MANILA, Philippines–Pilipinas Shell Petroleum Corp. has confirmed its commitment to expand its refinery in the Philippines and undertake its long-awaited initial public offering (IPO) on the Philippine Stock Exchange.
Energy Secretary Carlos Jericho L. Petilla told reporters that he met with Shell country chair Edgar O. Chua about three weeks ago and was assured that the oil firm has long-term plans for the Philippines.
“Basically, they are going to expand their refinery here. It will proceed,” Petilla said.
Sources said Shell recently started working on the $150-million expansion, which will include upgrading refinery equipment to produce Euro IV standard fuel products.
Petilla said it will only be a matter of time before Shell gets listed on the Philippine Stock Exchange as required by the Oil Industry Deregulation Act. “They are adamant that there is future in this country.” Petilla said, adding that the upgraded refinery will have capacity for exports besides serving local demand.
It has been reported that Shell may use proceeds from its IPO to fund expansion work.
Earlier, company vice president Roberto S. Kanapi had told Inquirer that a final investment decision (FID) was due in the first half of 2014 on upgrading the company’s oil refinery in Tabangao, Batangas.
The refinery upgrade will put the company on track to meeting new Euro IV fuel standards and secure fuel supply.
“Subject to achieving a positive FID, the refinery upgrade will be completed in time to meet Euro IV implementation deadline,” Kanapi said.
Pump stations must be selling Euro IV-standard fuel by January 2016, which means the $150-million refinery upgrade should have been completed by 2015.
An oil firm with a refinery must offer 10 percent of its shares to the public, under the Oil Industry Deregulation Act of 1998.
Yet, up until after the 2008 global financial crisis, Shell had cited the volatile stock market in deferring IPO plans.
Following the Department of Environment and Natural Resources’ 2010 directive for higher vehicle emission standards by Jan. 1, 2016, oil companies began to race to meet new fuel standards and Shell started studying Euro IV fuel compliance.
Petilla has expressed optimism on Shell’s IPO, saying the company remains “serious” in its Philippine business. Petilla cited the planned upgrade of its 110,000-barrel-a-day refinery in Tabangao, Batangas, and with its planned liquefied natural gas project in the Philippines
Zenaida Y. Monsada, director of the Oil Industry Management Bureau at the DOE, said that the equity and financial markets are currently healthy and therefore potentially attractive to prospective public investors of Shell.
Shell has repeatedly asked the DOE to give the oil firm more time to decide on the IPO, saying the company will come up with a decision before the implementation of the Euro IV standard.