Petron offers cheaper fuel to gov’t

Why import fuel from Singapore when government can buy locally?

Petron Corp., the country’s largest oil refiner, has offered to provide cheaper diesel fuel to state-run PNOC-Exploration Corp. (PNOCEC) instead of importing it from other countries, its top official said.

Petron imports Euro 5 and Euro 6 fuel from its Bataan refinery which can be re-directed to PNOC-EC to meet the country’s needs, Petron president and chief executive officer Ramon Ang said on the sidelines of the 44th Philippine Business Conference & Expo held yesterday.

The state-run firm was previously tapped to import low-priced fuel to address slowing growth and high commodity prices that pushed inflation to peak last month at 6.7 percent.

It plans to purchase a 50,000 metric ton trial shipment of Philippine Standard Euro-4 50ppm gas or diesel fuel.

Ang also disclosed that Petron may start construction of its new refinery before the end of the year.

“We are set to recommend to the board the construction of a new refinery which can produce 100,000 barrels per day,” Ang said.

Ang said the new refinery would be able to produce high grade petrochemical and high grade gasoline and diesel or Euro 6.

On Wednesday, the PNOC-EC Board approved the plan to import cheaper diesel within the month. This will be cheaper by P5 per liter compared with prevailing prices, said company president Pedro Aquino.

But if PNOC-EC buys from Pet- ron, Ang said government could save more sans freight costs, which costs P5 per liter.

“We are exporting gasoline and diesel, so definitely our price is very competitive with those from Singapore. Removing the freight cost alone, government can buy cheaper fuel from us. Plus, importing is just dollar outflow,” he said in Filipino.

“If they really want to import fuel, they should just buy from us,” Ang said.

Ang said importers of fuel are also subject to currency risks and oil price fluctuations.

If government sources fuel locally, PNOC-EC can also ask the Bureau of Internal Revenue (BIR) for certification to waive the excise tax and value-added tax (VAT), the Petron chief said.

Energy Secretary Alfonso Cusi earlier directed PNOCEC to prepare for oil trading, retail and strategic petroleum reserve.

Cusi sits as ex-officio chairman of PNOC-EC, the exploration arm of state-run PNOC.

The board resolution authorized PNOC-EC to engage in the retail or sale of petroleum products sourced from Russia and non-Organization of the Petroleum Exporting Coun- tries (OPEC) members to provide competition to existing oil industry players and pacify domestic oil prices.

Meanwhile, the site of the new refinery will be in the same area as the original facility in the Bataan complex.

“Once the board approves the plan, then we can start negotiating and we can start building this year. It will take three years to complete,” Ang said.

Ang earlier said Petron would likely hit a net income of at least P18 billion this year from P14 billion in 2017 with its Bataan refinery now running at almost 100 percent of its 180,000 barrels per day capacity.

The oil giant plans to start the expansion of the world- class facility this year to add roughly 100,000 barrels per day and bring the refinery’s total capacity to 280,000 barrels per day by 2021.

Ang said the refinery expansion would cost about $3 billion.

Petron’s refinery in Limay, Bataan, which supplies 40 percent of the country’s fuel requirements, is the biggest and pioneering refinery in the Philippines.

At the expanded 280,000 barrels per day capacity, Petron will be able to supply more than half of country’s estimated fuel demand of 400,000 barrels per day.

There are also plans to expand the refinery in Malaysia to 150,000 barrels per day from 80,000 barrels at present.

In Malaysia, Petron operates the Port Dickson Refinery, seven storage facilities and about 580 service stations. The complex is equipped with a crude distillation unit, a naphtha hydro treating unit, two semi-regeneration reformer units, and a kerosene hydro treating unit.

It is further supported by amenities such as waste-water treatment facilities, steam generator, cooling water plant, flare and safety relieving unit, crude storage tanks, refined petroleum products storage tanks, as well as spheres for Liquefied Petroleum Gas (LPG) storage.