Shell keeps refinery, defers IPO decision

MANILA, Philippines - Pilipinas Shell Petroleum Corp. will likely keep its refinery operations but has no decision yet on pushing through with its initial public offering (IPO), its top official said.

In an interview with reporters, Pilipinas Shell country chairman Ed Chua said the decision on the IPO would depend on the company’s final plans for the refinery.

“At this point in time I would like to say that it looks favorable that we will keep the refinery but for us to say categorically that we will do the IPO is difficult until we secure the refinery investment decision,” he said.

He said based on the Oil Deregulation Law of 1998, the IPO obligation is a function of an oil company with a refinery.

“People were saying before that Shell is just delaying but (they) need to understand that in 1997, the Asian crisis hit us. The economic landscape was not good for us at least for six years until 2003. That’s why one refinery shut down in October of 2003 so this is not something that we’re investing or using as an excuse,” Chua said.

He said in the years that followed, there were so many issues surrounding the oil industry even as the economy improved after the 1997 crisis.

Shell is currently weighing its options for its 110,000-barrel per day refinery in Batangas. It is studying whether it would upgrade the refinery to meet new Euro four fuel standards that would take effect in 2016 or just shut it down as Chevron earlier did.

Euro 4 is a globally accepted European emission standard for vehicles.

The Euro 4 standards require fuel to have significantly low amounts of sulfur and benzene.

Last month, the Department of Energy reminded Shell to proceed with its IPO, saying that market conditions have improved.

In a May 14 letter to Shell, Zenaida Monsada, director of the DOE’s Oil Industry Management Bureau, said Shell’s IPO is long overdue.

“While the opinion of the Department of Justice is that the three-year period under the Oil Deregulation Law is not mandatory but prescriptive and will not prohibit an IPO to be conducted after the lapse of the said period, nearly 15-year period since the passage of the law is long overdue for PSPC to implement the public offering of 10 percent of its common stocks,” Monsada said.

The Oil Deregulation Law requires all oil refiners to sell at least 10 percent of their common stocks to the public.