Aramco’s bet

After nearly two decades, Saudi Arabia’s oil giant quietly returned to the country through a stake in Co family-led Unioil Petroleum Philippines Inc.

It’s a significant 25 percent stake that Aramco has agreed to acquire in Unioil, now among the biggest independent oil companies in the country.

What does this mean for the country?

The way I see it, Aramco’s entry would toughen competition in the local oil industry.

While competition usually benefits consumers, this could mean more challenges for existing local players, including the big ones which are already grappling with an increasingly difficult landscape.

The Philippine oil industry’s journey has not been smooth sailing for some time now – Pilipinas Shell and Petron Corp. have earlier shut down their refineries because of economic challenges, including high cost of operations. Then there are the challenges such as compliance with the Biofuels Act which has artificially inflated prices of petroleum; maturity of market in certain localities which led to closures of some gasoline stations and permitting requirements in some LGUs which led to additional expenses for oil players.

Outside the Philippines, Royal Dutch Shell has been shutting down refineries and selling assets in other countries as well, a reflection of a changing oil environment across the globe.

In fact, across the US, Shell has a goal of closing 500 gas stations as the company looks into the future by hitching a ride on the growing electric vehicle industry.

But for the government, Aramco’s entry into the Philippines is a welcome development.

“Any form of investment in the Philippines is very much welcome. It’s a seal of good housekeeping,” Energy Secretary Raphael Lotilla told me when I bumped into him at an event last month.

Why Unioil?

The company, founded in 1966 by the Co family, is quite low-key but I heard from oil industry sources that Unioil now holds the fourth spot after the Big Three – Petron, Shell, Caltex.

Unioil, with a network of 165 retail stations and four storage terminals, holds a significant portion of the fuels business in the country through its facilities in Luzon, the Visayas and Mindanao.

“Through the partnership with Aramco, Unioil will also introduce the Aramco and Valvoline brands to Filipino consumers,” Unioil said when it announced its deal with Aramco.

For Aramco, the move is part of its international expansion “to capture additional value and enhance our participation in vibrant economies, in collaboration with established partners,” said Yasser Mufti, Aramco executive vice president of Products and Customers.

“This investment represents another step forward in our global strategy to expand Aramco’s retail network, and we look forward to introducing Aramco’s high-quality products and services to customers in the Philippines,” he said.

Aramco’s entry in the Philippines follows its previous retail acquisitions in Chile and Pakistan.

I heard from the grapevine that in the case of the Philippine market, Aramco also wants to get into the jet fuel business.

The bigger question though is this – will local pump prices go down for motorists with the entry of Aramco?

Don’t bet on it. Prices of course are market driven, plus the fact that oil players generally love high oil prices.

POGO out, e-games in

Speaking of businesses that come and go, POGOs, it turned out, haven’t made much of a dent in gaming revenues, the Philippine Amusement and Gaming Corp. reported.

PAGCOR said the country’s gross gaming revenue (GGR) surged to P410 billion last year, even higher by 25 percent from the previous year’s P329 billion.

PAGCOR chairman and CEO Al Tengco said that as offshore gaming exited the country, PAGCOR has shifted its focus to regulating electronic gaming while ensuring strict oversight to combat illegal operators.

Actually, e-games are even catching up with the traditional casinos, just look at the numbers.

Brick-and-mortar casinos contributed P201 billion or nearly half of the 2024 GGR but the e-games and e-bingo sectors saw extraordinary growth and generated P154.51 billion last year, a whopping 165 percent year-on-year increase.

This is due to PAGCOR’s move to reduce license fees for e-games – to 30 percent of GGR starting this year from around 50 percent previously.

Is this shift to e-games good for the economy?

Gaming in general will always have social costs. But if we look at traditional casinos and e-games, which sector has a ripple effect on the economy?

Clearly, brick-and-mortar casinos create jobs, fuel the economy of a community and boost land values. This industry is also better regulated. In contrast, the e-games industry creates fewer jobs and has a smaller ripple effect.

Given this, PAGCOR should focus on tightening regulations for e-games rather than relaxing its policies for this fast-growing sector.

Fixing government procurement

Why are government projects almost always problematic? It’s because it’s riddled with corruption and sometimes, those involved have limited knowledge on the process.

The good news is that the University of the Philippines Los Baños is at the forefront of procurement training. UPLB’s Dr. Eileen Lorena Mamino has recently completed the online Training of Trainers on Republic Act 12009 or the New Government Procurement Act.

As a result, through Dr. Eileen as coordinator, a procurement specialist training program has been administered to hundreds of government employees.

Big congratulations to UPLB and to Dr. Eileen. I know Dr. Eileen. I first met her when I visited UPLB some years back upon the invite of one of its esteemed alumni, Dr. Resty Collado. Dr. Eileen is untiring in her advocacy to improve people’s knowledge of government procurement.

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Email: eyesgonzales@gmail.com. Follow her on X @eyesgonzales. Column archives at EyesWideOpen on FB.