MANILA, Philippines - Petron Corp., the country’s largest oil refiner, incurred a net loss of P3.9 billion last year, a complete turnaround from the P6.4-billion income posted in 2007.
Petron blamed the extreme volatility in crude prices for the huge losses, saying that it was not spared from experiencing a tremendous drop in margins.
In a statement, Petron noted that after climbing by over 50 percent to reach an all-time high of $141 per barrel in July, the price of oil fell sharply downwards as the impact of the global financial crisis spread through the world’s largest economies.
By December 2008, the price of Dubai crude oil averaged only $40 per barrel.
The company also noted that domestic prices of refined products fell in line with global crude prices, the result of which had Petron incurring significant inventory losses.
“It was a very abnormal period for refiners, and many in the region reported reduced if not negative margins,” Petron president Eric O. Recto said.
“With oil prices now showing less volatility, we expect a return to profitability. In fact, our January and February performance bears this out,” Recto added.
Last year, Saudi Aramco’s 40- percent stake in Petron was sold to the Ashmore Group, a financial services company based in the UK.
Earlier this year, the government’s share through Philippine National Oil Co. (PNOC) in Petron was sold to Ashmore, which was later purchased by food and drinks giant San Miguel Corp.
Despite the downturn in its financial standing, Petron maintained its hold on the number one position in the industry in 2008, with a slightly improved 39.3-percent share of the market.
At the end of 2008, Petron had a total service station network of 1,288 nationwide – the largest in the country.
As part of its strategy to capture new revenue streams and improve margins, Petron commissioned its petro fluidized catalytic cracking (PetroFCC) unit and a propylene recovery unit (PRU) in April 2008. These facilities enabled Petron to produce higher-value products from its refinery.
The company also inaugurated a fuel additives blending plant in Subic Bay Freeport Zone last November in partnership with Innospec, a leading global fuel additives supplier, and will serve Innospec’s customers in the region.
“Petron’s business remains strong. We have undisputed industry leadership, an extensive and efficient distribution network, a solid customer base, and an array of world-class products and services. We are confident that our partnership with San Miguel will help us on this road to recovery,” Recto said.