Monday, March 17, 2008 Shell refinery expansion still hangs
OIL giant Royal Dutch Shell remains undecided on whether to push through with the plan to expand its refinery in the country and pouring in more investments.
"There are no definite developments yet. We are still on with our study and we have been constantly in touch with government as to how we should move forward with this," said Pilipinas Shell vice president Roberto Kanapi.
The Department of Energy (DOE) is expecting that Pilipinas Shell would finally complete its study on the first quarter of this year, which will determine if the company should keep its refinery business in the country.
Asked about the possible reason for the delay in the completion of their study, Kanapi admitted that the recent Supreme Court (SC) ruling ordering oil companies at the Pandacan oil depot to relocate their facilities is one of the so many factors.
He added that Pilipinas Shell and their principals in Europe are assessing these "troubling developments", and they see these to have bearing on their final decision on their refinery facility in Tabangao, Batangas.
Shell earlier announced that it is planning to expand its refinery, but because of the so many issues that happened in the country, the company is now determining the viability of putting in additional investment in the Philippines.
The Philippine National Oil Company (PNOC) recently received a notice from Aramco Overseas Corp. (AOC) that it will sell all its shares amounting to a 40 percent stake in Petron Corporation.
The Ashmore Group offered US$550 million for the Petron shares and has assigned SEA Refinery Holdings, an Ashmore Group owned-company, as the purchaser. AOC has accepted this offer.
Petron, the biggest oil refinery in the country, was 100 percent owned before by the National Government until it sold its 40 percent stake to Saudi Aramco in 1994.
The intent of getting Saudi Aramco, as strategic partner to Petron Corporation when it was privatized in the 1990s, was primarily anchored on ensuring crude supply for the oil industry's dominant player.
Pilipinas Shell conducted a review of its refinery operations in the Philippines to determine whether to shut down or expand its 110,000 barrels-per-day (bpd) refinery.
The result of the study will also determine if the company would push through with its planned initial public offering (IPO) this year which was announced last year by Ed Chua, country manager of Pilipinas Shell.
Chua admitted that based on the initial report of the study, the upgrade of their refinery would cost them over than the US$1.5 billion budget they have projected.
"As I mentioned earlier, we have already finished the initial study. However the problem was instead of the US$1.5 billion estimate, it came close to US$3 billion because of the overheated market. What we did is that we looked into a more modest upgrade option first, and then possibly look at expanding the facilities afterwards. Modest could be less than a billion-dollar, but we still have to finish the study," he said. (MSN/Sunnex)
