Despite the slump in oil prices, the country’s leading oil distributor and refiner Petron Corp. expects to post a banner year this 2016, with net profit seen reaching P18 billion as its upgraded Bataan refinery reaches optimal operation.
Ramon S. Ang, president of both Petron Corp. and its parent conglomerate San Miguel Corp. (SMC), told reporters late Wednesday that the Bataan refinery has now become very efficient in its extraction, with output now reaching 180,000 barrels a day. “That means it has achieved maximum liquid yield and even for petrochem products, this has been achieved,” Ang said shortly before the investors’ briefing for SMC’s P30-billion preferred shares offering.
“Can you imagine that at $30 per barrel, we will be tracking $650 million in cash flow and this year, 2016, I think Petron will give us P18-billion net income (even with global oil prices) at $30 per barrel,” Ang later said during the open forum.
Petron Bataan Refinery, the country’s biggest integrated refinery and petrochemical complex, processes crude oil into a full range of petroleum products including gasoline, diesel, liquefied petroleum gas (LPG), jet fuel, kerosene and industrial fuel oil. It also produces petrochemical feedstock benzene, toluene, mixed xylene and propylene, which are raw materials used in a wide variety of applications, including food packaging, rope, sacks, plastic parts, home appliance, automotive parts and reusable containers.
In the first nine months of 2015, Petron posted a P4.46-billion net profit attributable to equity holders of parent firm compared to P3.32 billion in the same period a year ago. In 2014, Petron chalked up a full-year attributable net profit of P3.32 billion compared to P5.25 billion in 2013.
Petron has spent $2 billion upgrading the Bataan refinery and shelled out another $700 million to put up a power plant to supply electricity to the refinery and another 600 tons-per-hour of steam.
At that time when Petron made the refinery investment, Ang said global oil prices were hovering at $100 a barrel, which was projected give Petron $1 billion in free cash flow each year. The upgrading program for the refinery started in 2011.
But even now that oil prices have gone down to less than $30 a barrel, Ang said cash flow based on earnings before interest taxes, depreciation and amortization (Ebitda) could still reach $650 million this year because of the increase in economic yield following the successful refinery upgrading program.
“When we were expanding the refinery, the liquid yield or economic yield of the refinery was much lower then at around 60-plus percent. Right after we have expanded the refinery, we are now experiencing a tremendous growth in the extraction of white product, meaning for every barrel, we are now able to extract 93 percent economic liquid yield of gasoline or diesel. So we are quite lucky that the technology we have chosen in the upgrading of the refinery in the Philippines was really really very successful,” Ang said.
In the first nine months of 2015, Petron accounted for the lion’s share of parent SMC’s business at 54 percent.