Shell's Philippines unit will suspend refining operations at its 110,000-bpd refinery in the country for a month starting in the middle of May, due to the dramatic plunge in fuel demand and the erosion of refining margins in the COVID-19 pandemic.
"In response to the drastic decline in local product demand and the significant deterioration of regional refining margins brought about the COVID-19 pandemic, the company will temporarily shut down its refinery operations for approximately one month starting mid-May 2020," Pilipinas Shell Petroleum Corporation said in a statement carried by Reuters.
"The temporary shutdown will help insulate the company from further potential drops in refining margins and will also aid in its cash conservation initiatives," Shell's unit in the Philippines, operator of one of the two refineries in the country, said.
At the Q1 earnings call last week, Shell's chief executive, Ben van Beurden, said that the oil supermajor and one of the largest oil product retailers globally is not sure when fuel demand would recover to pre-crisis levels, if at all.
"We are looking at a major demand destruction that we don't even know that will come back. So the oil price may come back. But if the volumes are significantly lower, we still have a major dislocation, of course, in our own cash wheel," van Beurden said at the call after announcing a first dividend cut at Shell since World War II.
Meanwhile, the Philippines - which had 9,684 cases of Covid-19, including 637 deaths from the disease as of early on Tuesday - is under strict lockdowns in the capital city Manila and other major cities until the middle of May.
On Monday, the President of the Philippines, Rodrigo Duterte, signed an executive order to raise import tariffs on crude oil and refined oil products by another 10 percent to finance actions to curb the spread of COVID-19 and economic measures to support the citizens and the economy.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More