Gokongweis want Petron

Petron is set to commission its fuel additives blending plant in Subic

The Gokongwei group and Morgan Stanley have expressed interest in buying the 40 percent stake owned by the government and another 40 percent by Saudi Aramco, respectively, in Petron Corp., Energy Secretary Angelo Reyes said yesterday.

Aramco has received an offer of $550 million from London-based investment fund Ashmore Group for the stake, but the Philippine National Oil Co. (PNOC), which also owns a 40 percent stake in the country’s largest refiner, has the right of first refusal.

Officials said PNOC can also assign its option to a third party. Its board meets today to decide on a course of action.

PNOC has to make a decision by May 12, based on the 1994 agreement with Aramco giving the state power firm 60 days to decide whether to exercise the right of first refusal or assign its option to a third party.

“There are some that expressed interest – the Gokongwei group and some representatives from Morgan Stanley,” Reyes told reporters.

He said the offers had been referred to PNOC’s financial advisers, ING Bank and state-owned Development Bank of the Philippines (DBP).

“People have come forward to say that they are interested and we have actually referred them to the DBP. The Gokongwei group has expressed interest. Some representatives from Morgan Stanley have expressed interest. That’s as far as I know,” Reyes said.

The Gokongweis control conglomerate JG Summit Holdings Inc., which owns the country’s second-biggest airline, Cebu Pacific.

It also has interests in property development, food, telecommunications and banking, and has a share in JG Summit Petrochemical Corp., a joint venture with Marubeni Corp., which the company says is the first integrated polyethylene and polypropylene plant in the Philippines.

But JG Summit Petroleum Corp. president and chief operating officer Lance Gokongwei said in a letter to Reyes dated April 21, 2008 that his firm is interested in the government’s stake.

He said JG Summit Petroleum is “making offer to purchase the 40 percent shareholdings of PNOC in Petron consisting of 3.75 billion shares at P6.55 per share.”

Petron’s own petrochemical business is expected to take off this year.

It hopes to increase gasoline production and extraction of propylene, a petrochemical used for food packaging materials and impact-resistant plastics, with the opening of a new facility at its 180,000-barrel per day refinery in Bataan.

At current prices, the Ashmore deal values Petron at about P6.22 per share, against the P5.60 it was trading at yesterday.

Sources from the Petron board told The STAR that Ashmore was having second thoughts about buying the Aramco shares. But top executives of Petron and PNOC denied the rumor.

“That’s not true. They are not backing out,” Petron Corp. chairman Nicasio Alcantara said in a telephone interview.

PNOC president Antonio Cailao also denied talk of Ashmore backing out.

“There’s no such thing. As far as we are concerned, they (Ashmore) are still interested to buy the shares of Aramco in Petron,” Cailao said.

In 1994, the government sold 40 percent of its PNOC stake in Petron to strategic investor Saudi Aramco while 20 percent was offered to the public. PNOC maintains the remaining 40 percent.

“It was stipulated that should government or Aramco wish to sell to the public they must follow certain processes – which include the offering to the other party the right of first refusal and they must be selling to an eligible third party,” Reyes said.

Finance Secretary Margarito Teves earlier said they would be studying the possibility of selling the remaining 40 percent stake of PNOC in Petron by the middle of this year.

Petron posted a net income of P658 million in the first three months of this year. But the company’s net income for the first quarter 2008 was 31 percent lower than the P953 million reported for the same period last year. The company attributed the drop in net income to lower refining margins.

Total sales volumes increased by 10 percent to 12.92 million barrels in the first quarter of 2008 compared to 11.75 million barrels last year. Meanwhile, sales revenues increased by 37.5 percent to P59.60 billion this year from P43.35 billion in 2007.

“In spite of the drop in our income, we are confident that we will be able to meet our financial and operating targets for the year as we begin to see the positive impact of our new petrochemical feedstock units,” Public Affairs Manager Virginia Ruivivar said.

On April 9, Petron inaugurated the country’s first petrochemical feedstock units at its Bataan Refinery, namely the Petro Fluidized Catalytic Cracking Unit (PetroFCC) and the Propylene Recovery Unit (PRU).

The company also said it is set to commission its fuel additives blending plant in Subic.

Petron will be the exclusive toll blender for Innospec – a leading fuel additives supplier – for its market in the Asia-Pacific region. Under the partnership, Petron will be able to tap Innospec’s regional customer network for its own lubricants and specialty chemicals. Petron will also provide technical support services to Innospec in the region, as well as directly participate in marketing petroleum additives to select markets in Southeast Asia, Northeast Asia, China, and India. Innospec’s additives are used in Petron’s world-class fuels, namely Blaze, XCS Plus, Xtra Unleaded and DieselMax. By Donnabelle Gatdula - PhilStar

Make world-class products, firms told

SUBIC — John Gokongwei Jr., chair emeritus of JG Summit Holdings Inc, has challenged Filipino companies to create world-class products, as he cited the significant role of entrepreneurs in country’s development and stability.

Gokongwei called on Filipino businessmen to "excel" in the international business arena and to create more jobs for Filipinos as their contribution to country’s economic takeoff.

"I have always wondered, like many of us, why we Filipinos have not lived up to our potential...But to be truly great nation, we must also excel as entrepreneurs before the world. We must create Filipino brands for the global market place," the Chinese-Filipino business tycoon said addressing the 3, 200 delegates, including advertising, marketing and media practitioners of the 20th Philippine Advertising Congress.

He keynoted the official opening ceremony of the congress the other night (Nov. 21) with a theme "The New Order." The gathering is aimed at readying the advertising and marketing professionals to "adapt and survive" in the ever-changing trends and practices in their industry.

"If we want to be philosophical, we can say that, with a world-class brand, we create pride for our nation. If we want to be practical, we can say that, with brands that succeed in the world, we create more jobs for our people, right here," he said as he lamented that Filipino companies do not have a truly global brand.

"Our country is wellknown for its labor, as we continue to export people around the world...But by and large, the Philippines has no big industrial base and Filipinos do not create world-class products," the 81-year old Gokongwei said. "We should not be afraid to try-even if we are laughed at," the business tycoon stressed.

He said the Filipino companies should not only invade the local market of 86 million people, but also target the four-billion Asian market.

"Why serve 86 million when you can sell to four billion Asians? And that’s just to start you off. Because there is still the world beyond Asia. When you go back to your offices, think of ways to sell and market your products and services to the world. Create world-class brands," Gokongwei said, noting that most of their food and beverage products, including Jack and Jill potato chips and C2 have reached foreign markets.

During his speech, he announced that JG Summit Holdings Inc. is set to launch C2 in other Southeast Asian markets.

He said C2 is selling over three million a month in Vietnam, six months after it was launched in the Asian country.

C2 was launched in 2004 and in the first month, a total of 100,000 bottles were sold.

Last year, around 30 million bottles per month were disposed to Filipino drinkers.

Yesterday, prominent book author and celebrity speaker gave the first workshop on "Imagination and Creativity in the Contemporary World."

Other Ad Congress’ speakers include Duncan Morris of Cartoon Network, James Chadwick of Insights and Strategy, Mind Share-Asia Pacific, Chris Nelson of Philip Morris, Michelle Green of Leo Burnett, Ben Colayco of Level Up International and Tay Guan Hin of JWTSingapore.

"The entire Philippine advertising arena may finally be more empowered to leap over hurdles and continue breaking barriers as it strives to make a mark in the international sphere," the organizers of the congress said.(Charissa M. Luci)