Local oil players likely to miss targets

Lower revenues feared as supply glut persists in world mart 

MANILA, Philippines - Local petroleum players are likely to miss their full-year targets as they brace for the impact of continued oil price cuts since mid-2014 due to a supply glut in the world market.

“It’s going to make a dent on our guidance. If you want to hit revenues, revenues are volume and prices and prices are going down so the target for the revenues may be affected,” Raymond Zorrilla, vice-president for external affairs of Phoenix Petroleum, an independent oil company, said in an interview.

Zorrilla, however, declined to provide details on the 2014 net income and revenue target of Phoenix Petroleum.

Phoenix reported a consolidated net income of P507 million in the first three quarters of the year, seven percent lower than the P541 million a year ago.

“Net income is lower by seven percent compared to the P541 million reported in the third quarter of 2013. The decline in income was brought about mainly by the continuous downward trend of petroleum products’ prices in the global market,” Phoenix said in its third quarter report.

Fernando Martinez, president of Eastern Petroleum, another independent oil firm said, he has been keeping inventory low to cushion the impact of low prices.”I’m okay as I keep low inventory level,” Martinez said.

For the bigger oil firms, the impact is more noticeable.

Petron Corp., the country’s biggest oil refiner, reported a consolidated net income of P3.2 billion in the first nine months of the year, down 26 percent from the previous year’s P4.4 billion.

“The drop was due to the sustained fall in crude prices in the third quarter resulting in weak margins as higher-priced inventory was sold at lower prices.  The benchmark Dubai crude fell from an average of $108 per barrel in June to an average of $97 per barrel in September. This resulted in nine price rollbacks during the period.  If the crude price was stable in the third quarter, operating income would have been higher by P1.9 billion,” Petron said in its third quarter report.

Oil prices have gone down at least 25 times since the start of the year for gasoline, equivalent to P18.30 while diesel prices have gone down 31 times, equivalent to P18.85.

The latest cut is this weekend’s hefty price cut of P1.75 per liter for gasoline and P1.55 per liter for diesel.

Based on the latest oil price monitoring report of the Department of Energy (DOE), gasoline prices now range from P39.60 to P45.70 per liter while diesel prices are now at a range P30.75 to P34.10 per liter.