Refinery upgrade to fuel sustained Petron profits

MANILA, Philippines - Petron Corp., the country’s largest oil refiner, expects to remain profitable towards the end of this year and next on improved margins from the upgrade of its refinery despite the continued drop in global crude prices.

Petron president and CEO Ramon Ang said the company would achieve the target efficiency of the $2-billion Refinery Master Plan (RMP) “sooner-than-expected.”

“We were expecting the refinery to reach 98 percent recovery by next year. But as of September, we are at 98.7 percent recovery,” he said.

By 2016, the refinery’s target capacity and efficiency will be achieved, he added.

“With that, Petron, even at low oil prices, is still going to be very profitable because of the modernization of the refinery,” Ang noted.

RMP-2 will boost Petron’s production by at least 50 percent to 150,000 to 180,000 barrels per day from the current 120,000 barrels once it starts full commercial operations.

Prior to the refinery upgrade, the oil firm was only raking in three to five percent in gross margin.

But RMP-2 will give Petron at least 20 percent in gross margin, the company’s top official said.

“Our original target when we were still drawing up the refinery model decision is to achieve a 15 percent gross profit in sales from the refinery,” Ang said.

In the second quarter of the year, Petron grew its net income 300 percent to P3.2 billion from P789 million in the same period in 2014.

This resulted in a 13-percent jump in its first-half net income to P3.4 billion from P3 billion in the same period last year.