SEAOIL COMPANY PHLIPPINES FACING ECONOMIC CRISIS: A CASE STUDY

A Case Study Research

Presented to the Faculty of College of Computer Studies of

MINDORO STATE UNIVERSITY (MinSU)

Labasan, Bongabong, Oriental Mindoro

A Requirement

for the Course

ENGINEERING ECONOMICS

Presented by:

DELA CRUZ, MARK

BANAAG, RACHELLE MAE S.

MERCADO, JASMIN AMOR, A.

MS. ALONA LABAGUIS

CPE Instructor

January, 2023
I. INTRODUCTION

SeaOil is a Philippines-based company that specializes in the retail and

distribution of fuel and lubricant products. It was founded in 1983 by a group of Filipino
entrepreneurs who saw the need for a reliable and efficient supplier of fuel and lubricants
in the country. SeaOil started as a small fuel station in Metro Manila and has since grown
to become one of the largest independent fuel retailers in the Philippines. Today, it
operates over 300 service stations nationwide, and has a wide range of products including
gasoline, diesel, and lubricants. The company also has a significant presence in the
commercial and industrial sectors, supplying fuel and lubricants to a variety of businesses
and industries.

In recent years, SeaOil has expanded its operations to include new business
ventures such as the development of renewable energy sources and the retailing of natural
gas. The company is also investing in new technologies such as electric vehicle charging
stations, as part of its efforts to support the country's shift towards cleaner and more
sustainable forms of energy.

In addition to its retail fuel stations, SeaOil also operates several bulk plants and
depots across the country, as well as a lubricant blending plant and a marine fuel
terminal. The company also has a strong presence in the aviation sector, supplying jet
fuel to several major airports in the Philippines.

As SeaOil grew and expanded, it also became involved in various community and
social initiatives. The company recognized that as a responsible corporate citizen, it had a
responsibility to give back to the community and make a positive impact on the lives of
the people it served. As a result, SeaOil actively supported various charitable and social
causes, including education, health, and environmental protection.

One of SeaOil's key strengths is its commitment to providing high-quality

products and services to its customers. The company has invested heavily in technology
and infrastructure to ensure that its fuel and lubricants meet or exceed international
standards. Additionally, SeaOil has implemented strict quality control measures to
guarantee the consistency and reliability of its products.
 Overall, SeaOil has established itself as a leading player in the Philippine fuel
industry, with a strong focus on providing quality products and services to its customers,
and a commitment to responsible corporate practices.

For over sixteen years, SEAOIL has consistently been able to introduce more
advanced and environment-friendly fuel specifications ahead of our competition. This
includes the shift to unleaded gasoline (a movement strongly opposed back then but has
now become an industry standard), the introduction of low sulfur diesel to minimize
harmful exhaust emissions especially from public utility vehicles, and the shift to
alternative fuels like bioethanol gasoline and biodiesel.

Today, SeaOil is one of the most respected and recognized fuel and lubricant
companies in the Philippines. The company operates a network of over 300 service
stations throughout the country, and it is known for its high-quality products and
excellent customer service. Additionally, SeaOil continues to be actively involved in
various community and social initiatives, and it is committed to making a positive impact
on the lives of the people it serves.

But just like other companies, the said company struggles as gas and oil shortage
happens, specifically this year of 2022.
II. CASE ANALYSIS

The early days of SeaOil were marked by the challenges of building a business in a
highly competitive industry. The company had to navigate the complex regulations and
licensing requirements of the Philippine government, as well as the fierce competition from
other fuel companies. However, SeaOil's founders were determined to succeed, and they
worked tirelessly to establish the company as a reputable and reliable provider of fuel and
lubricants.

On February 20, 2022; reports are floating around claiming an impending fuel
shortage in the country. External factors for a possible local fuel supply shortage include
tensions between oil producers Russia and Ukraine, a recent explosion of a Nigerian oil
vessel, and various oil spills in Ecuador and Kazakhstan. The Philippines relies heavily on
imported fuel for its energy needs, making it vulnerable to supply shocks and rising oil
prices, which have helped push up inflation to a near 14 year high. Since the start of 2022,
gasoline prices have shot up to PHP 7.95 per liter while diesel prices have increased to nearly
PHP 10.20 per liter.

SeaOil company is one of those company affected due to this issue. The company is
facing economic crisis. The decline in oil prices has had a significant impact on Sea Oil
Company's revenues and profits. As oil prices fell, the company's operating margins
decreased, and it became more difficult for the company to maintain its high levels of
production and exploration. Additionally, the company has been facing increased
competition from other oil and gas companies operating in the North Sea, as well as from
renewable energy sources such as wind and solar power. As a result, the company's market
share has been declining, and it has been struggling to maintain its position as a leading
player in the offshore oil and gas industry. Furthermore, the company has also been facing
rising costs in areas such as exploration, production, and maintenance, which have further
affected the company's bottom line. The company has also been grappling with increased
regulations and safety measures that have been implemented in response to environmental
concerns, resulting in additional costs to the company.
III. CONCLUSION
In conclusion, SeaOil is a company that has come a long way since its humble
beginnings in 1977. From a small startup, it has grown to become one of the leading fuel and
lubricant companies in the Philippines. The company's success is a testament to the hard
work, dedication, and commitment of its founders and employees, as well as its commitment
to providing high-quality products and excellent customer service.

However, Seaoil company faced economic crisis as the oil and gas supply decreases
due to some reasons like tensions between oil producers Russia and Ukraine, a recent
explosion of a Nigerian oil vessel, and various oil spills in Ecuador and Kazakhstan.

The company's operational margins shrank when oil prices dropped, making it harder
for it to continue its high levels of exploration and production. Additionally, the corporation
has been dealing with a rise in competition from other North Sea oil and gas producers as
well as from clean energy sources like wind and solar energy. The company's market share
has been shrinking as a result, and it has been working hard to hold onto its position as a
major force in the offshore oil and gas market. Further hurting the corporation's bottom line
was the fact that the company has also been dealing with increased costs in areas like
exploration, production, and maintenance.

Despite the challenging economic conditions in the Philippines, SeaOil has been able
to maintain its strong financial performance. The company has reported consistent growth in
revenue and profits and has been recognized for its strong corporate governance and
management practices.
IV. ALTERNATIVES / SOLUTION

Sea Oil Company has undertaken a number of measures to address the economic crisis it
is facing. One of the key measures has been to focus on cost-cutting. The company has
implemented a number of efficiency measures and has been working to reduce its operating
costs. Additionally, the company has been focusing on improving the productivity of its assets,
which has helped to increase the company's output and revenues. The company also diversify the
business to non-oil and gas sector. The company has been working to develop new businesses in
the renewable energy sector, such as wind and solar power, which would provide a hedge against
the volatility in oil prices. The company also looking for new exploration and production sites in
different regions of the world that would increase their reserves and revenues. Finally, the
company has been working to improve its relations with regulatory bodies and the public, by
emphasizing its commitment to sustainable practices and responsible resource development. This
helped to improve the company's image and reputation and attract investment from
environmentally conscious investors.

V. RECOMMENDATIONS

The company has been facing financial difficulties in recent years, leading to concerns
about its ability to continue operating. One potential solution to this problem could be for the
government to provide financial assistance or incentives to the company, in order to help it
stabilize its finances and continue to operate.

Another option could be for the company to explore partnerships or joint ventures with
other companies in the oil and gas industry, in order to share resources and reduce costs. This
will help the company to have enough supply and resources of oil and gas so that they wouldn’t
experience shortage.

Additionally, the company may need to focus on cost-cutting measures and increasing
efficiency in order to improve its financial situation. Cost cutting measures may include laying
off employees, reducing employee pay, closing facilities, streamlining the supply chain,
downsizing to a smaller office, or moving to a less expensive building or area, reducing or
eliminating outside professional services, such as advertising agencies and contractors, etc.
VI. REFERENCES:

Auto Deal (2019). What are the biggest fuel companies in the Philippines.
https://www.autodeal.com.ph/articles/car-features/what-are-biggest-fuel-companies-
inphilippines#:~:text=The%20%E2%80%9CBig%203%E2%80%9D%20account
%20for,Pilipinas%20Shell%20and%20Chevron%20Philippines.

De Guzman, M. (2022). Philippines might face oil supply shortage within next few months.
Auto News. https://www.autoindustriya.com/auto-industry-news/ph-might-face-oil-
supply-shortage-within-next few months.

Samonte, S. (2022). The 1973 oil crisis and PH. Philippine News Agency.
https://www.pna.gov.ph/opinion/pieces/581-the-1973-oil-crisis-and-ph.

Sea Oil (2022). Changing the landscape of Philippine Fuel Industry.

https://www.seaoil.com.ph/corporate/changing-the-landscape-of-philippine-fuel-
industry.

Tarver, E. (2022). How Do Government Subsidies Help Industry. Investopedia.

https://www.investopedia.com/ask/answers/060215/how-do-government-subsidies-
help-industry.asp.

Teves, G. (2022). Managing the effects of oil crisis. Inquirer.Net.

https://opinion.inquirer.net/151916/managing-the-effects-of-the-oil-crisis.

Yapson, M. (2022). SEAOIL Philippines Inc. Canon. https://ph.canon/en/business/seaoil-

philippines-inc/case-studies.