Caltex Philippines, Inc., which initiated the recent oil price increase last month, claimed to have suffered the biggest loss of P1.514 billion from January to September this year. It is the third biggest oil players in terms of volume and earnings.
In the same period, industry Petron Corp. claimed to have lost P1.5 billion while second-ranked Pilipinas Shell Petroleum Corp. admitted losing roughly P800 million in the nine-month period.
New oil players Total Petroleum Philippines Corp. (TPPC) also reported losses amounting to P150 million in the first eight months of the year, a reflection of the financial condition of the rest of the industry’s new players.
The common reason cited for the losses were the unprecedented increase in world crude prices, the record depreciation of the peso, and the continued suppression of local pump prices despite the deregulated environment of the oil industry.
"We had very bad months and we are looking at over a billion peso loss in the months (ahead)," Caltex country chairman Nicholas C. Florio said.
Petron officials explained that world crude oil prices rose over 200 percent since last year while local pump prices were "allowed" to grow by a little over 60 percent in the same period.
World crude oil prices have already breached the same level when the Gulf War erupted in the early ’90s.
The peso touched all-time lows against the US dollar in the wake of the jueteng scandal bared by Ilocos Sur Gov. Luis ‘Chavit’ Singson.
Petron, which has a government equity of 40 percent, reported one of its lowest net earnings in 1999 of P2.4 billion. This year, it did not declare a stock nor cash dividend due to its continued losses.
Caltex chief executive officer Jock McKenzie in an interview with Reuters admitted that their Philippine operations had been incurring losses.
"Prior to the latest increase (in pump prices) the entire industry were at losses, but certainly it would not be at a level at which we could expect a reasonable return on capital employed," McKenzie said.
He added that they are looking at another round of price adjustments when possible. "Directionally, markets permitting, we would like to increase our prices in the Philippines." Caltex Phils. registered earnings of P1.1 billion in 1999.
Oil executives admitted that the recent price adjustments reaching an average of P1.67 per litter would allow them "a little breathing spell" from mounting losses. They said that should Dubai crude stabilize at between $25 to $28 per barrel, price adjustments may not be necessary.
"But what worries the industry is the way the peso has been moving versus the dollar," said Energy Undersecretary Cyril del Callar. In an interview over television, Del Callar said that any price adjustments this soon is premature.
"We just had a price increase the other week, and the price of crude has hovered in the $29 to $30 per barrel. It is too early," he added.
All oil executives said that they expect losses or flat growth in net earnings for the rest of the year.