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Deregulation of Energy Sector and New Incentives Offer for Foreign Investment – Philippines Undergo Economic Transformation
- By Oil and Gas Author
- Published 08/28/2006
- Petroleum Pipeline , Offshore Drilling , Oil and Natural Gas Prices , Oil Gas Companies , Subsea Oil Production , Liquefied Natural Gas LNG , Exploration and Discoveries , Natural Gas Petroleum , Crude Oil Petroleum
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View all articles by Oil and Gas AuthorThe Philippines downstream Oil industry is dominated by three companies: Petron; Pilipinas Shell (Royal Dutch/Shells Philippine subsidiary); and Caltex (Philippines). Petron is the Philippines largest oil refining and marketing company. The company was a wholly owned subsidiary of the state-owned PNOC until 1994. Currently, the Philippine government and Saudi Aramco each own 40% of the company, with the remaining 20% held by portfolio and institutional investors, making it the only publicly listed firm amongst the three oil majors. Petrons Limay, Bataan refinery has a crude processing capacity of 180,000 bbl/d. Petrons market share is around 40%. Caltex (Philippines), a subsidiary of Caltex, the ChevronTexaco subsidiary based in Singapore, operates a 86,500-bbl/d refinery, two import terminals, and more than 1,000 retail Gasoline stations throughout the Philippines. Caltex announced in 2003, however, that it would be shutting down its refinery in late 2004 and replacing it with an oil import terminal. Pilipinas Shell has a 153,000-bbl/d refinery, one of the largest foreign investments in the Philippines, and operates some 1,000 Shell gasoline stations. Overall, Philippine refineries run at around 80% of capacity, and there is not a great deal of demand for new refinery construction.
Oil market deregulation, beginning in 1998, continues to have a significant effect on the industry. Since deregulation started, 62 new firms, including TotalFinaElf, Flying V, SeaOil (Philippines), Eastern Petroleum, Trans-Asia Energy and Unioil Petroleum Philippines Inc., have invested heavily and built several hundred new retail stations. While the three original companies still dominate the market, these firms have captured a steadily growing share of the petroleum products market, rising from around 10% in 2000 to more than 20% in 2005. These new entrants have organized the "New Players Petroleum Association of the Philippines" (NPPAP), and have been credited with putting significant downward pressure on retail fuel prices in the country. Currently, the Philippines enjoys the lowest fuel prices of any non oil-exporting Asian country. However, price swings associated with deregulation and higher world oil prices have angered many Filipinos. Despite recurring public calls for price controls, the government has remained committed to deregulation. In December 1999, the Supreme Court upheld the constitutionality of the countrys deregulation program.
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Deregulation of Energy Sector and New Incentives Offer for Foreign Investment – Philippines Undergo Economic Transformation
