Philippines: San Miguel to build P1-T new petrochem plant

Philippines: San Miguel to build P1-T new petrochem plant

SAN Miguel Corp. (SMC) on Tuesday bared plans to build a new petrochemical
refinery in the Philippines worth P1 trillion, with construction to possibly
start in the next six months, SMC President and Chief Operating Officer
(COO) Ramon Ang said.

"[We are looking to put up] a totally new oil refinery which will produce up
to 250,000 barrels a day for the Philippines," Ang told reporters on the
sidelines of the company's annual stockholders' meeting held in Pasig City
on Tuesday.

"We hope to be able to groundbreak [the project]in the next six months," Ang
said.

"Mas stable kasi ang petrochemical products, ang pricing nila, at saka .
cracking margin is more stable and more profitable and, of course, malaki
rito yung domestic consumption at napakalaki rin ng export potential," he
added.

[This is because petrochemical products are more stable, their pricing, and.
the cracking margin is more stable and more profitable and, of course,
domestic consumption is high and the export

potential is also great.] A crack spread or margin, according to
Investopedia, measures the difference between the purchase price of crude
oil and the selling price of finished products that a refinery produces from
the crude oil. Crack spreads are an indicator of the short-term profit
margin of oil refineries.

Construction of the project will mean a new company will be established that
will hold the refinery's operations and it will be put up "somewhere in the
south" of Metro Manila but Ang declined to disclose further details.

"The only reason why this project is being delayed is because of the
purchase of the land," he added.

SMC will be partnering with two undisclosed foreign firms to put up the
project, which will need around 1,000 hectares of land for its construction.

The refinery will be "integrated from crude oil to white products to
petrochemical," according to Ang, and that it will also be flexible in terms
of production.

The highest valued petroleum products are called white products in the
industry.

"Kung maganda ngayon ang margin ng white products, maganda 'yung demand ng
gasolina, pwede nating i-switch 'yun . 'pag mas Malaki ang demand ng
petrochemical, pwedeng magswitch to produce more petrochemicals," he said.

[If the margin on white products is good now, the demand for gasoline is
good, we can switch it. if the demand for petrochemical is bigger, we can
switch to produce more petrochemicals.]

The project is targeted to be fully operational in the next three-and-a-half
years.

Petron refinery expansion

SMC said it is also eyeing to expand Petron Corp.'s existing refinery from a
capacity of 180,000 barrels
per day to about 270,000 per day.

"Yung existing oil refinery ng Petron today, ie-expand pa natin yun [The
existing oil refinery of Petron today, we will still expand it from] 180,000
barrels per day to about 270,000 barrels a day but this is mostly going to
petrochemical na [already]," Ang said at the same briefing.

"And then we are also looking for opportunities, if possible, to expand our
refinery in Malaysia,"
he added.

SMC said the Petron refinery expansion will cost $800 million (P39.6
billion).

And did not disclose where the funds for the expansion will be sourced.

Petron Corp. is the fuel and oil business of SMC. Aside from Petron, SMC
also holds other businesses including beverages, food and packaging (San
Miguel Brewery Inc., Ginebra San Miguel Inc., San Miguel Pure Foods Company
Inc.), energy and power (SMC Global Power), infrastructure (Eagle Cement
Corp.), and banking (Bank of Commerce).

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Link to Original Article:
http://www.manilatimes.net/san-miguel-build-p1-t-new-petrochem-plant/332684/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com