Oil refiner Petron Corp. said it aims to become the country’s leading producer of resin by 2020 with the completion of its $100-million polypropylene plant expansion this year.
“[We have an] ongoing expansion of the polypropylene plant. By the end of the year, it [the capacity] will be 220,000 metric tons from 160,000 MT. It will be 220,000 MT annual capacity of polypropylene plant. Those are plastic. The pellets are plastic used for making plastic crates. It’s a byproduct of LPG [liquefied petroleum gas],” Petron president Ramon Ang said.
Petron’s polypropylene plant is expected to give higher margins for relatively smaller volumes and bring the company closer to its vision of becoming the country’s leading producer of resin by next year.
The oil firm produced 160,000 MT of polypropylene in 2018, higher than 115,000 MT it produced in 2017 with the development of new polypropylene products and three new product grades suitable for hot-filled containers, food containers and high-speed fiber manufacturing machines.
Petron earlier said it planned 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,” Ang said.
Petron owns the country’s biggest oil refinery in Bataan with a capacity of 180,000 barrels a 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 last week.
Ang said the remaining $400 million in capital expenditure would be spent for gas station network expansion, power line upgrading, pipeline upgrading, among others.
Petron had a network of 3,000 stations in the Philippines and Malaysia as of end-2018, 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,” Ang 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.