SUPPLY

IInventory

Actual total country crudes and petroleum products inventory as of end June 2011 was recorded at 16.1 MMB or 51-days supply equivalent, 38 days for crude oil and products in stocks and 13 days in-transit, respectively. This was 4.4 percent lower than last year’s end-June level of 16.8 MMB. First half 2011 average inventory was reported at 50 days, 42 days in stock and 8 days in-transit.

Meanwhile, given the uncertainties on supply due to the lingering conditions in the Middle East and African Nations (MENA), the government continued to enforce the Minimum Inventory Requirement wherein all oil companies, except refiners, operating in the country and bulk suppliers are required to maintain a minimum inventory equivalent to 15 days supply of petroleum products. LPG companies’ inventory shall be maintained at seven days supply while the refiners shall keep a minimum inventory of 30 days supply equivalent.

Crude Oil Imports

Various type of crude oil were imported for the period totaling 34.6 MMB, an increase of 2.4 percent vis-a-vis 2010‘s 33.8 MB.

Middle East crudes remained as the country’s major source of crude oil, supplying 71.9 percent (24.9 MMB) of the total crude mix while crude from the Far East region (1.3 MMB) such as Malaysia, Philippines and Indonesia supplied 3.7% of the total crude mix. The remaining 24.4 percent was sourced from Russia.

Saudi Arabia remained as top exporter of crude into the country, supplying 42.0 percent (14.5 MMB) of the total crude requirement followed by Russia with a 24.4% share (8.4 MMB). Next was UAE with a 24.2% share followed by Iran with a 4.2% share (Fig. 1).

Petroleum Product Imports

First half 2011 import volume of finished petroleum products dropped by 21.8 percent from 28.9 MMB of 2010 to 22.6 MMB, which was partly due to increased refinery production output during the period, resulting to lower imports of the local refiners.

Imports of fuel oil recorded the biggest drop of 65.2 percent vis-à-vis last year’s level due to reduced local demand of the same. Diesel oil, unleaded gasoline and LPG also fell by 22.2, 11.7 and 8.6 percentages, respectively. On the other hand, kerosene/avturbo imports rose by 33.7 percent.

The other industry players’ import volume accounted for 61.8 percent of the total import volume, an increase of 5.0 percent from last year’s 13.3 MMB to 13.9 MMB this year. The oil majors (Petron, Chevron and Shell) accounted for the remaining 38.2 percent with a decrease of 44.6 percent from last year’s level of 15.6 MMB to 8.6 MMB.

Meanwhile, the local refiners (Petron and Pilipinas Shell) accounted for 16.3 percent of the total product imports while 83.7 percent was attributed to direct importers.

Product import mix were comprised mostly of diesel oil at 39.6 percent, unleaded gasoline at 25.0 percent, LPG at 17.6 percent, kerosene/ avturbo at 11.8 percent, fuel oil at 5.3 percent, and other products at 0.8 percent.

Total gasoline import reached 46.3 percent of gasoline demand while diesel oil import was 40.4 percent of diesel demand. LPG import on the other hand, was 64.1 percent of LPG demand. Total product import was 42.4 percent of the total products demand.

The oil majors’ import share in the total demand was 16.2 percent while the other players’ import share was at 26.2 percent. As for the refiners, their import share in the total demand was 6.9 percent, while 35.5 percent was attributed to direct importers.

Moreover, a total of 493 MB ethanol was imported for fuel use during the first half of 2011. Republic Act No. 9367 of 2007 mandated at least 5% bioethanol substitution of gasoline sales. Philippine National Standards’ PNS/DOE QS 008:2009 for E-Gasoline specified a 10% ethanol content as the existing standard. Thus, gasolines sold in the country are either pure gasoline or E-10 (gasoline with 10% bioethanol content).

Crude Run and Refinery Production

The country’s current maximum working crude distillation capacity is 275 thousand barrels per stream day (MBSD).

Total crude processed increased by 13.7 percent from 30.5 MMB to 34.7 MMB during the period.

Vis-à-vis first half of 2010, the reported refinery capacity utilization improved to 69.7 percent from 60.7 percent only.

Consequently, local petroleum refinery production output also grew by 15.5 percent from last year’s 29.3 MMB to 33.8 MMB. First half 2011 average refining output was at 186.8 MB per day.

Diesel oil and fuel oil continued to dominate the production mix with shares of 37.0 and 19.9 percent, respectively. These were followed by unleaded gasoline at 18.7 percent, kerosene/avturbo at 10.3 percent, LPG at 6.9 percent and other products at 7.2 percent (Fig. 2).

All petroleum products posted increases vis-à-vis refinery output of 2010 level. Diesel oil refinery output posted the largest increase of 24.2 percent, followed by LPG with a 21.0 percent growth. Likewise, unleaded gasoline and fuel oil refinery output also rose by 17.8 and 11.4 percent, respectively.

DEMAND

Petroleum Product Demand

The country’s total demand of petroleum products for the period registered a decrease of 5.0 percent from 56.2 MMB of 2010 to 53.4 MMB. This can be translated to an average daily requirement of 294.9 MB compared with 2010’s 310.5 MB.

Compared with first half of 2010 demand, fuel oil recorded the largest drop of 33.5 percent in the total demand and almost 33% drop in the industrial trade demand. The decline can be attributed to shutdown of Manila-Batangas Black Oil Pipeline in the last quarter of 2010 wherein the oil company was having difficulty in transporting the black product to its industrial trade clients. Demand of diesel had a slight decrease of 0.8 percent while kerosene dropped by almost 9.0 percent. On the other hand, demand of LPG and unleaded gasoline rose by 2.5 and 1.0 percentages, respectively.

Diesel oil grabbed a hefty 41.5 share in the demand mix while unleaded gasoline captured 22.8 shares. Fuel oil and LPG trailed along with a 12.1 and 11.6 share, respectively. Kerosene/avturbo contributed 9.4 percent share in the total demand mix while the other products a mere 0.8 percent (Fig. 3).

Petroleum Crude Oil/Product Exports

Total petroleum products exported for the period increased by more than sixty percent (65.8%) from 4.8 MMB of first half of 2010 to 7.9 MMB.

All products posted increases vis-à-vis 2010 level, except for naphtha and benzene which declined by 5.3 and 1.4 percentages, respectively. Fuel oil exports rose by more than ten times (957.9%) from last year’s level, probably due to its lower domestic demand.

The total export mix comprised of condensate (32.0 percent); fuel oil (30.7 percent); naphtha (12.0 percent); propylene (8.1 percent); mixed xylene (5.6 percent); toluene (3.3 percent); reformate (3.1 percent); diesel oil (2.4 percent); benzene (1.6 percent); kerosene (0.6 percent) and LPG (0.8 percent), respectively.

The oil majors accounted for 68.0 percent of the total export mix while the condensate exports of Shell Philippines Exploration B. V. (SPEX) accounted for the remaining 32.0 percent).

Meanwhile, a total of 1.4 MMB crude oil (Palawan Light) was exported to various countries during the period, a decrease of 20.4 percent from last year’s 1.7 MMB.

MARKET SHARE

Total Petroleum Products

The major oil companies (Petron Corp., Chevron Phils. and Pilipinas Shell Petroleum Corp.) got 72.6 percent market share of the total demand while the other industry players which include PTT Philippine Corp. (PTTPC), Total Phils., Seaoil Corp., TWA, Filpride, Phoenix, Liquigaz, Petronas, Prycegas, Micro Dragon, Unioil, Eastern Petroleum and Jetti as well as the end users who directly imported part of their requirement captured 27.4 percent of the market (Fig. 3).

Local refiners (Petron Corp. and Pilipinas Shell) captured 62.7 percent of the total market demand, while 37.3 percent was credited to direct importers/distributors.

LPG

In the LPG industry, Petron Corp. and Pilipinas Shell Petroleum Corporation’s market shares totaled 54.8 percent while the other players obtained 45.2 percent.

Among the other LPG players, Liquigaz got the biggest market share with a 26.8 percent share, followed by Total Petroleum with a share of 8.2 percent (Fig. 4).

OIL IMPORT BILL

Year to date June 2011 total oil import bill amounting to $6,339.5 million grew by 24.6 percent from 2010’s $5,087.3 million despite the decrease in petroleum products imports. The reason may be due to high import costs of both crudes and finished products during the period as compared to year ago level.

Total oil import cost was made up of 59.4 percent crude oil and 40.6 percent finished products.

Import cost of crude oil amounted to $3,764.2 million at an average CIF cost of $108.911/bbl, 41.8 percent higher from 2010’s $2,654.5 million at an average CIF cost of $78.610/bbl.

Meanwhile, first half 2011 total product import cost increased by 5.9 percent to $2,575.2 million at an average CIF cost of $113.865/bbl vis-à-vis last year’s $2,432.8 million at an average CIF cost of $84.160/bbl.

The country’s petroleum export earnings rose by 89.2 percent from $540.7 million last year to $1,022.8 million.

Overall, the country’s net oil import bill for the period amounting to $5,316.7 million was up by 16.9 percent from last year’s $4,546.7 million.