Petron expects P2-B profit a month
PETRON Corp. is expecting to earn P2 billion a month this year if the prices of crude remain stable for the rest of the year, although its refinery will shut down some time in April and May for a regulator maintenance inspection.
“Kung stable ang prices ng crude oil (If crude prices are stable), Petron should deliver at least P2-billion net income per month,” said Ramon S. Ang, Petron president and chief executive officer, in a media briefing after the company’s annual stockholders meeting on Tuesday at Valle Verde Country Club in Pasig City.
The refinery shutdown occurs every five years to make way for a “calendar inspection maintenance.” The temporary closure usually takes 30 to 35 days and will affect income in April and May.
“Let’s say nawalan kami ng isang buwan (we lost a month of income),” he said. “’Yung contribution ng refinery mga P1 billion ’yon. Still, napakaganda pa rin ng takbo (The refinery’s contribution is about P1 billion. Still, it’s running well).”
After the shutdown, Petron is also set to “tweak” the refinery, which should result in “50 to 70% better income,” Mr. Ang said, adding that the enhancement should produce more petrochemicals and aromatics.
The improvement, which will start “within the next few months,” should take two years, and cost around $500 million, the Petron official said.
Petron reported a 73% jump in consolidated net income to P10.8 billion in 2016. In the first quarter of 2017, the company earned P5.6 billion, doubling the year ago figure of P2.8 billion.
Mr. Ang said volume growth this year would be in double digits, but declined to give a specific figure.
“We keep on growing market share, parami ng parami ang istasyon (the stations are continuously increasing) and every station is increasing volume because of optimization,” he said.
In 2010, the company started its refinery upgrade in what it called Petron Bataan Refinery Master Plan Phase-2 Upgrade (RMP 2) and completed in end-2014. The upgrade turned the facility into a full conversion refining complex that can convert oil production into higher value products such as gasoline, diesel, jet fuel and petrochemicals.
Mr. Ang said the existing refinery, which produces 180,000 barrels a day is set to expand to make 260,000 barrels per day.
Petron owns and manages an oil distribution infrastructure with 30 depots, terminals and airport installations and approximately 2,200 retail service stations in the Philippines. It also has 10 product terminals and more than 560 retail service stations in Malaysia.
Petron also owns a refinery in Malaysia with a capacity of 88,000 barrels per day.
Mr. Ang said the Malaysian business contributes around 25% to Petron’s operations, but its growth has yet to be maximized.
“It will only grow if we invest in a Malaysian refinery upgrade, otherwise para ka lang nagba-buy and sell (you only seem to be buying and selling),” he said.
“The Malaysian refinery we have to upgrade, and we are at the moment finalizing the study to do the upgrade,” he said.
Mr. Ang described Malaysia as a “very big” market with “so much potential, noting that its 25 million population consumes 68,000 barrels a day. To compare, the Philippines has around 100 million people and consumes 350,000 barrels daily.
He said the expansion in the Southeast Asian country could possibly deliver around 150,000 barrels a day. The upgrade should cost at least $1.5 billion, he added.
Mr. Ang said Petron was also finalizing a study to build a “completely new refinery” but this will be designed mostly to produce petrochemicals, which offers huge potential.
“Right now we have a target location and we are in the process of acquiring or doing lease agreement or joint venture agreement with the land owners,” he said.
The new complex requires a location with a size of at least 2,000 hectares and a deep seaport, Mr. Ang said, adding that its output should be around 250,000 barrels a day. He placed the price tag for the project at $15-$20 billion.
The Petron executive said it has two foreign partners in the venture, but declined give further details. The refinery should take three to three-and-a-half years to built, he added.
“This is one of the biggest investment ever undertaken in the history of the Philippines,” Mr. Ang said.
On Tuesday, shares in Petron closed 3.2% to P10.32 each.