Shell profit down 28% to P4.1B in 2006

Pilipinas Shell Petroleum Corp. posted a net profit of P4.1 billion last year, down 28 percent from P5.8 billion a year ago, mainly due to lower unit margin and lower trade volume.

In a financial report filed with the Securities and Exchange Commission (SEC), Shell said sales volume dropped to 5.81 million liters from 6.1 million liters in 2005 as a result of higher product prices and shift of some power generation activity to renewables.

Unit margin was P2.35 per liter last year, significantly lower than the previous year’s P2.72 per liter.

As of end-December 2006, the company’s market share slightly declined to 31.3 percent versus 32 percent in 2005, reflecting its higher than industry decline in total oil inland trade volume.

Operating expenses, meanwhile, rose to P7.5 billion from P7.4 billion due to the increase in repairs and maintenance cost, taxes and licenses.

Shell has set aside P1.5 billion for its capital expenditures this year, bulk of which will be used mainly for its maintenance work, equipment and tank replacement, compliance with the Clean Air Act, the expansion of service stations and the support of its retail, commercial, aviation and LPG businesses.

Shell is engaged in the manufacture and distribution of fuels, lubricating oils, baseoils and bitumen and specialities through its refineries and distribution sites and marketing of the same through nationwide commercial and retail networks. Its principal products include motor fuels, diesel, aviation fuel, fuel oil, LPG (under the brand Shellane), and a number of industrial and specialty lubricants.

The company said last year it was studying the possibility of expanding its refinery in Tabangao, Batangas to meet more demand in the future but the company in January shelved the study due to higher costs. Around $1 billion to $1.5 billion would be needed for the expansion.

Shell put its refinery business in the Philippines under review after Chevron Philippines (formerly Caltex Philippines, Inc.) closed its 72,000- bpd refinery in 2003 and converted this into a storage depot for petroleum products.

At present, the Philippines imports most of its oil requirements of roughly 330,000 barrels of oil per day.