Gov’t fight against oil smuggling paying off — Shell

MANILA, Philippines – The government’s efforts to curb oil smuggling are bearing fruit and improving sales revenue for local oil players, an oil firm executive said.

Speaking at a press conference on Friday, June 21, Pilipinas Shell Petroleum Corp. country president Ed Chua said that for the past two months, sales revenue of the company has significantly improved. He declined to disclose specific numbers.

“We would like to thank and congratulate the government because, since April up to now, we have seen a significant drop in (oil) smuggling.”

“Since April, we have seen increase in sales by double digits… (It) is a clear indication that the governments efforts to address smuggling is starting to pay off,” he said.

Chua added industry losses to smuggling amount to about 30% of sales in white commodities or diesel products.

Addressing this issue of smuggling will significantly benefit the government in terms of more efficient revenue collection, Chua said. It will also benefit local petroleum players in better sales revenue.

Oil companies estimate that around P20 billion to P30 billion are lost in oil smuggling every year.

In April, Petron Corp. CEO Ramon Ang, meanwhile, believes industry losses are much bigger at around P30 billion to P40 billion every year. Petron is the country’s biggest oil refiner and retailer.

The government has launched a name-and-shame campaign to reduce oil smuggling due to complaints of the country’s 3 biggest oil firms — Petron Corp, Pilipinas Shell and Chevron Philippines — led by Department of Finance (DOF), Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR).

Finance Secretary Cesar Purisima earlier said the government is on its toes in addressing smuggling activities “especially in high-risk commodities such as oil… (by) using a proactive, information-driven approach.”

Department of Energy (DOE) data said oil demand in the country stood at 106.9 million barrels in 2011.

There is, however, a discrepancy when this is compared to data from BOC. According to the customs agency, oil importation only amounted to 67.6 million barrels, proving the remaining 39.3 million barrels came from smuggling.

In April, DOF announced plans to implement a port accreditation system to curb widespread oil smuggling. This is on top of the 9 oil smuggling cases filed by the agency since 2010 amounting to about P39 billion pesos. – Rappler.com