Petron goes head to head with small oil players

MANILA, Philippines - Petron Corp., the country's largest oil refiner, is spending nearly half a billion pesos to put up small retail stations within a year to prevent small players from eating up its market share. At the sideline of the company's annual stockholders meeting on Tuesday, Ramon Ang, Petron chairman and chief executive officer, said that to protect its market dominance, it will put up some 200 more “pre-fabricated models that can start with two-three product pumps but easily expandable as demand grows." Ang said this will enable them to compete with small oil companies. Petron president Eric Recto said they have started building these smaller gas stations early this year. “We have built around 14 to 15 stations already in the provinces mostly in the Visayas and Mindanao," he said. Petron’s market share stood at 39 percent as of end-2008 from 38.6 percent in 2007. It has about 1,300 service stations nationwide. The strategy, Recto said, is to put up relatively small retail stations in the provinces since Metro Manila is already saturated. The 200 outlets, which will be mostly dealer-owned, will be part of the 1,000 stations it plans to put up in the next three years. Since the take over of San Miguel Corp. of Petron’s management early this year, the group has been aggressively pursuing expansion programs. San Miguel has promised that these expansion initiatives and cost cutting and efficiency measures are geared toward benefiting the company's stockholders and its customers. Ang also said the company would not be “remiss" on giving stock dividend each year. During the meeting, Ang also confirmed the oil company’s plan to pour in as much as $1 billion for additional facilities such as Petrochemical Fluidized Catalytic Cracker (PetroFCC) II project which will be completed in four to five years. Recto, meanwhile, said the second phase of the FCC project is now being studied and construction may start in a year or two. Recto said they are looking into the possibility of putting up a 20-megawatt co-generation power plant with estimated project cost of $100 million to $150 million between 20 and 24 months. He added that they still trying to determine if they will be building a coal-fired or bunker-fired power facility for its self-generation project. Petron is also set to raise P10 billion to P25 billion through a combination of fixed rate corporate notes, bond issue and preferred bond issuance. Ang said they plan to issue P10 billion worth of bonds in two tranches. The first tranche may be offered in May or June and the second tranche either in June or July this year. Petron has tapped the Development Bank of the Philippines, ING Bank, BPI and HSBC to handle the issuance of the fixed rate corporate notes. The issuance of preferred shares, on the other hand, will be done after the bond issuance, depending on the market condition. GMANews.TV