Petron vows to resume Bataan refinery operations by July

Petron Corp. is committed to restart the operations of its refinery in Bataan by July despite the continuing low fuel demand due to the COVID-19 pandemic.

Petron president and CEO Ramon Ang said the Authority of the Freeport Area of Bataan (AFAB) registration is not enough to make the oil business profitable again since the industry is still facing low fuel demand due to restrictions to mitigate the spread of COVID-19.

“It can help, but it cannot overcome all the problems, which is low consumption of fuel, low demand. There’s still over capacity of refining in the world, therefore refining margins are still weak,” he said in a virtual roundtable last week.

“The industry looks sad. Power demand is low, fuel demand is low. This year will not really improve compared to last year,” Ang said.

The worldwide lockdowns due to COVID-19 resulted in an unprecedented demand destruction, which led to a sustained drop in oil prices, reaching record low levels in 26 years.

Petron incurred a net loss of P11.4 billion last year, coming from a net income of P2.3 billion in 2019.

Last December, AFAB approved Petron’s application to make its Bataan refinery one of the registered enterprises of the freeport zone.

FAB-registered enterprises are entitled to avail of fiscal incentives under the Special Economic Zone Act of 1995 or Omnibus Investment Code of 1987. This will benefit the company in the form of better timing on the payment of VAT, which shall be upon withdrawal of the products from the refinery.

The oil firm said reclassifying the refinery under an economic zone could avert its permanent shutdown, which was supported by the Department of Energy (DOE) and Petron Refinery employees to save their jobs.