Low oil prices affect Shell performance

MANILA, Philippines - Another oil firm said declining oil prices have affected its performance last year.

The decline in oil prices, prevalent since the second half of 2014, has affected the output of Pilipinas Shell Petroleum Corp., one of the country’s biggest oil firms.

In an interview on the sidelines of Shell’s Powering Progress Together forum at the Manila Hotel, Shell Philippines country chairperson Ed Chua said last year’s results were “very bad,” but declined to provide specific figures.

Local petroleum players have earlier said that they likely missed their full-year targets due to the impact of continued oil price cuts since mid-2014.

For instance, Phoenix Petroleum Philippines Inc., a publicly listed independent oil company, earlier reported a seven percent drop in its net income last year, on the back of the decline in oil prices.

In an earlier disclosure to the Philippine Stock Exchange (PSE), Phoenix Petroleum said average selling prices for 2014 declined in line with the continuous drop in global oil and fuel prices.

“As a result, net income declined by seven percent from P665 million in 2013 to P616 million in 2014. However, in line with the company’s strategy to focus on more profitable sales, 2014 return on sales improved to 1.8 percent coming from 1.5 percent in 2013,” Phoenix said.

Petron, the country’s biggest oil refiner, has also reported a consolidated net income of P3.2 billion in the first nine months of 2014, down 26 percent from the previous year’s P4.4 billion.

This was due to the sustained fall in crude prices although consolidated revenues remained strong.

The benchmark Dubai crude fell to an average $97 per barrel in September 2014 from an average of $108 per barrel in June, resulting in nine rounds of price rollbacks during the period.

“If the crude price was stable in the third quarter, operating income would have been higher by P1.9 billion,” Petron said.

For the past three weeks, however, oil prices have gone up although Chua said next week may see another rollback in local pump prices.

The Department of Energy said moving forward, prices will continue to increase and go beyond $50 to $0 per barrel but will remain below the level of more than $100 per barrel seen before the slump that started in June last year.