Petron downsizes 2015 spending program

MANILA, Philippines - Petron Corp., the country’s largest oil refiner and retailer, is downsizing its spending program this year and over the near term but will continue an aggressive network expansion to preserve its position atop the Philippine oil industry.

In an interview on the sidelines of the Latham & Watkins annual investment conference yesterday, Petron senior vice president and chief finance officer Emmanuel Erana said the oil firm is earmarking up to P10 billion for capital expenditures this year.

 “Over the last five years, we’ve spent $2.5 billion.  So that’s a long way from the P10 billion we’ll be spending this year,” he said.

Erana said bulk of the previous years’ spending was utilized primarily for Petron’s $2-billion Bataan Refinery Master Plan Phase 2 (RMP-2) project which was completed in September last year.

 “We’ve funded requirements for Bataan and we’re done with the rebranding in Malaysia.  So I guess we’ll be spending relatively lower capital expenditures at this point,” he said.

Erana said this year’s capex budget would be spent on putting up new stations locally and abroad as well as in upgrading depots.

Petron is looking to put up 250 new stations in the Philippines this year and add 50 more in Malaysia.

Erana said Petron currently has 560 operational stations in Malaysia.

 “We upgraded some of the facilities to make it more competitive and more marketable to motorists in Malaysia,” he said.

In the Philippines, Petron has the largest retail network with about 2,200 service stations, more than the network of two of its largest competitors combined.

Erana said Petron is likely to tone down on its spending program over the next two to three years as it attempts to first bolster its balance sheet .

“We also need to scale down in terms of debt, we’d like to get back the strength of the balance sheet.  We have to figure out the next level of expansion,” he said.

Petron posted a consolidated net income of P3.2 billion in the first nine months of 2014, 26 percent lower than the previous year’s P4.4 billion.