Pandacan MOU

A UNITED FRONT TO PRESERVE THE PANDACAN TERMINAL
An interview with
Art Bernales, Corporate Communications, Caltex Philippines, Inc.

A month before D-day, the Board of the Federation of Petroleum Dealers, representing retailers of Caltex, Petron, and Shell, sought out the DOE anew to find out whether or not there were hopes of keeping the depot. Mayor Atienza was constantly in the news warning the oil companies to get prepared for an eventual pull-out. Oil companies had drafted a contingency plan for supply to be hauled from as far as Batangas, Bataan and La Union. Retailers were prepared to either increase inventories or close operations for certain days or hours.

In a bid to help convince the Manila City Council that it was treading on dangerous grounds, the Federation of Petroleum Dealers of the Philippines and the Confederation of Haulers of the Philippines issued a joint statement that described what the public could expect from a Pandacan Terminal shutdown by June 30. An immediate supply shortage would be certain, disrupting private and public transport as well as distribution of essential goods. New tank trucks to augment the current fleet could not be expected as haulers anticipated little income from the business due to the high cost of fuel and spare parts. Accidents on the road, not mentioning the horrendous traffic, would definitely plague daily commuters.

In the end, reason prevailed as DOE stepped up its efforts to get Mayor Atienza and the City Council to reconsider implementation of the ordinance. The oil companies also had to come together to agree to the rationalizing of Pandacan.

Your newsletter interviewed Art Bernales of Corporate Communications, Caltex Philippines, Inc. (CPI), to find out what dealers might expect from the Memorandum of Understanding (MOU) on Pandacan Terminal that was recently signed by the oil companies and City of Manila officials.

1. What can retailers expect to happen to the Pandacan depot after the signing of the MOU? Will the decommissioning of 28 tanks affect Pandacan's capability to service retailers?

The MOU provides for the continued operation of the Pandacan terminal by the three oil companies within the limited area resulting from the scale-down. Terminal operations will be reduced by 40% and the three oil companies will establish joint operations within the reduced terminal.

As stipulated in the MOU, the three companies are working together to ensure that the scale-down of terminal operations in Pandacan will not affect the security and reliability of supply of oil products to customers in Metro Manila and the rest of Luzon.

2. Can the oil companies implement the provisions of the MOU within 6 months? If not, what happens?

The three oil companies are working hard to comply with the requirements stipulated in the MOU. Work has already begun in relation to the scale-down, such as the decommissioning and dismantling of Shell’s LPG spheres and the survey and marking of an access road that forms part of the buffer zone that will run through Petron’s tank farm. Caltex has committed to the decommissioning and dismantling of 6 of its storage tanks to make way for the scale-down. A joint technical committee meets weekly to develop the detailed engineering and master plans for the scale-down, including the agreements for the joint operation of the terminal.

3. In what way will the MOU address the safety concerns aired by the City Council of Manila?

The MOU mandates that the three oil firms further enhance the safety of the area around the terminals by:

Implementing a 40% reduction in operations;
Creating a safety buffer zone that separates the terminal from the surrounding community; and
Integrating safety and fire-fighting facilities and upgrading them by incorporating state-of-the-art systems.

These will further enhance the current safety standards of Pandacan, which are already at par with international standards.

4. There are those who remain skeptical about the safety of the depot. A case filed by a city councilor against Mayor Atienza can bring the issue to the fore again. How can the oil companies convince the public, in layman terms, that depot operations are safe?

In 80 years of operation, no major incidents have occurred at the Pandacan Terminal. The terminal was specifically designed for the safety and security not only of its personnel, but more so of its immediate external environment. The terminal is equipped with state-of-the-art fire and safety equipment to deal with any eventuality. Its personnel are trained to tackle any emergency situation, including fire or oil spills. In addition, drills are conducted regularly to ensure the preparedness of terminal personnel. These comprehensive safety precautions are mandatory for contractors as well.

In addition, adequate internal security measures are well in place at the Pandacan Terminal. As a standard operating procedure, we coordinate regularly with the Philippine National Police (PNP), the Armed Forces of the Philippines (AFP), and other concerned government agencies on the matter of reinforcing external security.

A study conducted by EQE, an independent international consulting company specializing in risk management services, assessed the overall safety risks in the terminal and found them to be low and well within acceptable standards in similar facilities in Great Britain and other European countries.

The study also found that there is no risk of explosion since the fuels stored in Pandacan do not have chemical properties that may create an explosion.

5. Do you imagine that the oil companies will eventually have to relocate the depot elsewhere? How much time are you giving yourselves realistically?

Caltex remains committed to working with the local and national governments to ensure cost efficient and reliable fuel supply to the National Capital Region—which accounts for more than 1/3 of total Philippines fuel consumption—while addressing the safety concerns of the general public. The industry and government recognize that, at the moment and perhaps for the foreseeable future, the infrastructure and business climate in the Philippines cannot support relocation, hence the signing on June 26, 2002, of the MOU among the three oil majors and the City and National governments to scale down the operations at Pandacan. The scale-down will be engineered so as not to affect the current service levels despite a drastic reduction in the number of fuel storage tanks at Pandacan. Furthermore, the scale-down features the creation of the Pandacan Linear Park, which shall serve as an environment-friendly safety buffer zone between the reduced terminal and the neighboring community.