Petron chief hails GMA for scrapping OilEx plan

Publicly listed Petron Corp. lauded yesterday President Arroyo’s announcement that she would not consider the creation of a National Oil Exchange Corp. (OilEx).

Petron Corp. chairman Jose Syjuco Jr. praised President Arroyo’s statement that she was only batting for measures that would improve greater transparency in fuel pricing and not the creation of a centralized oil trading company as earlier reported.

"The proposed oil exchange is a bane not only to the oil industry but to the entire country. The President’s decision not to support it brings us a step closer to realizing the beneficial effects of oil deregulation," Syjuco said.

The Department of Energy (DOE) earlier rejected House Bill (HB) 8710, which calls for the establishment of a National Oil Exchange branding it expensive, inadequate in keeping petroleum prices low, and counter to the deregulation law. The bill was principally authored by Rep. Enrique Garcia of Bataan.

The DOE said that establishing an oil exchange, including the physical facilities and inventory would cost government about P17 billion. Besides, the energy department said the proposed bill runs counter to government’s policy of deregulation, liberalization and privatization.

The proposed oil exchange will also not guarantee lower prices of petroleum products. The two main sources of crude oil will be from OPEC and non-OPEC countries.

OPEC supplies almost half of the crude requirements of the world and they are the benchmark for the non-OPEC suppliers. If the OPEC price is sold at $22 per barrel, most non-OPEC countries find it profitable for their respective economies to follow suit.

The top three oil companies — Petron Corp., Philipinas Shell Corp., and Caltex Philippines Inc. – also get their crude oil supply from OPEC suppliers.

Under HB 8710, the OilEx will bid out on a monthly basis to more than 40 local and foreign oil traders and refineries the country’s total requirements of gasoline, diesel, kerosene, liquefied petroleum gas (LPG) and other refined oil products.

Based on the bill, the OilEx would help negate the monopoly of the three major players in the industry and they "would no longer have a captive market and volume."

Presently, the principal importers of crude oil are the three major players. They refine the crude and sell the finished products like gasoline to the domestic market and to a limited overseas market.