Posted by probability > 2017-07-09 13:23 | Report Abuse

Next Icon in the making....
lots of information there...need to go through and crack my head! he he..

Posted by VenFx > 2017-07-09 14:48 | Report Abuse

Very good Sensitivity analysis conducted in Petronm... tq davidtslim .

Posted by musangfoxking > 2017-07-09 14:58 | Report Abuse

aiyah!!! how to fathom when my education is only Std 6 level!!!! ok.. bottom line can i buy now?

Posted by probability > 2017-07-09 15:18 | Report Abuse

Below is my thoughts on why PetronM capacity is limited to 48k bpd:

If you see the Dec - 2011 qtrly report, the reason for the modification done is to handle crude of higher sulfur content which is way cheaper than the sweeter crude (lower sulfur).

I suspect the capacity of the Hydrotreater installed in PetronM for further purification of Gasoline or Diesel to meet the Euro IV requirement is at say at 25k bpd level.

https://www.quora.com/Petroleum-Engineering-Can-some-one-explain-what-is-Euro-III-and-Euro-IV-specifications-on-petrol

It would be less economical for PetronM to source a low sulfur crude (more expensive) and run at a high throughput say 88k bpd instead of higher sulfur crude and run at a lower throughput. Here is the prove:


Say the crack spread of Fuel Oil = - 3 USD/ brl (respect to high sulfur crude)
and crack spread of others product at : 7 USD/brl (respect to high sulfur crude)
Lets also assume the Low sulfur crude is more expensive than high sulfur crude by 'X' USD/brl.


(A) Old scenario:

30% fuel oil: 26k bpd ,
Margin: -3 - x
and remaining 55% of Distillate Fuel + Gasoline + Jet Fuel : 48k bpd ( 7 - x)
Margin : 7 - x

Old scenario Profit : 26* (-3-x) + 48* (7-x)


(B) Current scenario:

30% fuel oil: 15k bpd
Margin : - 3
and remaining 55% of Distillate Fuel + Gasoline + Jet Fuel : 26k bpd
Margin : 7


Current scenario Profit : 15* (-3) + 26* (7)


If you use an excel and do some trial & error you will know that the moment the X value is more than 1.7 USD/ brl...its more economical to go for Option B which is exactly what they are doing now for the last 6 years....

Posted by DrNeoh > 2017-07-09 16:05 | Report Abuse

What a fantastic analysis, keep it up and when will be part 3 coming ?

Posted by Flintstones > 2017-07-09 16:27 | Report Abuse

Quality article! This is so much better than kcchong!

Posted by newbies95y > 2017-07-09 16:51 | Report Abuse

no,only kc is right.you all wrong.

Posted by probability > 2017-07-09 18:17 | Report Abuse

the is inline with the word 'optimization' they use to justify their modification decision on the plant

Posted by davidtslim > 2017-07-09 23:29 | Report Abuse

Thanks probability for your sharing on 48kbpd capacity. The option A and B is your own estimation or any official statement from Petronm? Is it possible current higher profit margin for gasoline and diesel products make it possible to run at higher throughput using low sulfur crude oil (as what HY doing)?

Posted by probability > 2017-07-09 23:57 | Report Abuse

Just made a calculation because of your request...which you can work it out also from above equation. For simplicity assume that 'X' will be minimum 2 USD/brl.

Its probably higher than this, but in any case definitely low sulfur crude will be more expensive than high sulfur crude.

If x = 2, you can work out that the Fuel crack spread has to be at least on the positive territory (more than > 0 USD/brl crack spread) with gasoline crack spread at 7 USD/brl for Option A to generate same or higher earnings than Option B.

If they do that, the Next question is...can their hydrotreater (whatever component they installed to make Eur IV fuel) can handle the higher throughput of these distillate oil + gasoline + jet fuel?

Posted by probability > 2017-07-09 23:58 | Report Abuse

David these are just my deductions...nothing of these are mentioned by PetronM.

Posted by davidtslim > 2017-07-10 00:10 | Report Abuse

Thanks for your calculation. Good question on whether their hydrotreater can handle or not. Petronm mentioned that they are compliant with Euro 4 spec but some asked me whether they already compliant with both RON97 and RON95 fuels? Some said they just compliant with RON97 only? Do you have info on this?

Posted by probability > 2017-07-10 00:17 | Report Abuse

nope...i dont have such info

Posted by davidtslim > 2017-07-10 00:20 | Report Abuse

If x = 2, you can work out that the Fuel crack spread has to be at least on the positive territory (more than > 0 USD/brl crack spread) with gasoline crack spread at 7 USD/brl for Option A to generate same or higher earnings than Option B.

This is possible if they facility can handle it.

They are selling 8.3 mil barrel in Q1'17, due to they refinery throughput is only 4.3 mil barrels, so ~4 millions barrels are bought from competitors for trading. I guess these 4 mil barrels are purchased in the form of finished refined products.
How much the profit can be get from this trading? It should be less than if they refine the crude oil and selling the finished products based on current refinery profit margin?

Posted by probability > 2017-07-10 00:25 | Report Abuse

Posted by davidtslim > Jul 10, 2017 12:20 AM | Report Abuse

If x = 2, you can work out that the Fuel crack spread has to be at least on the positive territory (more than > 0 USD/brl crack spread) with gasoline crack spread at 7 USD/brl for Option A to generate same or higher earnings than Option B.

This is possible if they facility can handle it.

They are selling 8.3 mil barrel in Q1'17, due to they refinery throughput is only 4.3 mil barrels, so ~4 millions barrels are bought from competitors for trading. I guess these 4 mil barrels are purchased in the form of finished refined products.

FEEDBACK: yup thats what i think may be from Petron Philippines...any info from AGM?

How much the profit can be get from this trading? It should be less than if they refine the crude oil and selling the finished products based on current refinery profit margin?

FEEDBACK: Its lesser because the value addition is only from the retail margin - no 'refinery margin value addition' on these streams as they bought as refined products. But the margins are steady - fixed for retail.

Posted by probability > 2017-07-10 00:41 | Report Abuse

https://oilandgascorrosion.com/the-difference-between-sweet-crude-and-sour-crude/

Posted by paperplane2016 > 2017-07-10 00:48 | Report Abuse

Half battle won! You know how to calculate most profit contribution

Posted by probability > 2017-07-10 01:24 | Report Abuse

https://www.hydrocarbonengineering.com/refining/30062017/asian-residual-fuel-prices-narrow/

http://www.worldoil.com/news/2017/4/6/oil-spread-that-rules-trading-flow-seen-aiding-opecs-rivals

Posted by davidtslim > 2017-07-10 01:38 | Report Abuse

yup thats what i think may be from Petron Philippines...any info from AGM?

Feedback: I remember noboday ask this question in AGM. No info so far.
Good news is they have flexibility to increase their refinery throughput for low sulfur crude oil. In addition, they said no maintenance shut down in 2017. Management replied to question that they are confident to repeat the Q1'17 performance in AGM.

Posted by probability > 2017-07-10 01:39 | Report Abuse

ok. thanks..gd nite..

Posted by davidtslim > 2017-07-10 16:30 | Report Abuse

Consider to write part 3 if you think needed. Still hv some idea and point to share for Petronm

Posted by probability > 2017-07-10 16:33 | Report Abuse

go ahead David...it will stir some ideas from me too..
just make the title with the word petronm big "PETRONM" ;)

Posted by probability > 2017-07-10 18:41 | Report Abuse

to have an idea what is 'X' value like, you can take that as the difference between Brent (sweeter) and Dubai Crude (sour)..

This you can determine by seeing the Crack Spread of Singapore Fuel oil to Dubai Crude and comparing it to Singapore Fuel oil to Brent

Posted by 逍遥子 > 2017-07-10 20:04 | Report Abuse

Actually, the commercial sector is another area to look into it, the management stated commercial sector took up about 30% of the total revenue. The best part is this sector has been experiencing a double digits growth for the last 2 financial years.

Keep up the good work