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 today
SMC holds 68 per cent equity in Petron Corporation
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 maximize 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 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 maximize utilization 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 reorganize the plant," he said, adding that a similar workforce might be needed in Port Dickson
