SMC eyes P1-T petrochem, refinery facility

Conglomerate San Miguel Corp. plans to shell out P1 trillion—the single biggest investment seen in the Philippines—to build a brand-new integrated petrochemical plant somewhere in the “south” to cater to brisk demand for petrochemical products here and abroad.

In a press briefing after the company’s stockholders’ meeting yesterday, SMC president Ramon S. Ang said SMC would likely break ground for a new petrochemical complex in the next six months.

A new company will be created to handle this project, which will rise on a 1,000-hectare facility in the “south” possibly within 3.5 years, Ang said. He noted that this would be separate from Petron Corp.’s expansion program in Northern Luzon and Malaysia.

The new integrated chemical complex will include an oil refinery that can produce 250,000 barrels a day for the Philippines. The complex can produce crude to white oil products and other petrochemical products, switching from one product to the other, Ang said.

“This will be a totally new refinery,” he said.

SMC is in talks with two foreign groups for potential participation in the $15- to $20-billion project, Ang said. However, he could not say yet how much SMC’s interest in the project would be until the partnership deal has been finalized.

Asked why SMC is embarking on this huge project, Ang said: “Petrochemical products are stable. The pricing and cracking margin is more stable and more profitable and of course, there’s big domestic consumption and also big export potential.”

Ang said he could not say where the exact location of the proposed plant would be, except that it would be in the “south.” [The existing] Petron refinery is already in the north, so you don’t want to put all eggs in one basket,” he said. “South” can refer to either south of the metropolis or to Mindanao, which is the southern part of the Philippines.

This year, SMC expects to post around P65 billion in net profit, about a quarter higher than last year’s level, with Petron and San Miguel Brewery likely contributing a combined P40 billion, Ang said.

In 2016, SMC chalked up P52 billion in net profit, including that attributable to minority interest, up by 80 percent from the previous year. This was on the back of P685.3 billion in revenues.

This 2017 marks the 10th year since SMC started an ambitious diversification program that transformed it from a food and beverage-based group into a conglomerate with new businesses like power, infrastructure, oil and petrochemicals.