Gov’t weighs options on sale of Petron stake
March 24th, 2008 by Site AdministratorTHE GOVERNENT is considering seeking the services of an independent financial adviser to help it decide what the best move should be with regard to the offer of Ashmore Group’s SEA Refinery Holdings to buy Aramco Overseas Co.’s 40-percent stake in Petron Corp.
“We’ll have to undertake share valuation. That takes a lot of study. We need to arrive at a reasonable price before we decide whether or not we’ll exercise our preemptive right,” Energy Secretary Angelo Reyes said in a briefing.
“We’ll engage the services of an independent financial adviser. The investment decision has to be made first, then the financing decision will come,” he added.
However, he said the government’s thrust for Philippine National Oil Co., which owns 40 percent of Petron and has a right of first refusal in the proposed transaction between Aramco and Ashmore, was still privatization.
The government still has 60 days, starting March 13, to decide whether or not to exercise its right of first refusal.
Meanwhile, Petron chair Nicasio Alcantara said the oil firm has already had some informal discussions with an Ashmore representative with regard to the proposed buy-in.
He said Petron’s focus on petrochemicals was one of the factors that drew Ashmore, a $36.5-billion global asset management firm, to the company.
“We are glad to note that our strategic transformation program, which is based on our diversification into petrochemicals, is one of the main reasons why Ashmore offered to buy Aramco’s shares,” he said in a statement. “They will definitely support our further expansion into the petrochemicals business.”
He said that Petron was now in the process of evaluating the second phase of its refinery master plan, which should entail an additional investment of $1.5 billion.
The amount would finance the establishment of a second Petro Fluidized Catalytic Cracker (PetroFCC) unit, which should come on stream by 2014, among other projects that would increase Petron’s conversion capacity and petrochemical feedstock production.
The project should start implementation by 2009, Alcantara said.
The PetroFCC will not only produce 140,000 metric tons of the petrochemical propylene, but also allow Petron to convert more black products–such as industrial fuel oil–into higher-value white products such as liquefied petroleum gas, gasoline, diesel and kerosene.
For the long term, Petron’s PetroFCC is also expected to boost operating efficiencies at its 180,000-barrels-a-day Bataan refinery.
The PetroFCC has a conversion capacity of 19,000 barrels a day.
It is a major component of the first phase of the oil firm’s $300-million refinery master plan, which also includes the establishment of a BTX unit that will produce aromatics such as benzene and toluene and expand the company’s mixed xylene production.
Abigail L. Ho