MANILA, Philippines - Petron, the country’s largest oil refiner and retailer, is aiming to boost its market share on the back of dwindling oil prices.
Petron senior vice president and chief finance officer Emmanuel Erana told The STAR in an interview last week on the sidelines of Latham & Watkins annual investment conference that the oil firm sees its market share shooting up this year as declining oil prices in the world market are expected to take its toll on the small players.
“The last nine months also tested the resiliency of new players. The continuous falling prices are very costly for them. It is something that they’re not built for. Because for them, they’re supposed to make money out of the basic business that ‘you’re in, you’re out’ fast. They have a two-week inventory period and for the last nine months that has been proving to be disastrous for them. So naturally, they’ll slide back,” Erana said.
Data from the Department of Energy (DOE) showed that Petron’s overall market share in the first half of 2014 stood at 37 percent, the largest among all players.
Together with other oil majors Chevron Philippines and Pilipinas Shell, the Big Three cornered 71.1 percent of the market.
The independent players, meanwhile, which include smaller retailers such as Phoenix Petroleum, PTT Philippines Corp., Total Philippines and Seaoil Corp., among others, captured the remaining 28.9 percent of the market.
“At the end of the day, I do not need to be in competition with them completely. I can also supply them. I don’t need to be in competition at the station level or I can be in competition at the station level, but I can also work with them as a supplier. On one hand we compete at the station, on the other hand, I have a refinery that produces cost efficient supply. So why not stop importing and just buy from me?” Erana said.
Petron is downsizing its spending program this year and over the near term but plans to continue an aggressive network expansion to preserve its position.
The oil firm is earmarking P8- to P10-billion for capital expenditures this year to put up 250 new stations in the Philippines and add 50 more in Malaysia.
“We’ve been satisfied with just 250 (new stations) a year in the last two to three years. We see it as just enough number because if you push it too hard, you’re going to push some players out of the market. Desperation can destroy market pricing also so you don’t want to do that. You want to preserve market pricing,” Erana said. Petron ended 2014 with a four percent growth in revenues, which reached P482.5 billion, while consolidated net income was “better than expected” at P3 billion.