Pilipinas Shell to realign ₱4-billion capex rollout
Listed firm Pilipinas Shell Petroleum Corporation will reposition project implementation and investments around its programmed ₱3 billion to ₱4 billion yearly capital expenditure (capex) rollout.
Reynaldo P. Abilo, vice president for finance and chief risk officer of Pilipinas Shell, said “we are keeping our five-year strategy of spending P3.0 billion to ₱4.0 billion of capex program, but within that portfolio of capex program, we are rearranging some of our priorities – where to spend and where to invest.”
He indicated that in the oil firm’s buildup of mobility stations, “we are shifting toward more company-owned sites than dealer-owned sites.”
Beyond reinforcing its retail network, Pilipinas Shell President and CEO Lorelie Q. Osial specified that another focus of the company’s investment will be establishing their fifth import terminal and that is targeted to kick off within the year.
That will complement the Shell Import Facility Tabangao (SHIFT) in Batangas; the Subic import terminal; the Northern Mindanao Import Facility in Misamis Oriental; and the Darong import facility which will reach commercial operation in 2024.
As noted by Pilipinas Shell Vice President for Supply and Distribution Kit Arvin Bermudez, “we are building import terminals for us to be more competitive in the market that we are playing in. In the fuels [business], the bigger the vessel that you can import, the more competitive the prices will be,”
Osial added “as part of our strategy, we directed financial resources to more sustainable and higher yielding projects,” emphasizing that last year, “we continued to invest in line with our ₱3.0-₱4.0 billion per annum capex plan while delivering industry leading ROACE (return on average capital employed) at 18-percent; higher than pre-pandemic level.”
She stressed “our agile and valueoriented approach complimented the robust strategy we have in place.”
Of Shell’s programmed capital spending, the company chief executive conveyed 43 stations nationwide were already delivered to commercial completion – and these are sited in key cities and high foot-traffic areas.
Osial explained “based on our financial evaluation, the returns on building slightly less number but bigger stations with full mobility offer and more strategic locations, makes better economic prospects for us in the longer term, compared to original plan.”
Abilo further stated that “out of the 43 total stations that we have opened up, we have actually opened up more company-owned sites – and that’s the highest in terms of building up more company-owned sites. In terms of yield and profitability, it actually yields higher profit for the company because of the full mobility offer that it brings to the customers.”
The non-fuels business segment has likewise been on brisk ramp up, Osial said, as the company ended last year with 187 Shell Select stores; 75 Deli2Go; 225 Select Express and 455 Shell Helix oil service centers.
Randolph T. Del Valle, vice president for Mobility of Pilipinas Shell pointed out that “from a capital perspective, we are continuing to increase the capital investment. In fact, we have the highest capital investment in mobility – and while the numbers are smaller, the offer that we’re giving is actually quite more company-owned, bigger stations, bigger footprint – so every time you visit a Shell mobility station, you will not just have a fuel offer; you will also have a lot of our offers like car wash; an oil change facility; Shell Select ... we also have some partnership with co-locator brands because that’s really relevant for customers.”
He expounded “every time we build the site, we need to make sure that’s something relevant for that community and for our trade areas. The capital investment is actually all-time high that we’re actually having, building really relevant offers for true mobility which is aligned with our strategy and really aligned to what our customers need.”