By Lenie Lectura - June 1, 2017
“We are favorably endorsing to the Securities and Exchange Commission the attached Amended Articles of Incorporation of Shell with the statement that this agency interposes no objection to amending the Second Article of the Articles of Incorporation,” the DOE said.
In particular, Shell intends “to purchase, create, generate, hold or otherwise acquire electric current and electric power of every kind, description and source, and to sell, market, supply or otherwise dispose of at wholesale/retail.”
Shell operates a refinery in Tabangao, Batangas, that produces its own electric power through turbines fueled mainly by natural gas. The excess electricity will be sold in the spot market. The DOE said Shell must comply with the DOE and Energy Regulatory Commission policies, including the Retail Competition and Open Access and WESM rules, among others. Early this month, the oil firm sought approval from shareholders to expand its business to include the sale of electricity.
“The selling of excess power is not the main driver of our business. We see an opportunity because of the equipment we have, but our core business continues to be our highly profitable marketing business,” company President Cesar Romero said. “If there’s an opportunity to make extra margin on our refinery then we will do so.” The oil firm plans to build 50 to 70 stations a year. It has over 900 stations to date. In 2016 it built 48 new stations.
Romero said 20 percent to 25 percent of the P4-billion capital expenditure allocated every year over the next three years will be used to expand its retail business to 1,200 service stations by 2020. Shell, according to a company official, is eyeing to expand along the Subic-Clark Toll Expressway.
“The retail business continues to be strong. The only area we are concerned with is the fuel for power. With the coming in of coal plants, the demand for fuel oil for power has decreased,” Romero said.
The company remains bullish for the year as it sees core earnings to grow by P1 billion to P2 billion year-on-year in succeeding years.
“Our commitment is improvement in underlying performance of about P1 billion to 2 billion a year, taking out inventory gains and other extra ordinary ones. More or less, that is the trajectory we’re trying to pursue,” Romero said. The oil firm posted a 27-percent increase in earnings for the first three months of the year to P2.89 billion, from P2.27 billion in the same period last year.