By Alena Mae S. Flores

Petron Corp., the larger of the country’s two oil refiners, posted a bigger-than-estimated loss of P3.9 billion in 2008 due to volatile crude prices.

Oil prices reached an all-time high of $141 per barrel in July but fell sharply toward the end of 2008 as the global economic slowdown weakened demand considerably.

Petron president Eric Recto in December said the oil refiner could incur a loss of P1.5 billion to P2 billion compared with a P6.38-billion profit in 2007.

“It was a very abnormal period for refiners, and many in the region reported reduced if not negative margins,” Recto said in a statement.

“With oil prices now showing less volatility, we expect a return to profitability. In fact, our January and February performance bears this out,” he added.

Crude oil in New York tumbled 69 percent to close the year at $44.60 as the global recession slashed fuel demand. Petron failed to capitalize on the raw material’s price slump because of the company’s policy of buying crude as much as two months before the refined product is actually sold, Recto said then.

“It takes us much longer than anyone else to be able to digest and sell the crude that we purchase. And that fact is the main reason why Petron will suffer from that singular event called the crash in oil prices,” he added.

Dubai crude, meanwhile, sank to $40 per barrel in December, resulting in significant inventory losses for Petron.

Petron retained its no. 1 position in the local market, with a slightly improved 39.3 percent share at the end of 2008. It had 1,288 service stations nationwide, the largest in the country.

“Petron’s business remains strong. We have undisputed industry leadership, an extensive and efficient distribution network, a solid customer base, and an array of world-class products and services. We are confident that our partnership with San Miguel will help us on this road to recovery,” Recto said.

Food and beverage giant San Miguel Corp. is set to take over Petron under an option to purchase agreement reached by the two parties.

Recto earlier said this was the first time Petron suffered a net loss in eight years.

The company’s margins contracted sharply as domestic prices of refined products fell much faster than crude costs.

He said Petron was more optimistic this year because of the company’s flexibility in managing its inventory cycle through a wider choice of oil suppliers.

Recto also said oil prices were expected to stabilize this year.

Petron shares fell 5.1 percent to P5.60 yesterday at the Philippine Stock Exchange before the announcement. With Bloomberg