Vol. XXI, No. 163 [ Business World Online ]
Wednesday, March 19, 2008 | MANILA, PHILIPPINES
OIL REFINER Petron Corp. said yesterday it was looking at investing $1.5 billion to expand its petrochemicals arm and other units by 2009, a move supported by incoming shareholder London-based investment fund Ashmore Group.
petrochemicals to help jumpstart
the local plastics industry. — Bernie M. Cabilin
"We are glad to note that our strategic transformation program, which is based on our diversification into petrochemicals, is one of the main reasons why Ashmore offered to buy Aramco’s shares," Nicasio I. Alcantara, Petron president, said in a statement.
Mr. Alcantara said that Petron’s management had met with Ashmore representatives for informal talks after the fund offered to buy Saudi Aramco’s 40% stake in Petron for $550 million last week.
Aramco, the state oil firm in the world’s top oil exporting country, said its divestment from the Philippines would allow it to focus on its $50-billion domestic upstream and downstream expansion program.
Petron is studying more investment to expand on an earlier move into converting fuel oil to high-value products and the extraction of petrochemical feedstock propylene.
The company recently started production of petrochemical feedstock propylene at its 180,000 barrel-per-day refinery northwest of the capital after the commissioning last month of its petro fluidized catalytic cracker (PetroFCC), which it says is the first cracking unit of its kind in the world.
It converts "black" products, or fuel oil, to high-value "white" products such as gasoline, diesel, and liquefied petroleum gas.
Petron spent $300 million on phase 1 of its refinery upgrade, which includes the setting up of a unit to produce aromatics like benzene, toluene and increase its mixed xylene output.
Phase 2 of the refinery upgrade will include a second PetroFCC, among other units. The group did not say in its statement over what period the potential $1.5-billion investment would be spread.
"These new refinery units will hopefully jump-start the local petrochemical industry and will result in exponential benefits for other vital downstream manufacturing sectors," said Mr. Alcantara.
Analysts said Petron’s petrochemical business should lift its earnings this year and in coming years after flat growth in 2006 and an expected 3.5% drop in net income for 2007, according to Reuters Estimates.
Petron has touted the entry of a new part-owner, saying UK-based Ashmore Group has the resources to back up projects to be undertaken by the Philippines’ top oil company. — Reuters with MKCC
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