Caltex still bullish on prospects of oil sector

Caltex Philippines, Inc., one of the major players in the local oil industry, is doubling its budget from about $25 million in 2000 to at least $45 million this year despite its heavy losses.

Caltex country chairman Nicholas Florio said his company remains bullish about the prospects of the country’s oil industry this year. "We are still optimistic that the Philippines’ oil industry will be stable," he said.

Florio said a hefty net loss after tax of about P2.9 billion in 2000 will not hinder their enthusiasm to expand their operations in the Philippines. "Last year was a bad year for the company but we will continue to expand our operation, especially in the provinces," Florio said.

Florio said they plan to increase the number of "Star Marts" in their service stations and are also studying the possibility of transferring some of their Caltex kiosk centers that are not making money to other areas where prospects are good.

Unlike industry leader Petron Corp., Florio said Caltex has no immediate plans of diversifying into other non-fuel businesses. Petron earlier disclosed that it is venturing into non-fuel projects and businesses such as e-commerce and insurance.

Florio said Caltex is likely to defer anew its plan to go public due to the sluggish stock market. "We are still waiting for the right timing. But we are expecting it to be deferred. For how long, we do not know," he said.

Section 22 of the Oil Deregulation Act of 1998 requires local oil refiners to let the public own at least 10 percent of their equities through an IPO on or before Feb. 28 this year.

Earlier, Caltex and Shell had asked the Department of Finance (DOF) and the Securities and Exchange Commission (SEC) to allow them to defer their IPOs.

They said that the IPO requirement for Shell and Caltex should be deferred until such time as more favorable economic and business circumstances exist.

Caltex is jointly owned by US oil giants Texaco Inc. and Chevron USA Inc. It refines and distributes about 72,000 barrels of oil a day. Pilipinas Shell Petroleum Corp., a subsidiary of the Royal Dutch/Shell Group of Companies, has yet to disclose whether it will be able to offer shares to the public before the Feb. 28, 2001 deadline. Petron Corp. is already listed in the Philippine Stock Exchange.

According to Caltex, an IPO at this time "is likely to have material and negative consequences for the Philippine government, the investment community, the faith of investors in the economy in general and the securities market in particular."

Caltex has been incurring losses since 1998, when oil refiners were unable to recover costs due to a Supreme Court ruling that froze domestic crude prices.

Since April last year, prices of crude oil have increased from $10 a barrel to more than $25 a barrel.