The country’s largest oil refiner Petron Corp. will not implement changes in its business strategy and will continue to focus on its growth initiatives even with the entry of a new minority partner, the company’s top official said.
Petron chairman Nicasio Alcantara said the entry of London-based investment manager Ashmore Group which bought the entire stake of Aramco Overseas Co. in the oil firm will boost further the company’s operations.
Petron’s parent firm Philippine National Oil Co. (PNOC) approved last Monday the transfer of the 40 percent share held by Saudi Aramco to Ashmore, a global asset management company listed on the London Stock Exchange with assets worth around $36.5 billion.
“Petron is a strong stand-alone company with solid fundamentals. We have undisputed industry leadership in the Philippines with the largest distribution and marketing network and world-class products and services. That will not change with the new share ownership structure,” Alcantara said.
“With PNOC’s decision, we will continue to move forward with initiatives that will enable Petron to achieve even higher growth,” he added.
Petron recently commissioned the country’s first petrochemical feedstock units a petro fluidized catalytic cracker (PetroFCC) and a propylene recovery unit (PRU) - as part of its long-term diversification strategy.
The PetroFCC and the PRU would enable the Petron refinery to convert black products into high-value fuels such as diesel and gasoline, as well as produce the petrochemical feedstock propylene. A benzene-toluene-xylene (BTX) unit, currently under construction, will produce additional petrochemical feedstock.
PNOC said it chose not to exercise its right to make a counter offer for the Saudi Aramco shares, citing two main considerations.
One is government’s long-standing policy of privatization of state-owned commercial assets and the other is the cost to the government if it makes such a purchase, particularly at a time when it has more pressing priorities such as food security and essential infrastructure projects.
PNOC’s decision effectively allows Saudi Aramco and Ashmore to proceed with the transaction. Ashmore offered AOC $550 million for the 40-percent stake in Petron in mid-March.
The approval of the sale will trigger a mandatory tender offer by Ashmore for some of the shares held by the public as stipulated by the Securities Regulation Code.
“While our partnership with Saudi Aramco is changing, it is not ending. We will retain our strong commercial ties with Aramco since our crude oil supply arrangement remains in place,” the Petron official said.
Alcantara reiterated that Ashmore’s intention to buy Saudi Aramco’s shares is a strong vote of confidence in the company’s operations and growth prospects, and the Philippines as an investment destination.
“We look forward to working with Ashmore representatives so we can immediately look at synergies that can enhance Petron’s business especially in the petrochemical sector. In this regard, we see unique opportunities in Ashmore’s wide network of global business relationships,” he said.
Ashmore is a leading investor in emerging markets, focusing exclusively on developing economies. It has been a long-time investor in the Philippines, with holdings in power generation, telecommunications and utilities.
Petron is the largest oil refining and marketing company in the Philippines . Its 180,000 barrel-per-day oil refinery produces a full range of petroleum products to supply nearly 40 percent of the country’s total fuel requirements.
Through more than 1,250 service stations nationwide — the largest service station network in the country — Petron retails gasoline, diesel and kerosene to motorists.