The extreme volatility in crude prices shrank Petron Corporation's profit margins last year, causing the country's leading oil refiner to book a net loss of P3.9 billion.
After climbing by over 50 percent to a record high of $141 per barrel in July, the price of oil in the world market fell sharply towards the end of 2008 as the effects of global financial crisis spread through the world's largest economies. By December, the price of Dubai crude averaged only $40.
Domestic prices of refined products dropped in line with crude prices, resulting in heavy inventory losses for Petron.
"It was a very abnormal period for refiners, and many in the region reported reduced if not negative margins," said Petron president Eric Recto.
Despite this, Recto said Petron kept a dominant position in the industry, with a slightly improved 39.3 percent share of the overall market by end-2008. Petron operated a network of 1,288 service stations nationwide.
As part of its strategy to capture new revenue streams and improve margins, Petron commissioned its Petro Fluidized Catalytic Cracking unit and a Propylene Recovery Unit in April 2008. These facilities enable Petron to produce higher-value products from its refinery.
The company also inaugurated its Petron Fuel Additives Blending plant in Subic Bay Freeport Zone last November in partnership with Innospec, a leading global fuel additives supplier, to serve customers in the region.
"Petron's business remains strong. We have undisputed industry leadership, an extensive and efficient distribution network, a solid customer base, and an array of world-class products and services. We are confident that our partnership with San Miguel will help us on this road to recovery," said Recto.
"With oil prices now showing less volatility, we expect a return to profitability. In fact, our January and February performance bears this out," he added.