Shell IPO possible in 2016, DOE says

Shell may finally be able to offer shares to the public next year as required by law, after the completion of its refinery upgrade in Batangas, Department of Energy (DOE) officials said on the sidelines of the LPG Philippines Forum 2015.

DOE officer-in-charge Zenaida Y. Monsada told reporters that Shell had indicated it was getting ready for an initial public offering (IPO), but no specific date or timeline was given.

“An IPO is not just about what the company wants. They must comply with the requirements of the Philippine Stock Exchange (PSE). The requirements protect those who will buy (stocks),” Monsada said.

She said Shell must have good earning prospects and this will be partly dependent on its refinery upgrade, which could be completed by the end of the year or early next year.

This is expected to help Shell cope with increased competition and low oil prices through increased refining efficiencies to realize more sales.

Melita V. Obillo, director of the DOE’s Oil Industry Management Bureau, said Shell had sent an update on its IPO plans around July as part of a quarterly update to the DOE.

Asked when the company may undertake an IPO, she said, “Probably after their refinery upgrade. The market is down today. The refinery upgrade may be early next year, first quarter.”

An oil firm with a locally based refinery must offer 10 percent of its shares to the public under the Oil Industry Deregulation Act of 1998.

However, until after the 2007 Asian financial crisis, Shell had cited the volatile stock market in deferring IPO plans.

The Department of Environment and Natural Resources’ 2010 directive for higher vehicle emission standards by Jan. 1, 2016, sparked the race for oil firms to meet new fuel standards and Shell said it was first studying Euro IV fuel compliance before firming up a plan for an IPO.

The decline of oil prices since last year has raised fears that Shell may not offer shares to the public. If this happens, the company could go the way of Chevron, which chose to shut down its refinery and is simply importing all of its fuel products in the country. But the relative stability of oil prices in the first half of the year has helped improve Shell’s profitability, according to country chair Edgardo O. Chua.

Another major oil firm, Petron, is already listed on the PSE.

Earlier this year, former Energy Secretary Carlos Jericho Petilla said he had met with Chua and was assured that the oil firm had long-term plans for the Philippines, including an IPO.

Among such plans is to finish the $150-million expansion of Shell’s 110,000-barrel-a-day refinery in Tabangao, Batangas by end-2015.