Page 7 - AsianOil Week 28

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reports of non-performance from several other unnamed oil and gas developers.
PBJV’s three-year suspension adds to Bar- akah’s woes. The service provider became a Practice Note 17 (PN17) company in May a er it defaulted on an Export-Import Bank of Malaysia (Exim Bank) loan taken out to nance a pipe-laying barge.
Barakah’s wholly owned Kota Laksa- mana 101 received a notice of demand on
May 17 for the outstanding payment of $2.65 million.
Barakah has proposed re-organising its nances via a deal with Singapore’s Lecca Group that will see the latter become Barakah’s single largest share- holder with a 44.87% equity interest. Barakah has said it will use MYR88mn ($21.4mn) raised from the proposed disposal of a pipe-laying barge to Lecca to partially repay the Exim Bank loan. Bar- akah said the deal would li it out of PN17 status.™
Petron ditches Philippine refinery expansion
FINANCE & INVESTMENT
The business
of Petron is
becoming bad
due to inventory
loss and the
growing presence
of white stations
Ramon S Ang
President and CEO Petron
PHILIPPINE re ner and oil marketer Petron has shelved plans for a $3.5bn expansion of the 180,000 barrel per day (bpd) Bataan re nery, owing to a steep decline in pro ts that the com- pany has blamed on fuel smuggling.
Petron’s rst-quarter pro t shrank 77% year on year to PHP1.3bn ($25.5mn) and presi- dent and CEO Ramon S Ang has warned that full-year income for 2019 might amount to just PHP8bn ($156.9mn).
Ang said the company was struggling to com- pete with so called “white stations” – independent retail outlets operators typically paint white. He said white stations supplied about 37% of fuel demand at prices that made little commercial sense.
“ e business of Petron is becoming bad due to inventory loss and the growing presence of white stations resulting in cheaper fuel prices for noreason,”Angsaidatapressconferenceonthe sidelines of Top Frontier Investment Holdings’ annual general meeting (AGM). Top Frontier controls San Miguel, which in turn owns Petron.
As such, the company will shi its focus from the expansion, which would have li ed capacity to 270,000-300,000 bpd by 2022, to expanding its petrochemical product sales.
Ang said the government’s decision to restrict mandatory participation in a fuel-marking pro- gramme to major oil marketers, coupled with an increase in fuel excise taxes to 6%, had only made matters worse.
“How can [white stations] sell their gas- oline PHP10 [$0.196 per litre] cheaper than us? Where are they sourcing their fuel? If they are importing, their prices should not be this low. Our prices should be relatively the same,” Ang said.
“We are lucky if we can have an PHP8bn [$156.9mn] or PHP9bn [$176.5mn] income this year. And most of that will be carried by our Malaysian operations,” he added. Petron’s Malay- sian operations, which include the Port Dickson Re nery, seven storage facilities and roughly 580 fuel stations, generated PHP1.2bn ($23.5mn) in pro t in the rst quarter.
Despite Ang’s criticism of the fuel-marking programme, the government remains convinced that it will help curb oil smuggling.
Finance Secretary Carlos Dominguez said on July 10 that oil smuggling had increased fol- lowing the fuel excise tax hike but that the fuel marking would “help address this issue”.™
Week 28 17•July•2019 w w w . N E W S B A S E . c o m P7