Philippine oil refiner Petron Corp said on Tuesday it was looking at investing $1.5 billion to expand its petrochemicals arm and other units, a move supported by incoming shareholder London-based investment fund Ashmore Group. ?We are glad to note that our strategic transformation programme, which is based on our diversification into petrochemicals, is one of the main reasons why Ashmore offered to buy Aramco?s shares,? Nicasio Alcantara, Petron president, said in a statement. Alcantara said that Petron?s management had met with Ashmore representatives for informal talks after the fund offered to buy Saudi Aramco?s 40 percent stake in Petron for $550 million last week. Aramco, the state oil firm in the world?s top oil exporting country, said its divestment from the Philippines would allow it to focus on its $50 billion domestic upstream and downstream expansion programme. Petron is studying more investment to expand on an earlier move into converting fuel oil to high-value products and the extraction of petrochemical feedstock propylene. The company recently started production of petrochemical feedstock propylene at its 180,000 barrel-per-day refinery northwest of the capital after the commissioning last month of its petro fluidized catalytic cracker (PetroFCC), which it says is the first cracking unit of its kind in the world. Petron spent $300 million on phase 1 of its refinery upgrade, which includes the setting up of a unit to produce aromatics like benzene, toluene and increase its mixed xylene output. Phase 2 of the refinery upgrade will include a second PetroFCC, among other units. The group did not say in its statement over what period the potential $1.5 billion investment would be spread. Analysts said Petron?s petrochemical business should lift its earnings this year and in coming years after flat growth in 2006 and an expected 3.5 percent drop in net income for 2007, according to Reuters Estimates. Petron Corp. said also on Tuesday that it had begun production of its petrochemical feedstock propylene at the 180,000 barrel-per-day Bataan Refinery. With its ?cracking? unit, a first of its kind in the world, the oil company?s operating efficiencies are significantly improved with the conversion of black products (fuel oil) to high-value white products (LPG, gasoline, diesel etc.) and the extraction of the petrochemical feedstock propylene. From the PetroFCC, the propylene stream is purified in the PRU to produce petrochemical grade propylene. The unit has a capacity to produce 140,000 metric tons of propylene annually. Petron had earlier earmarked $300 million for its refinery upgrading which would include a unit capable of producing aromatics such as benzene, toluene, and more mixed xylene. ?These new refinery units will hopefully jumpstart the local petrochemical industry and will result in exponential benefits for other vital downstream manufacturing sectors,? said Alcantara. __
