The country’s energy security will now be forever threatened, as Royal Dutch Shell plc principals from both London and The Hague headquarters have already given go-signal to their Philippine subsidiary to shutdown the Tabangao refinery if their tax row with the Bureau of Customs (BoC) would not reach ‘reasonable conclusion’.

When that happens, this will already be the second refinery closing shop under the Arroyo administration - further exposing Filipino consumers to recurrent supply dilemmas and even more volatile pricing. The first one to give up was American oil giant Chevron, which shut down its San Pascual facility in 2003.

Pilipinas Shell Petroleum Corporation vice president for communications Roberto S. Kanapi confirmed the report, noting that their principals have raised serious concerns over long-term implications of the government’s arbitrary policy changes as well as on the arm-twisting tactic of the Customs bureau in collecting the P7.3 billion tax claims on their catalytic cracked gasoline (CCG) imports.

The Shell official stressed: “we are not just threatening on the impending shutdown of our refinery. Our principals are concerned of the whimsical rule changes because this will have impact on how we do business in the country.” In this protracted legal and policy battle, Shell said it is definitely not the first to blink.

The only expected saving grace of the P7.3 billion tax row between Shell and BoC will be an injunction that might be issued by the appropriate courts.

Shell already advanced word that if the BoC effects seizure of its CCG and light catalytic cracked gasoline (LCCG) imports upon the lapse of the existing temporary restraining order (TRO) of the Court of Tax Appeals come February 9, the naturally-occurring consequence of that event will be a closure of its refinery. That will then have cascading effect on its distribution operations (retail gasoline networks) and on the overall fuel supply chain of the country.

Ranked as the world’s second multinational oil giant, Shell is definitely a ‘tough investor’, penetrating even the safety-challenged jurisdictions, like Iraq and Niger Delta region. Yet the oil firm is not also very tolerant at markets or countries-of-operations where policies or rules are not predictable or are just modified on a whim.

The Netherlands-headquartered Shell has been pouring in multi-billion dollar investments in various parts of Asia.

Unfortunately for the Philippines, it has not been cornering its share in the pie as its local subsidiary was even directed to defer its planned $1-$3 billion refinery upgrade.

In a related development, the House committee on ways and means ruled that based on the outcome of its public hearing and its evaluation of earlier factual findings of the Department of Energy, “CCG and LCCG are not subject to excise tax pursuant to Section 148 and 148 (e) of the NIRC (National Internal Revenue Code) upon withdrawal at the port of entry since they are raw materials in the manufacture and processing of unleaded premium gasoline.”