BLOOMBERG: Shell May Shut Philippine Refinery, Citing Poor Profitability (ShellNews.net) 10 March 05

March 10 (Bloomberg) -- Royal Dutch/Shell Group, Europe's second-largest oil company, may shut its refinery in the Philippines as the facility doesn't meet profitability standards, an official at the company's Manila-based unit said.

Shell can't sell shares in the unit in an initial public offering as it is yet to decide whether to close the refinery, said Rudy Naguit, vice president for finance at Pilipinas Shell Petroleum Corp., the nation's second-largest refiner.

``Shell is reviewing the continued viability of the refinery,'' Naguit said yesterday on the sidelines of an investors' conference in the central Philippine city of Cebu. ``What happens if we sell shares and two years down the road we shut the facility? We can't sell either while the issue isn't resolved because how can we get good value?''

The nation's main stock index, which doubled in the past two years, rose to a 5 1/2 year high this year week, making it attractive for local companies to sell shares to the public. UBS AG's Philippine unit said local companies may sell as much as $1 billion of shares abroad this year, from zero in the past two years, as investors bet the government can curb budget deficits

Caltex Philippines Inc., a unit of ChevronTexaco Corp., closed its refinery in 2003 and converted the facility into a depot as it was cheaper to buy finished oil products from countries in the Middle East and other nations.

``The conditions that made Caltex close its refinery two years ago are still there,'' Naguit said. ``Government must decide if the refinery is still a critical industry. Incentives will help make the business viable.''

Pilipinas Shell and rivals are required under Philippine law to sell at least 10 percent of their shares to the public. The company got an indefinite extension after missing a mandated February 2001 deadline and, in April 2003, it again scrapped a planned IPO because of a slump in the local stock market.

To contact the reporter on this story:

Ian C. Sayson in Cebu, Philippines at  isayson@bloomberg.net.

To contact the editor responsible for this story:

Ben Richardson at  brichardson8@bloomberg.net.