Petron allots P75 billion for refinery conversion

MANILA, Philippines - Petron Corp., the country’s largest oil refiner, will invest P74.78 billion for the full conversion of its Limay refinery to cleaner white oil.

In an interview, Board of Investments (BOI) executive director Lucita P. Reyes said they have registered the project for entitlement to income tax holidays (ITH) and other incentives.

Reyes said Petron will upgrade its existing refinery to convert fuel oil to white oil. She explained this will make the firm Euro-4 compliant, one year ahead of the imposed schedule.

By-products such as petro feedstock will be sold to plastic producers or propylene as raw materials for polymer plastics.

Reyes said the project is expected to generate 165 jobs in addition to the existing regular employees to support additional processes. The implementation will begin July 2015.

She said project financing will come from internally generated funds and loans. 

In terms of taxes, Petron will enjoy zero duty on equipment.

Earlier, during the 50th anniversary of the refinery, Petron chairman and chief executive Ramon S Ang said the Refinery Expansion Program (RMP-2) will further enhance the country’s supply security, increase Petron’s capability to supply the increasing demand for white products (LPG, gasoline and diesel) and petrochemicals.

Once completed, RMP-2 will enable Petron to “digest” a wider range of crude oils, including from African sources, giving it greater flexibility to source cost-efficient crude types from any part of the world.

Petron’s operational efficiency will also significantly improve since the project allows the full “conversion” of all remaining black streams into high-margin white products and petrochemicals. This means that the company can run its refinery 100 percent without incurring penalties from producing low-value fuel oil. For instance, the project will increase current propylene production by nearly 200 percent. The project doubles Petron’s refining complexity, enabling it to compete more effectively with refineries in the Asia-Pacific region.

Another benefit from RMP-2 is the local production of fuels that meet the global clean air standard of the future - Euro 5, further improving air quality in the country.

Petron will partner with leading global technology and engineering companies focused on refining and petrochemical production namely Axens, UOP, CBI Lummus, Foster Wheeler and Daelim.