Petron offers to sell back refinery to government
MANILA, Philippines—Petron Corp., the country’s largest oil refiner and retailer, is offering to the national government the Petron Bataan refinery complex for a possible re-acquisition, in order to help arrest the rising local pump prices.
In an Oct. 11 letter to Energy Secretary Jose Rene D. Almendras, Petron chairman and CEO Ramon S. Ang said they would like to offer their refinery assets if this could help assist in attaining the government’s objectives at this time.
“Having control of the largest petroleum refining assets in the country will place the government in a better position to develop and devise comprehensive and long-term programs and solutions. Through this acquisition, the government will enjoy significant influence on the prices of petroleum products and in securing the supply of petroleum products in the country,” Ang explained in the letter.
“As a way to get the process underway, we are ready to discuss the appointment of a mutually acceptable third party to establish a valuation basis and transaction structure,” he said.
Almendras, however, declined to comment on the matter, noting merely that they “do not have any discussion on it yet. We just heard it.” The letter was received by the DOE on October 12.
Ang pointed out that the move to offer its refinery assets stemmed from the growing public opinion, urging the government to reinvest in Petron as a means to attain effective participation in the industry.
“The recent trend of rising prices of petroleum products has led to the ongoing discussions in Congress and in media to revisit the Downstream Oil Industry Deregulation Law and a loud clamor for more government participation in the industry. In fact, a number of bills have been proposed in both (the Congress and Senate) aimed at implementing measures for government to stabilize prices and secure continuous supply of petroleum products in the country,” Ang said.
This growing clamor, he added, has reached Petron and the oil company would be amenable to the idea of the government having participation in the industry.
He clarified that Petron, while it extended its full support and cooperation to the thrust of the government to counter the adverse effects of high oil prices in the Philippine economy, believed that reverting back to the regulated regime would not be the solution.
“The recent increases in oil prices are dictated not by the oil companies but by worldwide market forces. The company believes that deregulation has been most beneficial to the economy as well as to the downstream oil industry and should this be continued to be implemented by the government,” Ang said.
The government, through the Philippine National Oil Co., continued to own a 40-percent stake in Petron, even after the passage of the Oil Deregulation Law. In 2008, the government signed an agreement finalizing the sale of its 40-percent stake in Petron to a unit of British investment fund Ashmore Group for P25.7 billion.
The share-purchase agreement officially transfers 3.75 billion shares held by state-owned PNOC in Petron to SEA Refinery Corp.
By 2010, San Miguel Corp. managed to obtain a controlling stake in Petron by exercising the option to acquire 60 percent of the outstanding shares of Sea Refinery as provided in an agreement dated Dec. 24, 2008. This allowed San Miguel to beneficially own 68 percent of the outstanding and issued shares of stock of Petron.
