Pilipinas Shell suffers P16.2B net loss in 2020 on refinery shutdown, decline in crude prices

Pilipinas Shell Petroleum Corp. suffered a financial beating in 2020 as the impact of the COVID-19 pandemic compelled it to restructure its business strategy in the Philippines, causing it to incur heavy expenses.

In a disclosure to the Philippine Stock Exchange on Friday, Pilipinas Shell reported a full-year net loss of P16.32 billion.

The oil company said 73% of the net loss is comprised of P12 billion in one-off charges related to the cessation and transformation of its refinery in Tabangao into a world-class import facility.

In August 2020, Pilipinas Shell announced it is permanently shutting down its refinery in Tabangao, Batangas City as it shifted its strategy from manufacturing to importation to sustain its business amid the economic impact of the COVID-19 pandemic. 

The company also attributed the P4.8 billion in losses to the drastic decline in crude prices.

“Transforming the refinery into a world-class import terminal last August was a difficult but vital decision to make given the negative outlook for the refining sector worsened by the COVID-19 pandemic. A very hard decision for Pilipinas Shell but necessary to be more competitive and ratable in the future,” said Cesar Romero, Pilipinas Shell’s president and chief executive officer.

Romero said that Pilipinas Shell was able to secure jobs of over 134 out of the 217 impacted refinery employees, within other entities in the Shell companies in the Philippines while 26 opted for a voluntary retirement.

Pilipinas Shell ended 2020 with total volume of 5.1 billion liters, 13% below pre-pandemic level.

“We are slowly seeing the results of our agility and decisiveness to thrive from the challenges posed by the global pandemic. We are confident about driving fuel mobility and getting the country back on track as the country recovers from the impact of the pandemic,” Romero said.—LDF, GMA News