“Crude prices reached record-lows due to the breakdown of production cut discussions between OPEC and Russia and product prices in the global and regional market decline” said Shell in its financial report.
“Global crude prices showed a steep decline from $67 per bbl (42-gallon blue barrel) as of the end of December 2019 to $20 per bbl in April, contributing bulk of the inventory holding loss booked for the period,” it added.
Shell said crude oil prices have stabilized at an average of $41 per bbl from May to September this year.
Shell said the pressure on refining margins mounting inventory losses coupled with the steep plunge in sales due to the lockdown forced it to shut down its Tabangao Refinery last August to arrest further losses.
The firm booked P7.5 billion from the closure of the 58-year old refinery which accounted for nearly half of its P13.9 billion loss in the first nine months of 2020. Shell said it would convert the refinery into a “world-class import terminal.”
With its refinery closed since May, Shell’s net inventories have shrank by 45 percent to P13.957 billion as of September 2020 from P25,422.7 million as of December 2019.