Pilipinas Shell Petroleum Corp. is seeking more time—or until the end of 2013—to decide whether it will offer shares to the public through a long overdue initial public offering (IPO).
“Everything hinges on the study on upgrading the refinery and the law states that if you have a refinery, you should commit 10 percent (of the company’s shares to the public). The refinery study is ongoing,” Shell spokesperson Roberto S. Kanapi said on the sidelines of an energy forum. “We are conducting the study on the refinery following the completion of the standards for Euro IV in the Philippines. Because of that we are now finalizing the study on upgrading the refinery. We are requesting the DOE (Department of Energy) to give us up to the end of this year.”
Zenaida Monsada, director of the oil industry management bureau at the DOE, said in a separate interview that she was awaiting a letter that Shell said it would submit regarding its IPO plans. “I don’t expect specific plans right away. I expect they will say what triggers or the basis they need to set milestones,” she said.
Last month, Monsada gave Shell until May 31 to submit an update to its IPO plans as mandated under the Oil Industry Deregulation Act of 1998. Monsada noted in the letter that the equity and financial markets were healthy and therefore potentially attractive to prospective investors of Shell.
It has been nearly 15 years since the passage of the law, which means the mandated public offering of 10 percent of Shell’s common stocks has been long overdue. Under the law, an oil company that is engaged in the refinery business must offer to the public through the stock market at least 10 percent of its shares within three years’ time from the effectivity of the law. This means that Shell’s IPO should have been completed by 2002.
Up until after the 2007 Asian financial crisis, Shell cited the volatile stock market as it continued to mull over its IPO plans. Recently, following the Department of Environment and Natural Resources’ 2010 directive for upgraded vehicle emission standards by January 1, 2016, Shell started studying Euro IV fuel compliance.
Energy Secretary Carlos Jericho L. Petilla had said that last month’s DOE letter to Shell was simply a reminder because “it’s been a long time.”