GOOD market conditions and a planned facility upgrade, has tipped the scales in favor of an initial public offering, or  IPO, that Pilipinas Shell Petroleum Corp. would likely push through listing its shares at the local bourse.

In an interview, country chairman Edgar O. Chua said that there’s a possibility for an IPO next year, which is also linked to results of a study on his company’s refinery upgrade.

“It will be better to do an IPO when then there’s something you’ll use the money for, and essentially the IPO is hinged on the upgrade and on the good market conditions,” Chua said.

The executive said the study is due any time soon.

“We have already finished an initial study, the problem was instead of a $1.5-billion project cost estimate, the project was estimated to come close to $3 billion because of the overheated market,” he said.

As a result Pilipinas Shell decided to pursue a more modest upgrade option, which would cost less than a billion dollars. The company is also looking at the possibility of expanding the facilities later on.

Late last year, Chua said they might push through with plans to undertake an IPO this year, barring an unfavorable review of its operations in the country.

Chua added that Pilipinas Shell needs to wait for result of the study it is currently conducting to determine whether it will shutdown or expand its refinery.

Chua said Shell is now fine tuning the results of this study and will release it in the first quarter of 2008. “By then, we will be ready with a decision…” he added.

Chua said an IPO exercise will follow after Pilipinas Shell expands its Philippine refinery capacity.

“The IPO is connected to the refinery expansion. We are still looking at undertaking the public offering, as we need to comply with the law [Oil Deregulation Law],” he said.

Pilipinas Shell needs to strengthen capacity, Chua said. He stressed that expanding its plant is one of the prerequisites of listing at the bourse.

Pilipinas Shell, a downstream oil development arm of the Royal Shell Dutch Group, earlier hinted that it may pursue expansion of its refinery in the country instead of a shutting it down.

Also earlier the company expressed apprehension in doing business in the Philippines owing to the government’s inability to resolve some of the major concerns raised by oil companies that include the tariff differential between finished and refined petroleum products.

As one of two refineries in the country, Pilipinas Shell is mandated by law to offer at least 10 percent of its equity to the public.

Twenty percent of the country’s largest oil refiner, Petron Corp., which is partly owned by the government and Saudi Aramco, are listed on stock exchange.

Chevron Philippines Inc.—formerly Caltex Philippines Inc.— decided to shut down its refinery. It had since been converted into a storage facility.

Pilipinas Shell wants to make sure its IPO would benefit existing stakeholders and the new investors who will come in via the stock market, Chua said.

GOOD market conditions and a planned facility upgrade, has tipped the scales in favor of an initial public offering, or  IPO, that Pilipinas Shell Petroleum Corp. would likely push through listing its shares at the local bourse.

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