Oil refiner Petron Corp. said it is open to an audit of its books by lawmakers so they can determine for themselves if the company is unduly profiting from the steep drop in crude and finished petroleum product prices.
This pronouncement comes amidst criticisms the price rollbacks implemented by the major oil companies over the past few months have been “too slow and too little.”
“If lawmakers actually look into our financial position, they would find that we are in a very difficult situation,” Petron’s public affairs manager Virginia A. Ruivivar said.
In the first nine months of 2008, Petron reported a 32 percent drop in its net income year-on-year. It said margins contracted as domestic prices of refined products fell much faster than crude costs.
With the continuing steep drop in crude prices, the company expects to post a net loss in the fourth quarter.
Including product exports, Petron’s return on sales as of the third quarter is equivalent to only about 1.3 percent. This means the company only earns one centavo for every peso sale.
“We have always supported initiatives to ensure transparency in oil pricing. As a publicly-listed company, our financial statements can be scrutinized by anyone,” Ruivivar added.
“In the first half of the year when international prices were rising, we fully cooperated with the Department of Energy (DOE) when it conducted an audit to check if local prices were reasonable.”
In May 2008, the DOE directed auditing firm SGV and the University of Asia and the Pacific to audit the books of oil firms.
If oil companies had been overpricing, it should have shown up in extraordinarily high profit rates.
But the study revealed that Petron’s return on equity from 2005 to 2007 – when oil prices were rising - were much lower than interest rates on Treasury bills and bonds.
The study also found out that local pump prices did not go up as fast as the price of crude and finished products abroad during the period.
Petron is the country’s largest oil refining firm. 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.
With nearly 1,300 service stations nationwide, Petron has the largest service station network in the country today.