Petrotahlil - The Philippines has raised import taxes on crude and oil products by 10pc to fund its Covid-19 prevention measures.

President Rodrigo Duterte imposed the additional import duties in an executive order signed on 2 May. Crude, motor fuels and other oil products, LPG and ethylene are all subject to the 10pc tax increase.

The government already imposed a 3pc tariff on imports of crude and oil products, traders said. The new tax is temporary and will be lifted when international oil prices reach an unspecified "trigger price", according to the government's executive order.

The Philippines has two refineries, the 180,000 b/d Bataan plant operated by local firm Petron and Shell's 110,000 b/d Tabangao refinery. The refineries rely largely on imported crude.

Petron and Shell run mainly Mideast Gulf grades, including light sour crude from Abu Dhabi. Both refineries have occasionally also taken Russian ESPO Blend. Petron buys most of its crude on a term basis.

Shell said today it is shutting Tabangao for a month from mid-May because of falling product demand and deteriorating refining margins. Petron has reduced runs at Bataan, market participants said.

The Philippines is a net importer of oil products, mostly from South Korea and China, according to data from oil analytics firm Vortexa.

The higher tariffs will affect international companies that operate service stations in the Philippines, such as Chevron, Total and Thailand's state-controlled refiner PTT. These firms may have to turn to domestic refineries for oil product supplies to avoid the additional tariffs or pass on higher import costs to consumers, market participants said.

The tax increase will also hit Philippine petrochemical producer JG Summit, which depends on imports of feedstock naphtha for its 480,000 t/yr cracker in Batangas.

Other products that are covered by the 10pc import tariffs include propane, butane and ethylene.

Proceeds from the higher tariffs will be used to fund the country's Covid-19 response, including recovery and rehabilitation. The country has imposed a lockdown in Manila and other large cities until mid-May.

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