MANILA, Philippines--San Miguel Corp. may abandon its plan to acquire a majority stake in Petron Corp. due to the ballooning losses at the oil refiner and distributor caused by the Palace-imposed price freeze on petroleum products.

In an interview with the Inquirer, San Miguel president and chief operating officer Ramong S. Ang said that he would reconsider exercising the option to buy a 50.1-percent stake in the listed firm due to the altered regulatory regime.

Petron expects to lose P1.5 billion in the fourth quarter due to the effects of Executive Order No. 839, which mandated petroleum firms to keep prices pegged at their Oct. 15 prices in response to the aftereffects of Tropical Storm ?Ondoy? and Typhoon ?Pepeng.?

The order has come under intense criticism from local and foreign business groups, which have expressed fears of growing government intervention in the deregulated oil industry.

San Miguel acquired early this year an option to buy a majority stake in Petron from UK-based fund manager Ashmore Group, which owns 90.57 percent of the refiner. The diversifying food conglomerate has until Dec. 24, 2010, to exercise its option for which it already paid Ashmore $10 million.

Acquiring a controlling stake in Petron is expected to cost San Miguel P32 billion?a deal that is now in question due to the declining attractiveness of the petroleum industry caused by the executive order, explained Ang, who also sits as chair of Petron.

?If the losses continue, we will rethink our position on the option [to buy Petron],? he said.

The executive order caused Petron and other major petroleum distributors to cut pump prices by as much as P2 a liter of gasoline and diesel products, while the price of crude oil in the international market has been on a steady uptrend.

Over the weekend, foreign and local businessmen demanded an end to Malacañang?s order, fearing a shortage of fuel supplies if importers decide to stop selling because of losses.

No less than the Management Association of the Philippines (MAP) said EO 839 was ?based on an oversimplified but misleading view of the problem,? adding that ?it holds out the promise of lower prices but it does not properly inform the public of the dire consequences of arbitrary and sweeping price control.?

Other groups that have expressed concern over the imposition of EO 839 are the Philippine Chamber of Commerce and Industry, the Makati Business Club and the Federation of Philippine Industries.

The business community also warned that price controls might create an arbitrage situation between Luzon and the rest of the country because there will be an incentive to sell cheap oil stocks from Luzon to buyers in the Visayas or Mindanao where prices are higher.

?We strongly recommend an immediate announcement of a termination date for EO 839 to mitigate the adverse impact of forced losses on the petroleum industry, risk of future adequate supply, and disincentive to future investment,? a separate statement from the Joint Foreign Chambers said.