most important depot in the Philippines, supplying 50 percent of the countrys road fuels; 90 percent of its lubricant requirements; 70 percent of the shipping industrys requirements nationwide; 75 percent of aviation fuels; and 25 percent of the nations chemicals consumption.

Because of the reclassification, the three companies operating the Pandacan Oil Depot have begun building alternative facilities outside of Manila, although Petron is the only one so far to publicly discuss its plans. In a press conference last month, Petron President and Chief Executive Officer Ramon Ang revealed that the company is spending 15 billion pesos (U.S. $342 million) to build alternative depots in Bataan and Cavite provinces and in Navotas City, which is part of the Manila metropolitan area.

Petron, which supplies 40 percent of country's oil requirements, operates a refinery in Limay, Bataan, and has depots in Rosario town in Cavite Province and at the Harbor Center in Navotas City. At the Pandacan Oil Depot, Petron has a lubricant and grease plant. The company has not spelled out specific plans for those operations.

By the end of 2015, we should be totally out of Pandacan, Ang said, adding the transfer of their depot operations is a commitment with the local government of Manila. We are law-abiding citizens. We promised the City of Manila that within five years we will be moving out of Pandacan. I think we are the only one in compliance to that promise, he said.

Shell and Caltex both have refineries in Batangas, south of Manila.

Industry sources said transferring facilities translates to cost that would reflect on soaring prices of oil products.

Oil companies are reluctant to relocate due to huge expenses, said an industry source, who spoke on condition of anonymity. Imagine hauling supply from as far as Bataan, Batangas and La Union. An increase in the cost of transporting fuel products to Manila is expected.

In a joint statement, the Federation of Petroleum Dealers of the Philippines and the Confederation of Haulers of the Philippines warned that closing the Pandacan depot will create fuel shortages that disrupt public and private transportation as well as distribution of essential goods. The groups said additional tank trucks would be needed to haul oil products from new facilities but that haulers would probably not be able to afford them.

The Department of Energy, aware of the issues raised by the dealers and haulers as well as the increase in prices, is talking with the oil firms to find definite solutions. When asked on any shortage problem regarding lubricants, Melita Obillo, chief of Oil Industry Competition and Management Division under the Department of Energy, said there should be none if the blending plants are transferred in a manner that doesnt affect supply. She also assured that the government will strictly monitor all tankers coming from refineries or lube blending plants to assure the safe transport of products to service stations, as well as commercial and industrial customers.

An estimated 85,000 people live in Pandacan and residents have long been complaining of the risks of having the oil depot in their area, prompting the citys mayor to reiterate calls for the oil firms to move their facilities out of the city in compliance with the reclassification of the industrial complex into a commercial zone.