Petron earmarks P5B for capex this year

Publicly-listed Petron Corp. is allocating about P5 billion for its capital expenditure this year.

In a disclosure to the Philippine Stock Exchange, Petron said that of the P5-billion capex this year, some P4.4 billion will be used for major capital pro-jects and P583 million for miscellaneous projects.

The major capital projects include the refinery expansion project of the oil firm.

On the back of the success of the mixed xylene pro-ject, the company said it would also expand further into the petrochemical business.

Total investment in the petrochemical-related activities is estimated at P3.2 billion.

Petron said it has allotted about P319 million for a project which is geared towards protecting market share in the retail market. The company has also set aside a portion of the capex this year for tank farm relocation under the joint oil companies avfuel storage plant (JOCASP).

"The development plans of the government for the Ninoy Aquino International Airport (NAIA) requires the relocation of the JOCASP tank farm estimated at P260 million," it said

The company said it will allot funds for its ethanol program to be able to company with the Biofuels Law.

"In order to comply with the new law, installation facilities to enable the blending of ethanol into gasoline is necessary by 2007. Estimated cost of installation is P205 million," it said.

This year, Petron, the country’s largest oil refiner, projects its net income to reach P5.7 billion in 2007.

A company official, in an earlier interview with The STAR, said the projected improvement in income, presented during the recent Petron board meeting, would be driven by its aggressive expansion program.

According to the official, who requested anonymity, the income assumption is also anchored on the oil firm’s continuing efforts to expand its operations abroad, particularly its export business.

During the company’s stockholders’ meeting, Petron president Khalid Al-Faddagh said that they expect their income to hit the P10-billion mark by 2010.

If Petron is able to sustain its improved performance, the official said earnings could reach P13.5 billion in five years time or by 2011.

At present, Petron has the biggest service station network in the country with more than 1,265 stations nationwide.

To date, the company controls more than 34 percent of the highly competitive retail market. 

In industrial trade, Petron has about 47 percent of total volumes.  Overall, Petron continued to dominate the market and posted a market share of over 39 percent.

The oil firm also reported that its board has approved a $77.6-million budget for the Engineering, Procurement and Construction (EPC) of the petrochemical project.

As of August 2006, the petro fluidized catalytic cracker (PetroFCC) unit was over 30 percent complete.

The PetroFCC will allow the company to produce more high-value while products and extract the petrochemical grade propylene. A BTX (benzene, toluene and xylene) unit which will produce aromatics and expand the company’s mixed xylene production capacity will also be constructed as part of its $300-million refinery master plan.