Shell, Chevron close oil depots in GenSan district

GENERAL SANTOS CITY, Philippines — Two oil industry giants have closed their fuel depots in Bula district here after the local government stood by its decision not to extend the December deadline, officials said Wednesday. Pilipinas Shell Petroleum Corp. (Shell) and Chevron Philippines, Inc. (formerly Caltex Philippines, Inc.) moved out their fuel storage operations out of the city pursuant to a city rezoning ordinance. Local government officials downplayed the eviction, saying fuel prices were unlikely to be affected. The local law reclassified Bula district from an industrial to a commercial zone. Shell and Chevron’s closure of their storage operations in the city left Petron Corp. as the only major oil company with depot operations here. Petron transferred its depot facilities from Bula to the village of Bawing, about 17 kilometers from its previous location in the downtown proper. Councilor Jose Mariano Constantino G. Gonzalez, finance and trade and industry committee chairman, said Shell and Chevron had relocated to Davao City, shrugging off the effects of the transfer on local pump prices. "Even if they had their operations here, fuel pump prices in the locality were already higher compared with those in neighboring urban centers," he told local TV. He also said Shell and Chevron had been barred from operating oil depots for failing to comply with the local zoning ordinance. "We need to be fair to those who are complying," he said. The Bula fuel depots here of the three major oil companies supplied fuel to the Central Mindanao region, serving the provinces of South Cotabato, Sultan Kudarat, Sarangani and the cities of General Santos, Koronadal and Tacurong. Enrico O. Altonaga, Shell retail manager for Mindanao, said the company had withdrawn to Sasa district in Davao City. He said distribution prices in General Santos City would not go up despite higher transport costs. Davao and General Santos are about 160 kilometers apart. "We will subsidize the transport cost, which will be less than a peso [per liter]," Mr. Altonaga told BusinessWorld in a phone interview. Asked whether Shell had plans to build a new fuel depot in the city, he said the matter was still being studied. Mr. Altonaga said they had transferred to Davao City due to the zoning ordinance and for the sake of the communities surrounding the Bula storage facility. Officials of Chevron could not be reached for comment. Pilar T. Afuang, executive director of the General Santos Chamber of Commerce and Industry, supported the local government’s closure order on Shell and Chevron. "It was just right since we’re talking here of the safety of the people. The depots are located in a dangerous place," she said in a separate interview. She expressed confidence that fuel supply in the locality will not suffer with the transfer of Shell and Chevron. Ms. Afuang said Shell and Chevron’s relocation to Davao City would be an opportunity for small oil industry players to flex their muscles by setting up their own oil depots in designated areas. The Confederation of Transport Cooperatives and Associations in General Santos City, Inc. had asked the local government to reconsider the closure of the oil storage facilities. They said the depot closure would result in at least a three- to five-year interim period when oil players, including small independent oil firms, will be shipping fuel from Davao City. The group estimated a fuel price increase of 60 centavos to a peso per liter. But Mayor Pedro B. Acharon, Jr. said the local government had given the giant oil players enough time to leave the Bula oil terminal. He said the local government had asked the three major oil players to relocate to other sites in the city three times already, each with a five-year grace period. This was in 1993, 1998 and 2003, the mayor added. — Romer S. Sarmiento, BusinessWorld