Petron to post 18-B net profit despite oil price drop

Petron Corporation’s operations has remained very profitable despite the plunge in oil prices as its recent refinery expansion is paying off with the firm expecting to report an 18-billion net income this year.

During an analysts’ briefing, San Miguel Corporation and Petron president Ramon S. Ang said that, while the price of crude oil has dropped from $100 a barrel to about $30 a barrel, “the company is still projecting $650-million EBITDA for this year.”

“What’s the reason why the company is still projecting $650 million? Because when we were expanding the refinery, the liquid yield or economic yield of the refinery was much lower than, it was about 60 percent economic yield,” Ang said.

He noted that, “right after we have expanded the refinery, we are now experiencing a tremendous growth in the extraction of white products. Meaning, for every barrel we are now able to extract 93 percent economic, liquid yield or gasoline diesel.”

Ang said that “we are quite lucky that the technology we have chosen in the upgrading of the refinery in the Philippines was very successful. That was a very successful expansion.”

When oil was $100 per barrel, Ang said Petron spent $2 billion in upgrading its refinery and spent another $700 million to put up a power plant to supply its electricity requirements.

“At that time, the refinery at $100 per barrel should give us $1 billion a year for cash flow,” said Ang noting that, despite the 70 percent drop in oil prices, Petron will still hit an EBITDA of $650 million this year.

Prior to the upgrade and expansion of its refinery in Bataan, Petron was only raking in three to five percent in gross margin. But, with the upgrade, Petron is chalking up at least 20 percent in gross margin, Ang said.

The Bataan Refinery Master Plan 2 (RMP-2) was fully operational last year, boosting Petron’s refining capacity by 50 percent to 180,000 barrels-per-day from 120,000 barrels.

The RMP- 2 transforms Petron’s refinery into one of the most advanced facilities in the region in terms of processing, energy efficiency, operational availability and complexity.

“Further, it allows the Petron Bataan Refinery to fully utilize its production capabilities by converting all negative margin fuel oil into highmargin products such as gasoline, diesel, and petrochemicals,” Petron said last year.