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Thursday, September 21, 2006
European traders open to funding oil firm expansion
INVESTORS from Europe have shown interest in infusing capital in the planned expansion of the Royal Dutch Shell Group in the Philippines.
Energy Secretary Raphael P.M. Lotilla, who arrived recently from a nine-day European investment undertaking, said in a press conference Wednesday that the willingness to fund the planned Shell refinery capacity expansion is a clear indication that chief executives and businessmen in Europe still consider the Philippines a good investment haven.
The stable investment environment in the downstream oil industry, according to Lotilla, was the major reason why Shell and European investors would take the risk of infusing additional capital ranging from US$1 billion to US$1.5 billion.
“For the last 90 years Shell had been in the Philippines and they have seen the stable investment environment,” the energy chief said.
Lotilla said the expansion plan of Shell, if it pushed through, would assure the country of a “more secure supply” of refined fuel since “refinery investments are huge, and the potential cost, for instance, of a refinery expansion of such will be at a minimum of US$1 billion to US$1.5 billion.”
He also said one area that the government needs to work on is the concern on incentives and tariffs.
“They have again stressed issues on incentives, as you know that in the Senate there have been talks about the Omnibus Incentives Bill, in other words, what they will want to see is that those incentives that are made available at the time they came in will still be available throughout the life of the investment,” he added.
Lotilla is optimistic that Shell will decide to go ahead with the expansion plan with the ongoing study to be completed by the end of the year or in early 2007.
Shell reportedly plans to shut down its refinery in Batangas that produces 150,000 barrels of oil daily due to the country’s volatile economic condition and the lack of tariff differentials for both refined and finished petroleum products.
In 2005, Shell doubled its net income from P2.98 billion net income it posted in 2004 to P5.7 billion as a result of positive refining margins. (MSN/Sunnex)
(September 21, 2006 issue)
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