Oil refiner Petron Corp. said Tuesday it put on hold the planned expansion of its Bataan refinery given the current volatility of oil prices in the world market and the proliferation of the so-called “white stations” that are selling cheaper fuel to the domestic market.
Petron president Ramon Ang said in an interview at the sidelines of the stockholders’ meeting of Top Frontier Holdings Corp. these two factors would likely reduce the net income of the oil refiner to between P8 billion and P9 billion this year.
“Petron’s business moves together with the fluctuation of oil prices in the world market. Second, there are many white stations that are selling cheaper gasoline. What is the reason? How can they be P10 cheaper than us?” Ang said.
Petron said in May it planned to invest over $1 billion for its refinery optimization and retail network expansion in the Philippines and Malaysia.
Petron owns the country’s biggest oil refinery in Bataan with a capacity of 180,000 barrels per day that 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.
Ang said to partially offset the weakness in domestic oil operations, Petron would focus on other businesses of the company including the petrochemical business and the operations in Malaysia.
Petron is nearing the completion of the $100-million expansion of its polypropylene plant that would give higher margins for smaller volumes.
The company will also commission a new lube oil blending plant with a capacity twice of its current Pandacan plant.
Ang said Petron would continue to expand in Malaysia which is currently contributing about 40 percent to its total business.
Petron has a network of 3,000 stations in the Philippines and Malaysia which it plans to increase to 6,000 stations by 2022.
The 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.
Petron raised P20 billion in June from the issuance of preferred shares which will be used for refinancing purposes.