Petron refinery upgrade to cost $1 B

Petron Corp., the country’s largest oil refiner, is spending $1 billion to upgrade its refinery, and expand its operations and retail network over a period of three years.

“We are continuing with our investments for plant and refinery optimization. We are still going to spend over $1 billion,” Petron president and chief executive officer Ramon Ang said in a briefing after the company’s stockholders’ meeting yesterday.

Of the total spending, $600 million will be focused on building two steam producer boilers to improve the operations of Petron’s refinery in Bataan.

The project, which started construction this year, will take two to three years to build, Ang said.

“It will be used to bring down the cost of the refinery and to optimize the refinery. We can only hope that the crude oil price will be stable in the coming years,” he said.

Meanwhile, Petron will use the remaining $400 million for retail network expansion to meet its target of 6,000 stations both in the Philippines and in Malaysia.

The amount will also be used in upgrading the company’s power lines and pipelines.

Petron is eyeing to build at least 200 stations a year in the Philippines and 100 stations in Malaysia.

“Between the Philippines and Malaysia, we already have 3,000 stations and our target is to reach 6,000 by 2022. We have three years to go,” Ang said.

The massive investment comes even after Petron reported a 77.6 percent drop in net income in the first quarter to P1.3 billion.

Petron’s Malaysian operations accounted for P1.2 billion of the consolidated net income.

The oil firm attributed the steep drop to the impact of the second phase of the Tax Reform for Acceleration and Inclusion (TRAIN) Act and the rising crude prices during the period.

“If you notice, despite all of that inventory losses, new taxes, steep oil price drop, etc., Petron only reported lower profit during the period,” Ang said.