http://ph.linkedin.

com/pub/gene-gregorio/2/455/b0a
http://gene-gregorio.blogspot.com/p/about-gene-gregorio.html
http://twitter.com/#!/genegregorio
http://www.facebook.com/gene.gregorio
http://www.scribd.com/home

Media Brief for Pandacan Terminal

I. Current Situation

For more than 80 years, the Pandacan Terminal has been operating safely. However, the
current global apprehension over terrorism and mass-scale destruction have prodded the
Manila City Government to consider some drastic changes in the operations of the Pandacan
Terminal.

In fact, 39 out of 42 Pandacan barangay captains submitted a position paper in favor of “The
development, operation, & maintenance of the oil depots by Caltex, Shell, & Petron in
Pandacan”. It stated their:
• Stern objection to the impending implementation and enforcement of Ordinance No.
8027.
• Petition for the City Council to reconsider its position and to effect the immediate
amendment or repeal of the measure.
• View that the sudden and abrupt phase out of the oil depots may affect not only the
residents of Pandacan or the inhabitants of the city but the whole nation as well.
• View that the threats of terrorism as alleged by opposing quarters may be overly
emphasized, and
• Conviction that the 3 firms’ safety and security measures have met international and
domestic technical, safety, environmental requirements and economic considerations
and standards.

Having benefited from the terminal’s activities, employment, and community involvement for
decades, community leaders, barangay captains, and residents are up in arms against
Ordinance 8027. There is a strong groundswell from the residents to have the City Council
repeal or amend it before April 30 in order for the terminal facilities to be scaled down, not
removed. Residents favor the continued stay of the Terminal Facilities.

II. Chronology

Ordinance No. 8027’s Section 3 provided that: Owners or operators of industries and other
businesses, the operation of which are no longer permitted under Section 1 hereof are hereby
given a period of 6 months from the date of effectivity of this Ordinance within which to cease
and desist from the operation of businesses which are hereby, in consequence, disallowed. 6
months being too unrealistic for the removal of the terminal, accommodation has been reached
between Petron and the city government.

It is estimated that it would cost Petron, Caltex, & Shell an aggregate amount of P20-B to P30-B
to relocate their terminals to acquire land and build infrastructure. For Petron alone, it would
have to shell out P10-B to P15-B to do so. The following past and future developments are
listed for your review:

1. Sept. 11, 2001: World Trade Center and the Pentagon attacked by terrorists.
http://ph.linkedin.com/pub/gene-gregorio/2/455/b0a
http://gene-gregorio.blogspot.com/p/about-gene-gregorio.html
http://twitter.com/#!/genegregorio
http://www.facebook.com/gene.gregorio
http://www.scribd.com/home

2. Nov. 28, 2001: Manila City Council enacts Ordinance No. 8027. (See Annex A:
Ordinance No. 8027)

3. June 28, 2002: Petron’s Scale-Down Memorandum of Understanding (MOA) with

Mayor Atienza ratified by City Council.
• City Council gives Pandacan Terminal a 6-month extension to
operate.

4. December 2002: City Council gives Pandacan Terminal another extension to operate
until April 30, 2003.

5. April 21, 2003: Majority of barangays in Manila’s 6th District present to Energy
Secretary Perez a petition to allow the continued operation of the
Pandacan Terminal. (See Annex B: Position Paper in favor of the
development, operation, and maintenance of the oil depots by Caltex
(Philippines), Inc., Pilipinas Shell Petroleum Corporation, and Petron
Corporation in Pandacan, Manila)

6. April 30, 2003 Permit to operate Pandacan Terminal expires.

7. May 1, 2003 Pandacan Terminal ceases operation.

• Serious fuel distribution and pricing crisis on nationwide scale
ensues.
• Grave economic dislocation for Pandacan residents and allied
businesses.

III. Security & Safety

Undeservedly, the mindset in the media and the public continues to be that the Petron
Pandacan Terminal and the oil terminals of Caltex and Shell are a disaster waiting to happen.
This is neither an informed scientific opinion nor perception bandied about by a noisy minority.
Pandacan has been operating for more than 80 years with no major incident, even during World
War II, because safety is a paramount concern. The safety and environmental standards
applied to the terminal far exceed national standards. (See Annex C: Petron Corporation
Position Paper on the Review of Manila City Ordinance No. 8027)

The terminal is subjected to regular environmental and safety audits both by internal and
external parties. These parties include safety engineers, ISO auditors, insurance inspectors,
and government agencies that include the Department of Energy (DOE), the Department of
Environment and Natural Resources (DENR), the Bureau of Fire Protection (BFP), Laguna Lake
Development Authority (LLDA), and the Manila City Government.

In terms of security, it is monitored 24-hours a day by 105 security personnel. They are
augmented by the Philippine National Police (PNP) and the Armed Forces of the Philippines
(AFP). More important, the AFP, PNP, and the Presidential Security Group (PSG) continue to
provide up-to-date intelligence information essential to preventing threats against the facility.
http://ph.linkedin.com/pub/gene-gregorio/2/455/b0a
http://gene-gregorio.blogspot.com/p/about-gene-gregorio.html
http://twitter.com/#!/genegregorio
http://www.facebook.com/gene.gregorio
http://www.scribd.com/home

In terms of safety, the terminal has fire-fighting equipment and procedures that are the best in
the country. These include chemical foam sprinklers, hydrants, fixed water spray systems, and
special foam hardware. 3 fire pumps have a combined capacity of 5,000 gallons per minute and
draw an unlimited water supply from the Pasig River. About P130-M have been invested in fire-
fighting equipment.

Its storage configuration makes the terminal doubly safe. Its outermost tanks store non-
flammable oil products such as fuel oil, base oils, and diesel. Its gasoline storage tanks are
stored deep in the interior of the facility. Shell and Caltex provide additional equipment and
personnel during fires under a mutual aid agreement. Fire-fighting equipment and capabilities
have assisted neighboring residential areas for decades. In the past 4 years, the fire brigades of
Petron, Caltex, and Shell have responded to 7 fires. On the whole, Petron, Caltex and Shell
train community leaders, tanods, and citizens to ensure the safety and security of the
community.

IV. Pandacan Closure Results in National Fuel & Economic Crisis and Economic
Dislocation for Pandacan residents

The terminal is crucial not only to the oil industry but also to the national economy because it
supplies fuels and lubricants to various strategic industries. The Pandacan terminal supplies:

• 50% of the country’s total demand for fuels, including 1,787 retail stations for
Regions 1-4, including 459 stations in Metro Manila alone;
• 70% of the shipping industry’s needs nationwide;
• 90% of lubricant requirements nationwide; and
• 75% of all aviation fuel needs nationwide.

Thus, the closure of terminal will have catastrophic effects on our economy, trade, livelihood,
and the nation’s life in general that are far worse than the 1973 oil crisis.

Its closure would result in the shortage of fuel supplies because there are limited alternative
supply points. These alternative locations are inadequate because tankage limitations, lack of
loading facilities, limited tank trucks, and longer supply distances. Consider the following
implications:

• The supply of petroleum to Metro Manila will be cut by roughly 50% because the pipeline
for Shell and Caltex and barge deliveries for Petron will no longer be available;
• The increase in tank trucks will worsen the traffic congestion in the North and South
Luzon Expressways. This creates more security and safety concerns and increases the
risks of road accidents;
• The longer travel time will also expose tank trucks to higher risks inherent in road travel;
• At best, oil firms can only supply 40% of present volumes, or 715 stations in Regions 1
to 4 and in the National Capital Region;
• Pump prices will rise because of additional hauling costs and other penalties that include
the slowdown in refinery processes;
http://ph.linkedin.com/pub/gene-gregorio/2/455/b0a
http://gene-gregorio.blogspot.com/p/about-gene-gregorio.html
http://twitter.com/#!/genegregorio
http://www.facebook.com/gene.gregorio
http://www.scribd.com/home

• More than half of the 459 service stations in Metro Manila will be forced to shutdown
reducing the source of supply for consumers;
• NAIA and the Manila Port area operations will be jeopardized. This will disrupt their
operations, slow down economic activity, and greatly inconvenience the suffering public;
• The military’s and the police’s lack of fuel will impede operations essential to maintain
peace and order;
• Rationing and queuing will be resorted to adding to the distress of the public;
• Expensive lubricants will have to be imported. Most industries – transport, construction,
food manufacturing, rice & sugar mills, mining, power generation, etc… - will be
adversely affected; &
• Oil firm losses will amount to tens of millions of pesos per day.

The financial impact on the dealers, employees, contractors, and the government itself will likely
add another tens of millions of pesos in daily losses. A shortage and unreliability in supply will
result in massive disruptions to economic and industrial activity resulting in retrenchment and
unemployment. The reduction and disruption in economic activities will reduce the tax
collections of the government at a time when it is struggling to meet its revenue targets. As
thousands will lose their jobs once the terminal is closed, tens of thousands more will be
indirectly affected by it.

V. Pandacan Terminal has been Beneficial to the Community and its Residents

The terminal currently employ more than 1,500 people, 80% of which are from Pandacan. In
fact, Petron employs more than 600 people from the area. As such, more than 1,000 residents
and their immediate families will be severely affected by a closure. Thousands of residents will
also be indirectly by the closure of the terminal. These include storeowners, canteens, vendors,
etc., who depend on the economic opportunities provided by the oil firms.

In addition, Petron makes it a point to include the community leaders, barangay officials, tanods,
and concerned citizens in training activities. This is meant to give them the opportunity to be
actively involved in ensuring the safety and security of the community. In fact, Petron has made
its fire-fighting systems available to Barangays 835 and 836 by donating and installing fire
hoses outside the terminal ready for use by residents. More important, Petron has trained
residents who have been assigned and designated to use them.

In the past, Petron has responded to several fire incidents and had them under control before
the arrival of the local fire department. Petron has saved countless lives and millions of pesos
worth of property. Moreover, Petron has undertaken scholarship and livelihood programs,
medical outreach programs, training seminars, and other socio-civic activities that have
benefited tens of thousands of Pandacan residents.
http://ph.linkedin.com/pub/gene-gregorio/2/455/b0a
http://gene-gregorio.blogspot.com/p/about-gene-gregorio.html
http://twitter.com/#!/genegregorio
http://www.facebook.com/gene.gregorio
http://www.scribd.com/home

VI. Conclusion: Scale-Down Project is a “Win-Win” Solution

Despite the low risks arising from depot operations, the oil firms entered into a MOU with the
City of Manila and the DOE to scale down the Pandacan terminal in response to perceived
security threats following the Sept. 11, 2001 terror attacks on the US. The MOU covers:

• Decommissioning and dismantling 28 tanks (about half of the terminal’s total tankage),
including all LPG storage spheres;
• Providing an additional safety buffer to the adjoining communities and creating a “green”
Linear Park with a total land area of 2.1 hectares for recreational use. The land area of
this park is roughly the same size as that of the Arroceros Forest Park; and
• Establishing a reduced and integrated oil terminal.

The scale-down of the Pandacan terminal is the most viable approach to balance the safety and
security concerns of the public with the need for safe, secure, and reliable supply of petroleum
products for Metro Manila and parts of Luzon.