In a disclosure to the Philippine Stock Exchange, Petron said that its executive committee approved on Wednesday the company’s investment in Esso but did not reveal the final investment figures. The oil firm said that the amount and percentage sharing have yet to be determined.
In a text message, Petron president Eric O. Recto said the oil company has not determined how it would make its investments in Esso—whether it would acquire only a portion or the entire 65-percent stake in Esso, now owned by highly diversified conglomerate San Miguel Corp.
San Miguel also owns 68 percent of Petron.
Last year, it was reported that San Miguel was planning to invest as much as $1.2 billion in Esso Malaysia, a move that would expand the conglomerate’s footprint in the regional oil industry.
Recto earlier said that the supply synergy would be evident upon the purchase by San Miguel of crude for both the Philippine and Malaysian refineries.
“When we’re buying crude to feed two refineries, we are going to be a bigger purchaser of crude, and obviously that will mean stronger purchasing power,” Recto had explained. However, it was not clear if this could help lower the prices of fuel in the Philippine market.
“That synergy can be enjoyed later on. But for now, we are looking at upgrading the Malaysian refinery and expanding its service station network—a duplicate of what San Miguel did in Petron,” Recto had said.
“We see the potential in Malaysia and we want to develop that potential the way we saw the potential in Petron. Three years ago, we took over Petron and we’ve seen how successful we have been in turning the company around and we want to do the same in Malaysia,” he said.
About $1 billion will be used to upgrade the Malaysian refinery while the remaining $200 million will be used to increase the number of retail gas stations from the current 550.
According to Recto, San Miguel is looking at a combination of several financing alternatives, including the use of its internally generated funds, borrowings and equity infusion to finance the expansion.
Exxon, through subsidiary Esso Malaysia Berhad, has a refinery in Port Dickson that processes an average of 45,000 barrels of crude oil per day. It also manages a major portion of ExxonMobil’s network of 560 Esso and Mobil service stations in Malaysia.