Oil refiner Petron Corp. plans to invest more than $1 billion for its refinery optimization and retail network expansion in the Philippines and Malaysia.
“We will continue with our investment, expansion, plant optimization, refinery optimization, petrochem expansion, network expansion, port expansion, terminal expansion. We are still going to spend over $1 billion,” Petron president Ramon Ang said after the annual stockholders’ meeting.
Petron owns the country’s biggest oil refinery in Bataan with a capacity of 180,000 barrels per day, which supplies about 40 percent of the country’s fuel requirements. It also owns the Port Dickson Refinery in Malaysia with a capacity of 88,000 barrels a day.
“We are building two steam producer boilers. That’s $600 million…to bring down the cost of the refinery and to optimize the refinery,” Ang said, referring to the planned investment in the Petron refinery in Bataan.
He said the steam producer boilers would take two to three years to build. The company started the construction of the boilers Tuesday.
Ang said the remaining $400 million in capital expenditure would be spent for gas station network expansion, power line upgrading, pipeline upgrading, among others.
He said Petron had a network of 3,000 stations in the Philippines and Malaysia, which it planned to increase to 6,000 stations by 2022.
“Our target is 6,000 [stations] but our target was delayed. That is supposed to be by the year 2022, for us to complete it. But it is three years to go, yet we have yet to complete it,” he said. He said the delay was due to permitting issues in both markets.
Ang said he was hoping that crude prices would remain stable in the coming years. Recent volatility in oil prices in the world market and the effect of the second phase of the Tax Reform for Acceleration and Inclusion Act brought down Petron’s profit in the first quarter.
Petron’s net income dropped to P1.2 billion in the first quarter from P5.8 billion in the same period last year.
“We can only hope that the crude oil price will be stable in the coming years…If you notice, Petron, despite all of that―inventory losses, new taxes, huge oil price drop, etc. Our income declined but we did not lose [money],” Ang said.
He said Petron, during a normal scenario, could generate an operating income of $1 billion.
“It is still an industry which we believe that the country needs,” Ang said.
Petron is also nearing the completion of its $100 million polypropylene plant expansion that would give higher margins for smaller volumes.
The company will also soon commission a new lube oil blending plant with a capacity twice of its current Pandacan plant.
Petron received approval from the Securities and Exchange Commission for its P20-billion preferred shares offering which will be used for refinancing purposes.