Petron raises production, eyes bigger export sales

Publicly-listed Petron Corp. is planning to increase the output of its Bataan-based refinery to 90 percent or 160,000 barrels of oil per day (BOPD) from the present 130,000 BOPD, a company official said.

Petron vice president for refinery operations Alfred Trio told reporters during a plant tour over weekend, that the move is in line with the company’s plan to expand its market.

"We are also eyeing to expand our export market," Trio said, adding that the 220-hectare refinery has a total capacity of 180,000 BOPD.

According to Trio, they recently changed their marketing thrust by giving focus on the export market since local sales are a little bit slow.

For the past years, Petron has been exporting its excess production of gasoline, diesel and naphtha products.

"This is a deliberate strategy (to divert a portion of our production to neighboring countries like Japan, Korea and China)," he said.

He said this is the reason why their market share in the first quarter dropped to 37 percent from 39 percent in the same period last year, losing its leadership in the local market to Pilipinas Shell Petroleum Corp. with 38.3 percent.

"Before, what we are selling abroad are just surplus of our production. But we started to shift some of the sales to export markets because they offer better margins," he said.

Trio said Petron’s export sales grew to 21.1 percent (from 2.2 million barrels to 2.6 million barrels) of its total sales for the first three months of the year. Historically, export sales account for only 10 percent.

As of end-December 2000, 17.7 percent of its total sales volume were from exports, compared to 8.5 percent in 1999.

According to Trio, the export business is the oil firm’s balancing act to compensate for the losses it incurred in the domestic market for the past few months. Petron reported a net loss of P1.1 billion in 2000.

The Petron executive explained that the export business of the company should be balanced to keep their market share and as a corporate responsibility.

"We just cannot increase altogether our export share to the detriment of our local market," he said.

He also expressed optimism that in the long-run, they would be able to regain their dominance in the local market because of higher refining capacity.

The two other local oil majors, Shell and Caltex Phils. Inc., which have their own refineries, also export some of their products abroad but in a smaller scale.