Saudi Aramco reaffirms its 40% investment in Petron

Saudi Arabia Oil Co. (Saudi Aramco) has no plans of divesting its 40 percent share in publicly-listed Petron Corp.

Saudi Arabia’s Minister of Petroleum and Mineral Resources Ali Bin Ibrahim Al-Naimi, in an interview with reporters after his meeting with Department of Energy (DOE) officials yesterday, said they intend to hold on to their stake in Petron.

Al-Naimi, who arrived Sunday night for a three-day visit, said he came to the Philippines to reaffirm his government’s commitment to do business in the country and extend help in alleviating the impact of rising crude prices.

"We like to continue to be a major investor in the Philippines," Al-Naimi said when asked on the proposal floated by some sectors for the Philippine government to buy back from Saudi Aramco at least an 11-percent share, to regain majority control of the oil firm.

"Saudi Arabia and the Philippines are good friends. We are a premier supplier of crude oil in the Philippines. We want to assure that we will be able and ready to supply oil requirements to the country," he said.

Saudi Aramco, one of the world’s largest oil refiners, bought a 40 percent stake in Petron in a strategic sale prior to the firm’s initial public offering (IPO) in 1994. Another 40-percent block in Petron remains owned by the Philippine National Oil Co. (PNOC) while 20 percent is owned by various small investors in the local stock market.

Saudi Aramco currently supplies about 85 to 90 percent of Petron’s total crude oil requirements.

Al-Naimi, who has been oil minister since 1995, said his government wants to assure the Philippines of its continued support particularly in the steady supply of oil in the country.

"I have said in many occasions that we at Saudi Arabia do not like high prices to negatively impact particularly economic growth in developing nations (like the Philippines)," he said, at the same time dismissing speculations of possible oil supply shortage in the future. "The perception in the market is that there is not enough supply which is untrue. There is plenty of supply."

The Saudi Arabian official said his country has been doing its part to help alleviate the impact of rising crude prices, on top of the ongoing efforts of the Organization of Petroleum Exporting Countries (OPEC) to possibly raise supply from 27.5 million barrels per day to 28 million barrels per day.

"We can go up a million and a half barrels more per day. It depends on demand. All we need are customers," he added.

He said Saudi Arabia has the capacity to produce 11 million barrels of oil per day but is presently producing only 9.5 million barrels. "This means that we have spare capacity of 1.5 million barrels. We are building our capacity for the next four years to 12.5 million barrels. The first increment will come in 2006 and another in 2007 and probably more in 2008 and a big one in 2009. This will alleviate concerns in shortage of supply."

Energy Secretary Vincent S. Perez, for his part, lauded the Saudi official for his initiative at the OPEC that led to the recent move to increase the oil production of their member nations. "The move may have averted run-away prices of oil that could have spelled major setbacks for non-oil producers."

Perez also sought Al-Naimi’s assistance in helping the Philippines look for ways to cushion the impact of rising oil prices.

"We also reiterate to Minister Al-Naimi, a long-time friend of the Philippines, our deepest concern on the adverse impact of escalating global oil prices on Filipino consumers," Perez said, noting that this visit is a continuing part of President Arroyo’s oil diplomacy to enhance the energy security of the Philippines.