SUPPLY

IInventory

Actual crudes and petroleum products inventory as of end December 2009 was recorded at 11.6 million barrels (MMB) or 42-days supply equivalent (40 days for crude oil and products in stock and 2 days for crude in-transit to the country). This is 18.4 percent lower than last year’s end-December level 14.2 MMB. On the other hand, 2009 average inventory was reported at 15.1 MMB, 44 days in stock and 9 days in-transit.

Meanwhile, sometime during the last quarter of 2009, with the extensive damage brought by Typhoons Ondoy and Pepeng in Luzon, President Gloria Macapagal-Arroyo issued Executive Order No. 839 which ordered the oil companies to retain the level of the retail price of petroleum products prevailing on October 15, 2009. With its Implementing Guidelines (Department Circular No. DC 2009-10-0013), the DOE was tasked to monitor the daily inventory of specific petroleum products, namely gasoline, diesel, biodiesel, kerosene and LPG in Luzon areas. As such, the oil companies and LPG industry players were required to report their daily stocks of the mentioned products in order to monitor and assess the status of total supply in Luzon.

The E.O. has been effective until the issuance of E.O. 845 on 15 November. This, however, directed the oil players in Luzon to implement a more targeted and focused assistance program in the identified calamity areas.

Crude Oil Imports

Year 2009 crude imports dropped to 50.6 MMB, 27.3 percent lower than 2008’s 69.5 MMB. This was due to the maintenance and emergency shutdowns of the country’s local refineries sometime during the period, hence the lower volume of crude imported.

Crudes imported from the Middle East totaled 42.2 MMB, representing 83.5% of the total crude mix while crudes from the Far East region (5.2 MMB) such as Malaysia, Philippines, Indonesia and Singapore supplied 10.2% of the total crude mix (Fig. 1).

Saudi Arabia supplied more than forty percent (44.7%) of the country’s crude requirements. Next was UAE with a 20.1 percent share, followed by Qatar with a 16.6 percent share. Meanwhile, a total of 2.8 MMB crude, representing 5.5 percent of the total crude mix, was imported from Russia.

Petroleum Product Imports

Imports of finished petroleum products in 2009 grew by 19.7 percent from 48.3 MMB of year 2008 to 57.8 MMB. This was due to low refinery production output during the period. As a consequence, the local refiners, as well as the other players, increased their imports to augment their requirements.

Diesel oil imports swelled by more than thirty percent (31.9%) compared to year ago level. Imports of unleaded gasoline and LPG also grew by 21.5 and 19.3 percent, respectively. However, fuel oil imports declined by 22.1 percent.

The oil majors (Petron, Chevron and Shell) accounted for 61.1 percent of the total import volume with an increase of 16.6 percent from last year’s level of 30.3 MMB to 35.3 MMB. The growth was due to increased volume of product imports of the local refiners due to the total shutdown of their refineries for maintenance sometime during the period. As for other industry players’ import volume which accounted for the remaining 38.9 percent, an increase of 25.1 percent was also recorded from last year’s 18.0 MMB to 22.5 MMB this year.

Meanwhile, the local refiners (Petron and Pilipinas Shell) accounted for 35.3 percent of the total product imports while 64.7 percent was attributed to direct importers.

Product import mix is comprised mostly of diesel oil at 41.2 percent, unleaded gasoline at 22.7 percent, LPG at 16.6 percent, fuel oil at 9.6 percent, kerosene/avturbo at 7.7 percent and other products at 2.2 percent.

Total gasoline import reached 55.1 percent of gasoline demand while diesel oil import was 54.6 percent of diesel demand. LPG import on the other hand, was 76.6 percent of LPG demand. Total product import was 53.9 percent of the total products demand.

The oil majors’ import share in the total demand was 32.9 percent while the other players’ import share was at 21.0 percent. As for the refiners, their import share in the total demand was at 19.0 percent, while 34.9 percent was attributed to direct importers.

Moreover, a total of 404 thousand barrels (MB) ethanol was imported for fuel use during the period. Republic Act No. 9367 of 2007 mandated the use of at least 5% bioethanol blend for gasoline by 2010. Philippine National Standards’ PNS/DOE QS 008:2009 for E-Gasoline specified a 9-10% ethanol content as the existing standard for fuel.

Crude Run and Refinery Production

The country’s current maximum working crude distillation capacity is 281 thousand barrels per stream day (MBSD).

Total crude oil processed for the period dropped by 20.0 percent vis-à-vis 2008 level of 67.2 MMB to 53.7 MMB. The decrease in volume was attributed to consecutive maintenance shutdowns of the refineries of Petron and Pilipinas Shell sometime during the period. This resulted to a low refinery capacity utilization of 52.4 percent from 2008’s 64.6 percent.

Consequently, local petroleum refinery production output also fell by 20.4 percent from last year’s 64.9 MMB to 51.6 MMB. Full year 2009 average refining output was at 141.5 MB per day.

Diesel oil and fuel oil continued to dominate the production mix with shares of 34.0 and 20.9 percent, respectively. This was followed by unleaded gasoline at 20.3 percent, kerosene/avturbo at 12.1 percent, LPG at 6.4 percent and other products also at 6.4 percent (Fig. 2).

Most petroleum products posted decreases vis-à-vis refinery output of 2008. Fuel oil, diesel oil and unleaded gasoline refinery output recorded the biggest drop of 32.5, 26.5, and 18.8 percent, respectively.

Meanwhile, Petron started to produce benzene and toluene (521.0 MB) since April 2009.

DEMAND

Petroleum Product Demand

Petroleum products demand in 2009 rose by 6.0 percent from 101.2 MMB of 2008 to 107.3 MMB. This can be translated to an average daily requirement of 294.0 MB.

All petroleum products registered increases vis-à-vis 2008 level with the exception of fuel oil which dropped by 2.7 percent. LPG and unleaded gasoline grew by 9.1 and 7.9 percentages, respectively. Diesel oil was also up by 7.3 percent while kerosene/avtubo posted an increase of 5.9 percent.

Diesel oil obtained the largest share of 40.7 percent in the total sales mix, trailed by unleaded gasoline, fuel oil, LPG, and kerosene/avturbo at 22.2, 14.7, 11.7 and 10.0 percentages, respectively (Fig. 3).

Demand for automotive LPG for the same period continued to grow from 10.7 percent of total LPG demand in 2008 to 13.2 percent due to shifting of more taxis to LPG as fuel.

Petroleum Product Exports

The country’s export of oil was down to 10.8 MMB from 17.8 MMB of 2008, equivalent to a decrease of 39.6 percent. Fuel oil registered the biggest drop of 76.7 percent vis-à-vis 2008 figure. Naphtha and condensate exports also fell by 9.9 and 1.8 percentages, respectively. Propylene export on the other hand increased by 43.0 percent from year ago level.

The total export mix comprised of condensate (50.7 percent); fuel oil (16.4 percent); naphtha (9.5 percent); mixed xylene (6.8 percent); propylene (6.6 percent) diesel oil (2.3 percent); unleaded gasoline (1.6 percent) and other products (6.2 percent), respectively.

The condensate exports of Shell Philippines Exploration B. V. (SPEX) and Cross Country’s diesel oil and unleaded gasoline accounted for 53.3 percent of the total export mix, while the oil majors accounted for the remaining 46.7 percent.

Meanwhile, a total of 1.9 MMB crude oil (Palawan Light) was exported this year to Korea and Japan by Galoc Production Co.

MARKET SHARE

Total Petroleum Products

The major oil companies’ (Petron Corp., Chevron Phils. and Pilipinas Shell Petroleum Corp.) dominance of the market was reduced to 78.8 percent share of total demand vis-à-vis 2008’s 81.9 percent. This was due to the increased market share of the other players in the LPG business as well as to the entry of new importers in the oil industry.

On the other hand, market share of the other industry players, which include PTT Philippine Corp. (PTTPC), Total Phils., Unioil/Oilink, Seaoil Corp., TWA/Filpride, Liquigaz, Petronas, Prycegas, Micro Dragon, Zhenron, Ixion Corp., Cross Country, Jetti and World Precision as well as the end users who directly imported part of their requirement, grew from 18.1 percent of 2008 to 21.2 percent this year (Fig. 3).

Meanwhile, the local refiners (Petron Corp. and Pilipinas Shell) captured 64.7 percent of the total market demand, while 35.3 percent was credited to direct importers/distributors.

LPG

In the LPG industry, the oil majors’ market share recorded at 52.6 percent while the other players got the remaining 47.4 percent. Meanwhile, Pilipinas Shell’s LPG business was transferred last May 2009 to its wholly-owned subsidiary, Shell Gas (LPG) Phils. Inc. (SGLPI).

Among the other LPG players, Liquigaz got the biggest market share with a 28.6 percent share, followed by Total Petroleum with an 8.3 percent market share.

Total LPG market share of the other players grew from 42.4 percent in 2008 to 47.4 percent (Fig. 4).

OIL IMPORT BILL

Total oil import bill in 2009 amounting to $7.1 million dropped by 40.9 percent compared with 2008’s $12.0 million. This was because of the decreased volume of crude oil imported and low import cost of both crudes and petroleum products during the period as compared to 2008.

Total oil import cost is made up of 52.7 percent finished products and 47.3 percent crude oil.

Import cost of crude oil amounted to $3.4 million at an average CIF cost of $66.501/bbl, down by 53.2 percent from the 2008 level of $7.2 million at an average CIF cost of $103.314/bbl.

Meanwhile, 2009 total product import cost decreased by 22.7 percent to $3.7 million at an average CIF cost of $64.741/bbl vis-à-vis last year’s $4.8 million at an average CIF cost of $100.343/bbl.

The country’s petroleum export earnings also recorded a huge drop of 53.2 percent to $0.8 million from last year’s $1.7 million despite the 1,912 MB crude oil (Palawan Light) that was exported this year.

Overall, the country’s net oil import bill for the period amounting to $6.3 million was lower by 38.9 percent from last year’s $10.3 million.