Government mulls return to downstream oil industry

MANILA, Philippines - After selling a 100-percent stake in Petron Corp., the government is mulling the possibility of engaging anew in downstream oil industry through the publicly-listed subsidiary of Philippine National Oil Co. (PNOC)-PNOC-Exploration Corp. (PNOC-EC).

PNOC-EC chairman Jacinto Paras said the company is exploring this idea to maintain the government’s balance on oil pricing issue.

Paras said if the government will have its own oil company which will engage in retail oil business just like any other new players in the domestic oil market, this will give an assurance that there will be a “check and balance” on oil prices.

“If ever, this company will become the neutralizer (on oil pricing). We just can’t leave this business to private sector. The government should be, by itself, protect the interest of the consumers,” Paras said.

”On my personal view, Petron had played an important role especially when oil prices were so volatile. It served as a government’s guardian inside the industry,” he added.

According to Paras, PNOC-EC’s charter allows it to create an oil company. “It is in our mandate. Unless the government would want to create a new corporation either by legislative or administrative order,” he said.

Asked how investors would react on this proposed move, he said “ it’s going to be just another player in the block.  There are oil companies being put up every now and then.  It will compete just like any other player in the market.”

“What we intend to do is to create competition. If there is real competition in the market, consumers will be assured that they will get the best prices,” he added.

But Paras said this plan, however, would only materialize depending on the decision on the government on PNOC-EC’s privatization.

“This is based on the assumption that EC will not be privatized 100 percent,” he said.

Paras, in expressing his opinion, said it would be “best’ for the government to maintain PNOC-EC as its national oil company.

“It would also ensure that the government would be able to maintain buffer to guarantee stable supply of oil in the country,” he said.

If it will materialize, the PNOC-EC’s downstream oil subsidiary will help maintain the national oil stockfile.

Initially starting out as the Exploration Department of PNOC in April 1975, PNOC-EC was eventually incorporated as a PNOC subsidiary and registered with the Philippine Securities and Exchange Commission on April 20, 1976.

PNOC EC’s shares of stock are 99.78 percent owned by the Philippine government through PNOC, with the remaining 0.22 percent are held by public shareholders.