MANILA, Philippines – Petron Corporation, the country’s biggest oil refiner and retailer, has partnered with two foreign firms to start building a new oil refinery worth $15 million (P745.46 billion) to $20 billion (P993.95 billion) by early 2018.
"This is the biggest investment in the Philippine history so far. Have you seen a plant that is worth that much?" Ramon Ang, president and chief executive officer of Petron, said in a media roundtable in Pasig City on Tuesday, May 16.
Ang said the oil refinery will mainly produce petrochemicals, with a capacity of 250,000 barrels per day. "It will process petrochemical and by-products."
"Right now, we have a target location and we are in the process of acquiring or doing a lease or a joint venture agreement with the land owners. A new oil refinery project with this size requires at least 2,000 hectares and a deep sea port," Ang told reporters.
The chief of Petron said he cannot reveal yet the location and the names of his partners as the project has yet to secure government approvals.
"We have to wait for ECC (environmental compliance certificate) and other government approvals. We may start early next year, once the partners agree on equity. Financing is huge, we have to process it in different countries," Ang said in Filipino.
He said the construction period for the greenfield project will take two to 3 years. Ang said his group is looking at 30% equity and 70% loan for the financing of the project.
"World market potential for petrochemical is very very high, so we are gearing for that," Ang said.
Expansion in Malaysia, Philippines
Other than its greenfield project, Ang said Petron plans to earmark a spending budget of another $2 billion (P99.41 billion) to expand its plants in Bataan and Malaysia.
He said Petron plans to spend at least $1.5 billion (P74.57 billion) to expand the capacity of its oil refinery in Malaysia to 150,000 barrels a day from 88,000 barrels a day. Petron also plans to spend about $500 million (P24.86 billion) to upgrade its refinery in Bataan.
"Right now, Malaysian investment contributes about 25% of our revenue. It will only grow if we invest in the Malaysian refinery upgrade. Otherwise, it is just like buy and sell. So, the Malaysian refinery, we have to upgrade. At the moment, we are finalizing the study to do the upgrade," Ang told reporters.
He said the Malaysian market is promising, with about 25 million population, consuming around 600,000 barrels a day.
Petron acquired in 2011 Esso Malaysia's Port Dickson refinery and fuel retail network in Malaysia.
Meanwhile, the Petron Bataan Refinery is the country's largest integrated crude oil refinery and petrochemicals complex. Inaugurated in 1961 with a capacity of 25,000 barrels per day, it has grown to its current rated capacity of 180,000 barrels-per-day.
"[Bataan upgrade] will start within the next two months. If you notice, during the time of the government, they already know how to do oil refinery upgrade... it is just that the investment is too big. For us, this is where we are strong at," Ang said.
Petron registered a net income of P5.6 billion in the first quarter of 2017, doubling the P2.8 billion it posted for the same period last year.
Combined volumes from the Philippines and Malaysia were 3% higher at 26.2 million barrels.
Domestic retail segment volumes grew 6%, with LPG and lubricants growing 5% and 16%, respectively.
Petrochemical export volumes also more than doubled. Petron Malaysia’s commercial and lubcricants sectors also posted double-digit growth.
As a result, Petron’s total revenues rose 38% to P106.4 billion, and operating income surged 54% to P8.9 billion. – Rappler.com
$1 = P49.6975