Petron mulls refinery in Mindanao

Petron Corp. is undertaking a feasibility study on the construction of an oil refinery plant in Mindanao, a top company official said.

Being the largest oil refiner in the Philippines, Petron president Khalid Al-Faddagh said the company was asked by President Arroyo to conduct the study during her recent visit in Saudi Arabia.

"What we were tasked when the President came to visit Saudi Aramco is for us to conduct a feasibility study in building the refinery in Mindanao," Al-Faddagh said.

According to the Petron executive, one of the main factors they are looking at is where to locate the refinery facility and if it will "make economic sense."

Al-Faddagh said Petron, which is 40 percent owned by Saudi Aramco, had already undertaken a number of feasibility studies on this purpose. The government, through the Philippine National Oil Co. (PNOC), owned another 40 percent and the remaining 20 percent is owned by the various small stakeholders listed in the stock exchange.

But he said they would need to update these studies to keep up with the current oil industry situation. He said it would take them at least three months to complete the new study.

"Now what we’re doing is, we would be revisiting that study on building another refinery again. Now whether that would be in Mindanao or Bataan - that’s what the feasibility study would determine," he said.

Petron’s current refinery in Bataan has a capacity of 180,000 barrels of oil per day (BOPD). Rival Pilipinas Shell’s refinery in Batangas operates at 110,000 BOPD. 

Based on Department of Energy (DOE) data, the Philippine downstream oil industry needs a new refinery with a capacity of 100,000 BOPD to ensure security of supply amid a global oil crisis.

The Philippines has an oil requirement of 330,000 BOPD. Combined, Petron and Shell should provide for 280,000 BOPD but both refineries are operating below capacity.

If a refinery is not feasible in Mindanao, the Petron official said government wants the company to look for an "alternative development that would benefit Mindanao."

Al-Faddagh said such alternative project includes helping agribusiness in Mindanao by growing sugarcane and produce ethanol domestically.

"Our position is to one-hundred percent support the drive for biofuels – ethanol specifically, but we need to assure also that we have a very strong supply base in the Philippines – and that’s what we have been saying all alone. We want to see a very strong ethanol industry that would make the most economic sense and we believe having such a strong industry in Mindanao," the Petron official said.