IPO plans ready by yearend – Shell

MANILA, Philippines - Pilipinas Shell Petroleum Corp. is asking the Department of Energy to give it until the end of the year to provide plans for its initial public offering (IPO).

Pilipinas Shell vice president for communications Roberto Kanapi said the company’s IPO plans hinge on the result of a study on its refinery expansion.

“We are conducting the study on the refinery following the completion of the standards for Euro 4 fuel in the Philippines. Because of that, we are now finalizing the study on upgrading the refinery and we are requesting the Department of Energy to give us up to the latter part of the year. Everything hinges on that,” Kanapi said.

The oil company is looking at expanding its 110,000-barrel per day (bpd) refinery in Tabangao, Batangas to meet new fuel standards that will take effect in 2016.

Euro 4 is a globally accepted European emission standard for vehicles which require fuel to have significantly low amounts of sulfur and benzene.

Last month, the DOE reminded Shell to proceed with its planned IPO, saying that market conditions are now ripe.

The department has sent a letter to Shell country chairman and president Edgar Chua reminding the oil refiner of its obligations to list in the local bourse as mandated under the Downstream Oil Deregulation Act of 1998.

In a letter to Shell, Zenaida Monsada, director of the DOE’s Oil Industry Management Bureau, said Shell’s IPO is long overdue.

“While the opinion of the Department of Justice is that the three-year period under the oil deregulation law is not mandatory but prescriptive and will not prohibit an IPO to be conducted after the lapse of the said period, nearly 15-year period since the passage of the law is long overdue for Pilipinas Shell to implement the public offering of 10 percent of its common stocks,” Monsada said.

The oil deregulation law requires all oil refiners to sell at least 10 percent of their common stocks to the public.

In the letter, Monsada noted the rosy performance of the stock market.

“Given also that the equity/financial market environment in the country is currently healthy, which attracts potential investors, you are hereby requested to submit an update of your IPO plans,” she said.

However, Kanapi said the law mandates the listing of 10 percent of an oil refiner’s common stock. As such, he said, it was necessary to first determine Shell’s final plans for its refinery.