SAM MIGUEL TO INVEST UP TO US$1 BIL TO REFURBISH PORT DICKSON REFINERY

  SAM MIGUEL TO INVEST UP TO US$1 BIL TO REFURBISH PORT DICKSON REFINERY
    By Prem Kumar Panjamorthy



    KUALA LUMPUR, Aug 29 (Bernama) -- Philippines conglomerate, San Miguel
Corporation (SMC), which acquired a 65 per cent stake in Exxon Mobil
Corporation’s interest in three businesses operating in the Malaysian downstream
petroleum sector, plans to invest up to US$1 billion to upgrade and install new
equipment in the 48-year-old Port Dickson refinery.

    Member of the Board of Directors of SMC Eric Recto said the corporation was
looking at bringing in new machinery to create more value-added products in the
Malaysian market.

    "We are looking at the same achievement we did when we acquired Petron
Corporation three years ago.

    "The Malaysian refinery is a useful asset, given that a fair level of
investment is poured in to replace the old machinery and equipment," he told
Malaysian journalists via voice-conference from Manila Sunday.

    SMC holds 68 per cent equity in Petron Corp.

    Recto, who is also Petron Corp president, said the plan would be executed
over a long-term process between three and five years.

    ExxonMobil and SMC signed a sales and purchase agreement for the latter to
sell its 65 per cent stake in public-listed petroleum trading company, Esso
Malaysia Bhd (EMB), and its wholly-owned, ExxonMobil Malaysia Sdn Bhd (EMMSB)
and ExxonMobil Borneo Sdn Bhd (EMBSB), to the Philippines' highly-diversified
entity for US$610 million or RM3.50 a share of EMB.

    SMC is a Philippines business conglomerate and the parent company of Petron
Corp, the largest oil refining and marketing company in the Philippines.

    Its 68 per cent-owned subsidiary, Petron Corp, is the largest integrated oil
refining and marketing company in the Philippines, with a crude distillation
capacity of 180,000 barrels per day and over 1,700 service stations across the
Philippines.

    Under the deal, other than the Port Dickson refinery, 10 fuel distribution
terminals (7 active); about 560 branded retail fuel sites (420 company-owned);
and ExxonMobil's Industrial and Wholesale and Aviation fuel businesses, will be
controlled by San Miguel.

    Recto said the upgrading would enable the Port Dickson refinery, which
currently produces 50,000 barrels per day, to maximise the plant's production
capacity to 88,000 barrels a day.

    The investment, he said, would be divided into two segments; the first 70
per cent would be derived from financial institutions, while the remaining 30
per cent would be from San Miguel.

    "In this case, ExxonMobil Malaysian operations can stand on its own as it
will fund 30 per cent of its operations in Malaysia.

    "Only if extra investment assistance is needed, SMC would step in. However,
we will be very very careful from where the money comes from," he said, citing
the recent concerns from locals about where the money will come from,
given that San Miguel was a beer company initially.

    Recto clarified that currently SMC, based in the Philippines, is a highly
diversified conglomerate, with businesses ranging from food and beverages to
petroleum, power, energy and infrastructure.

    The company now derives more than 70 per cent of its revenue from the
non-food and beverages segment.

    As for the bank, Recto said banks from both Malaysia and the Philippines
were keen to finance the company's investment expenditure.

    "There will be no doubt that Malaysian banks will be given priority,
given their achievements and capabilities," he said.

    In enhancing human capital, Recto said SMC promises not to retrench any of
the existing operational staff in the refinery and in other businesses as SMC
needs all of them, and even more workers in the future in tandem with its goal
to maximise utilisation of the refinery.

    "We will be creating more job opportunities and the first priority will be
given to Malaysians.

    "When we first acquired the Manila refinery, we needed around 20-25 per cent
extra workers to rebuild and reorganise the plant," he said, adding that a
similar workforce might be needed in Port Dickson.

     -- BERNAMA