Marketline Report - Oil & Gas in The Philippines 2017

MarketLine Industry Profile
Oil & Gas in

Philippines
September 2017
Reference Code: 0115-2116
Publication Date: September 2017
WWW.MARKETLINE.COM
MARKETLINE. THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED
Philippines - Oil & Gas 0115 - 2116 - 2016
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EXECUTIVE SUMMARY
Market value
The Filipino oil & gas market shrank by 7.7% in 2016 to reach a value of $5.4 billion.
Market value forecast

In 2021, the Filipino oil & gas market is forecast to have a value of $7 billion, an increase of 29.6% since 2016.
Market volume
The Filipino oil & gas market grew by 9.7% in 2016 to reach a volume of 178.4 million BOE.
Market volume forecast

In 2021, the Filipino oil & gas market is forecast to have a volume of 194.5 million BOE, an increase of 9% since 2016.
Category segmentation
Crude oil is the largest segment of the oil & gas market in Philippines, accounting for 98.9% of the market's total value.
Geography segmentation
Philippines accounts for 1.3% of the Asia-Pacific oil & gas market value.
Market rivalry
Oil and gas companies are typically large, integrated players that benefit from the scale of their operations. Examples
include Seaoil, Phoenix and Petron. The presence of such incumbents intensifies rivalry in the market.

TABLE OF CONTENTS
Executive Summary ....................................................................................................................................................... 2
Market value............................................................................................................................................................... 2
Market value forecast ................................................................................................................................................. 2
Market volume............................................................................................................................................................ 2
Market volume forecast .............................................................................................................................................. 2
Category segmentation .............................................................................................................................................. 2
Geography segmentation ........................................................................................................................................... 2
Market rivalry.............................................................................................................................................................. 2
Market Overview ............................................................................................................................................................ 7
Market definition ......................................................................................................................................................... 7
Market analysis .......................................................................................................................................................... 7
Market Data ................................................................................................................................................................... 9
Market value............................................................................................................................................................... 9
Market volume.......................................................................................................................................................... 10
Market Segmentation ................................................................................................................................................... 11
Category segmentation ............................................................................................................................................ 11
Geography segmentation ......................................................................................................................................... 12
Market Outlook ............................................................................................................................................................. 13
Market value forecast ............................................................................................................................................... 13
Market volume forecast ............................................................................................................................................ 14
Five Forces Analysis .................................................................................................................................................... 15
Summary .................................................................................................................................................................. 15
Buyer power ............................................................................................................................................................. 17
Supplier power ......................................................................................................................................................... 18
New entrants ............................................................................................................................................................ 19
Threat of substitutes................................................................................................................................................. 21
Degree of rivalry ....................................................................................................................................................... 22
Leading Companies ..................................................................................................................................................... 23

Petron Corporation ................................................................................................................................................... 23
Philippine National Oil Company .............................................................................................................................. 26
Phoenix Petroleum Philippines, Inc. ......................................................................................................................... 29
SEAOIL Philippines, Inc. .......................................................................................................................................... 32
Macroeconomic Indicators ........................................................................................................................................... 33
Country data............................................................................................................................................................. 33
Methodology................................................................................................................................................................. 35
Industry associations ................................................................................................................................................ 36
Related MarketLine research ................................................................................................................................... 36
Appendix ...................................................................................................................................................................... 37
About MarketLine ..................................................................................................................................................... 37

LIST OF TABLES
Table 1: Philippines oil & gas market value: $ billion, 2012–16 ...................................................................................... 9
Table 2: Philippines oil & gas market volume: million BOE, 2012–16 .......................................................................... 10
Table 3: Philippines oil & gas market category segmentation: $ billion, 2016 .............................................................. 11
Table 4: Philippines oil & gas market geography segmentation: $ billion, 2016 ........................................................... 12
Table 5: Philippines oil & gas market value forecast: $ billion, 2016–21 ...................................................................... 13
Table 6: Philippines oil & gas market volume forecast: million BOE, 2016–21 ............................................................ 14
Table 7: Petron Corporation: key facts ......................................................................................................................... 23
Table 8: Petron Corporation: key financials ($) ............................................................................................................ 23
Table 9: Petron Corporation: key financials (PHP) ....................................................................................................... 24
Table 10: Petron Corporation: key financial ratios........................................................................................................ 24
Table 11: Philippine National Oil Company: key facts .................................................................................................. 26
Table 12: Philippine National Oil Company: key financials ($) ..................................................................................... 26
Table 13: Philippine National Oil Company: key financials (PHP) ................................................................................ 27
Table 14: Philippine National Oil Company: key financial ratios .................................................................................. 27
Table 15: Phoenix Petroleum Philippines, Inc.: key facts ............................................................................................. 29
Table 16: Phoenix Petroleum Philippines, Inc.: key financials ($) ................................................................................ 29
Table 17: Phoenix Petroleum Philippines, Inc.: key financials (MXN) .......................................................................... 30
Table 18: Phoenix Petroleum Philippines, Inc.: key financial ratios.............................................................................. 30
Table 19: SEAOIL Philippines, Inc.: key facts .............................................................................................................. 32
Table 20: Philippines size of population (million), 2012–16.......................................................................................... 33
Table 21: Philippines gdp (constant 2005 prices, $ billion), 2012–16........................................................................... 33
Table 22: Philippines gdp (current prices, $ billion), 2012–16 ...................................................................................... 33
Table 23: Philippines inflation, 2012–16....................................................................................................................... 34
Table 24: Philippines consumer price index (absolute), 2012–16 ................................................................................ 34
Table 25: Philippines exchange rate, 2012–16 ............................................................................................................ 34

LIST OF FIGURES
Figure 1: Philippines oil & gas market value: $ billion, 2012–16 .................................................................................... 9
Figure 2: Philippines oil & gas market volume: million BOE, 2012–16 ......................................................................... 10
Figure 3: Philippines oil & gas market category segmentation: % share, by value, 2016 ............................................. 11
Figure 4: Philippines oil & gas market geography segmentation: % share, by value, 2016 ......................................... 12
Figure 5: Philippines oil & gas market value forecast: $ billion, 2016–21 ..................................................................... 13
Figure 6: Philippines oil & gas market volume forecast: million BOE, 2016–21 ........................................................... 14
Figure 7: Forces driving competition in the oil & gas market in Philippines, 2016 ........................................................ 15
Figure 8: Drivers of buyer power in the oil & gas market in Philippines, 2016 .............................................................. 17
Figure 9: Drivers of supplier power in the oil & gas market in Philippines, 2016 .......................................................... 18
Figure 10: Factors influencing the likelihood of new entrants in the oil & gas market in Philippines, 2016 .................. 19
Figure 11: Factors influencing the threat of substitutes in the oil & gas market in Philippines, 2016 ........................... 21
Figure 12: Drivers of degree of rivalry in the oil & gas market in Philippines, 2016 ...................................................... 22
Figure 13: Petron Corporation: revenues & profitability ................................................................................................ 24
Figure 14: Petron Corporation: assets & liabilities........................................................................................................ 25
Figure 15: Philippine National Oil Company: revenues & profitability........................................................................... 27
Figure 16: Philippine National Oil Company: assets & liabilities .................................................................................. 28
Figure 17: Phoenix Petroleum Philippines, Inc.: revenues & profitability ...................................................................... 30
Figure 18: Phoenix Petroleum Philippines, Inc.: assets & liabilities.............................................................................. 31

MARKET OVERVIEW
Market definition
The oil and gas market volume is defined as the total consumption (barrels of oil equivalent) of refined petroleum
products and natural gas by end-users in each country.
The value of the oil segment reflects the total volume of refined petroleum products, including refinery consumption and
losses, multiplied by the hub price of crude oil.
The value of the gas segment is calculated as the total volume of dry natural gas consumed multiplied by the price of
natural gas (Henry Hub spot price). The values represent the total revenues available to exploration and production
companies from sales of crude oil and natural gas.
Any currency conversions used in this report have been calculated using constant 2016 annual average exchange rates.
For the purposes of this report, the global market consists of North America, South America, Europe, Asia-Pacific, Middle
East, South Africa and Nigeria.
North America consists of Canada, Mexico, and the United States.
South America comprises Argentina, Brazil, Chile, Colombia, and Peru.
Europe comprises Austria, Belgium, the Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy,
Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden, Switzerland, Turkey, and the United Kingdom.
Scandinavia comprises Denmark, Finland, Norway, and Sweden.
Asia-Pacific comprises Australia, China, Hong Kong, India, Indonesia, Kazakhstan, Japan, Malaysia, New Zealand,
Pakistan, Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam.
Middle East comprises Egypt, Israel, Saudi Arabia, and United Arab Emirates.
Market analysis
The Filipino oil and gas market has suffered a strong decline in recent years, primarily due to the decline in crude oil
prices. Nevertheless the market is expected to bounce back in the forecast period and post strong growth.
The Filipino oil & gas market had total revenues of $5.4bn in 2016, representing a compound annual rate of change
(CARC) of -15.9% between 2012 and 2016. In comparison, the Indonesian and Chinese markets declined with
compound annual rate of change (CARC)s of -21.8% and -18.7% respectively, over the same period, to reach respective
values of $21.8bn and $161.9bn in 2016.
Decline in global crude oil prices has had a strong impact on the value of the Filipino oil and gas market. The Philippines
imported 87% of its crude oil from the Middle East but with OPEC engaged in cuts at the moment along with Russia, the
Philippines might have to increase imports from neighboring oil rich nations such as Indonesia or Brunei. Overall growth
in the economy will push the oil and gas market forward, increasing demand.
Market consumption volume increased with a compound annual growth rate (CAGR) of 7.6% between 2012 and 2016, to
reach a total of 178.4 million BOE in 2016. The market's volume is expected to rise to 194.5 million BOE by the end of
2021, representing a CAGR of 1.7% for the 2016-2021 period.
Although the volume consumption in this market has grown strongly in recent years, there is expected a strong
deceleration in growth in the forecast period. One of the reasons for this is a shift in the Philippines power generation mix
wherein fossil fuel based energy is increasingly being replaced by renewable sources. For example in 2010, almost 20%
of the country’s installed generating capacity of electricity was sourced from oil, but by 2016 this figure has declined to
16.9%. This trend is expected to continue in the forecast period.

The crude oil segment was the market's most lucrative in 2016, with total revenues of $5.4bn, equivalent to 98.9% of the
market's overall value. The natural gas segment contributed revenues of $0.1bn in 2016, equating to 1.1% of the
market's aggregate value.
The performance of the market is forecast to accelerate, with an anticipated CAGR of 5.2% for the five-year period 2016
- 2021, which is expected to drive the market to a value of $7.0bn by the end of 2021. Comparatively, the Indonesian and
Chinese markets will grow with CAGRs of 7% and 8.1% respectively, over the same period, to reach respective values of
$30.4bn and $239.1bn in 2021.
The rise in volume figures whilst value figures declined can be explained by the low crude oil prices globally. Whilst
demand for oil has declined, pressure on crude oil prices has intensified in recent years due to a myriad of reasons
ranging from the shale oil revolution to increased output from Russia and the OPEC nations (the latter have attempted to
backtrack on this increased output in recent months by reducing supply in order to boost oil prices). With oil prices
recovering somewhat the level of volume growth is expected to decelerate. Nevertheless the difference in the fortunes of
the value and volume figures can be explained by the steep decline in oil prices.

MARKET DATA
Market value
The Filipino oil & gas market shrank by 7.7% in 2016 to reach a value of $5.4 billion.
The compound annual rate of change of the market in the period 2012–16 was -15.9%.
Table 1: Philippines oil & gas market value: $ billion, 2012–16
Year $ billion PHP billion € billion % Growth

2012 10.9 515.9 9.8
2013 11.1 526.2 10.0 2.0%
2014 10.1 478.2 9.1 (9.1%)
2015 5.9 280.2 5.3 (41.4%)
2016 5.4 258.6 4.9 (7.7%)
CAGR: 2012–16 (15.9%)
SOURCE: MARKETLINE MARKETLINE
Figure 1: Philippines oil & gas market value: $ billion, 2012–16

Market volume
The Filipino oil & gas market grew by 9.7% in 2016 to reach a volume of 178.4 million BOE.
The compound annual growth rate of the market in the period 2012–16 was 7.6%.
Table 2: Philippines oil & gas market volume: million BOE, 2012–16
Year million BOE % Growth

2012 133.3
2013 135.3 1.5%
2014 136.5 0.9%
2015 162.7 19.2%
2016 178.4 9.7%
CAGR: 2012–16 7.6%
Figure 2: Philippines oil & gas market volume: million BOE, 2012–16

MARKET SEGMENTATION
Category segmentation
Crude oil is the largest segment of the oil & gas market in Philippines, accounting for 98.9% of the market's total value.
The Natural gas segment accounts for the remaining 1.1% of the market.
Table 3: Philippines oil & gas market category segmentation: $ billion, 2016
Category 2016 %
Crude Oil 5.4 98.9%
Natural Gas 0.1 1.1%
Total 5.5 100%
Figure 3: Philippines oil & gas market category segmentation: % share, by value, 2016

Geography segmentation
Philippines accounts for 1.3% of the Asia-Pacific oil & gas market value.
China accounts for a further 37.8% of the Asia-Pacific market.
Table 4: Philippines oil & gas market geography segmentation: $ billion, 2016
Geography 2016 %
China 161.9 37.8
India 57.3 13.4
Japan 52.2 12.2
Indonesia 21.8 5.1
Philippines 5.4 1.3
Rest of Asia-Pacific 130.2 30.4
Total 428.8 100.2%
Figure 4: Philippines oil & gas market geography segmentation: % share, by value, 2016

MARKET OUTLOOK
Market value forecast
In 2021, the Filipino oil & gas market is forecast to have a value of $7 billion, an increase of 29.6% since 2016.
The compound annual growth rate of the market in the period 2016–21 is predicted to be 5.2%.
Table 5: Philippines oil & gas market value forecast: $ billion, 2016–21
Year $ billion PHP billion € billion % Growth

2016 5.4 258.6 4.9 (7.7%)
2017 5.1 244.2 4.6 (5.6%)
2018 5.8 276.9 5.3 13.4%
2019 6.3 299.6 5.7 8.2%
2020 6.7 318.0 6.1 6.1%
2021 7.0 333.8 6.4 5.0%
CAGR: 2016–21 5.2%
Figure 5: Philippines oil & gas market value forecast: $ billion, 2016–21

Market volume forecast
In 2021, the Filipino oil & gas market is forecast to have a volume of 194.5 million BOE, an increase of 9% since 2016.
The compound annual growth rate of the market in the period 2016–21 is predicted to be 1.7%.
Table 6: Philippines oil & gas market volume forecast: million BOE, 2016–21
Year million BOE % Growth

2016 178.4 9.7%
2017 164.0 (8.0%)
2018 172.0 4.9%
2019 179.9 4.6%
2020 187.4 4.2%
2021 194.5 3.8%
CAGR: 2016–21 1.7%
Figure 6: Philippines oil & gas market volume forecast: million BOE, 2016–21

FIVE FORCES ANALYSIS
The oil & gas market will be analyzed taking companies engaged in oil and gas exploration and production as players.
The key buyers will be taken as end users (individual and institutional) and independent retailers, and suppliers of oil and
gas field services as the key suppliers.
Summary
Figure 7: Forces driving competition in the oil & gas market in Philippines, 2016
Oil and gas companies are typically large, integrated players that benefit from the scale of their operations. Examples
include Seaoil, Phoenix and Petron. The presence of such incumbents intensifies rivalry in the market.
The oil market is generally divided into two main segments: upstream and downstream. The upstream segment includes
activities such as exploration and exploitation of oil and natural gas, while the downstream segment includes activities
such as refining and distribution of petroleum products in the form of fuel, heating oil or raw material for the
petrochemical market. Oil and gas companies may specialize in a specific segment or do business in both these
segments.
The oil and gas market is characterized by the presence of large, diversified international companies with highly vertically
integrated operations throughout oil exploration, production, refining, transportation and marketing. Both the presence of
these powerful incumbents and the need for substantial initial investment to set up facilities such as drilling rigs reduce
the threat of new companies establishing themselves in this market.
In historic years, the Philippines oil and gas market has shown continuous contraction with significant contraction in 2015
and 2016 owing to reduced crude oil prices.
Due to the high sensitivity of prices, it is difficult to predict future trends. Substitutes in the oil and gas market can be
considered in terms of increasing the production of alternative energy sources, although this can result in high switching
costs. High fixed costs and exit barriers intensify the competition level within the market.
In the Philippines oil and gas market competition is strong; the market is dominated by a small number of large firms, but
high levels of state involvement temper competition somewhat.

Buyer power is fairly moderate. Utilities are a necessity for the vast majority of customers and there is typically little
choice as the segments are controlled by one or two large firms. Supplier power is moderate; switching costs for players
are low due to low differentiation however there are only a small number of large firms operating, which increases
supplier power somewhat. The threat of new entrants is weak as low differentiation and continuous contraction are
balanced by the size and power of existing firms. Finally, the threat of substitutes is moderate.

Buyer power
Figure 8: Drivers of buyer power in the oil & gas market in Philippines, 2016
The Filipino oil and gas market is characterized by the presence of large, diversified international companies with highly
vertically integrated operations throughout oil exploration, production, refining, transportation and marketing, and they
appear as both buyers and players within different stages. Due to this complexity, as well as the importance of the
products offered in this market, there are a large number of buyers, not only individual but also institutional, weakening
buyer power.
However, institutional buyers, i.e. independent retailers or chemical companies, are able to make large purchases and
losing such customers would impact players’ revenues, boosting their power somewhat. Commodities such as crude oil
or natural gas are relatively undifferentiated products, the prices of which are set according to supply and demand by the
mercantile exchanges of New York, London and Dubai, which effectively ameliorates buyer power on the basis of price.
With the introduction of price comparison websites, this serves to increase the buyer power as the customer can shop
around for the best deal which is suited to themselves.
The likelihood of buyers backwards integrating and becoming players is extremely minute as to enter this market
requires significant investment in equipment as well as staying in line with regulatory measures designed to reduce
threats to the environment. This is beyond the scope of most buyers, except perhaps some very large sized buyers for
whom producing their own output of oil may be beneficial to other parts of their business. Overall the likelihood of
backwards integration is slim at best.
There is a possibility for some players to forward integrate into some buyer segments of the Filipino market. Petron for
example is engaged in not only the exploration and extraction of oil and gas but also acts as a buyer through its service
stations spread throughout Philippines. This reduces buyer power somewhat.
Brand loyalty is not likely to be a significant factor here (unless there are loyalty programs in place) so buyer power is
strengthened. Switching costs for individual buyers are not likely to be high, they may, however, be increased with
respect to institutional buyers with supply contracts.
Overall, buyer power within the oil and gas market is assessed as moderate.

Supplier power
Figure 9: Drivers of supplier power in the oil & gas market in Philippines, 2016
Major suppliers are oil and gas equipment and services providers, including: Schlumberger, GE, Smith International or
Halliburton. Typically, such suppliers are large, highly diversified companies, affording them greater bargaining power
within the market. GE, for example, has a wide product portfolio catering to the worldwide oil and natural gas market.
The company manufactures and supplies drill bits, primarily roller cone bits, and fixed-cutter polycrystalline diamond
compact (PDC) bits. It supplies them to the oil and natural gas market worldwide. GE also supplies drilling and
evaluation services which include directional drilling, measurement-while-drilling (MWD), and logging-while-drilling (LWD)
services. The company provides formation evaluation and wireline completion and production services for oil and natural
gas wells. Such suppliers are small in number, which, combined with high demand from the oil and gas market,
enhances their supplier power.
Consolidation is a trend that has been noticeable in the oil and gas services market in recent years. A notable example is
GE which merged with Baker Hughes in 2017, creating a new company with annual revenues in the range of $23bn.
Consolidation amongst suppliers means there are fewer companies that can act as suppliers, thereby increasing their
power as players become increasingly reliant on those players still operating and supplying in the market.
Supplier power can also be affected by the price of commodities. When the price is high, oil and gas companies may
explore deposits that were previously deemed too costly, which would boost suppliers’ revenues. However, when the
price is low, investment in drilling and exploration could fall, which would increase competition between suppliers. A
global decline in the price of crude oil continued to occur in early 2016. Also, many larger oil and gas companies have
backward integrated oil and gas services operations, and use third-party services companies to supplement their own
activities. This, combined with the high importance of the oil and gas market to supplier revenues, reduces the supplier
power of oil equipment and services companies.
Amongst suppliers, there are also human resources providers, as well as landowners or governments. Some of these
may exert strong bargaining power due to their size. While there are a large number of companies providing specialist
equipment, it may be more difficult to assure adequate reserves, as oil and natural gas are non-renewable. This means
that major landowners, governments, and similar bodies can be viewed as suppliers, and these may be in a strong
position. Overall supplier power in the oil and gas market is assessed as moderate.

New entrants
Figure 10: Factors influencing the likelihood of new entrants in the oil & gas market in Philippines,
2016
Analysis of the threat of new entrants into the oil and gas market is complicated by the fact that it is possible for
companies to operate in one or more parts of the supply chain. Leading oil companies are typically large, highly
vertically-integrated, multinational companies, which use the large scale of their production and distribution networks to
reduce costs and enhance profitability. Such players have invested heavily in their fleets of drilling rigs, other equipment,
and technology, including product innovation.
Declining prices for crude oil in 2015 and 2016 have resulted in a contraction of the market in Philippines. Signs of
recovery are evident owing to deals put in place by OPEC countries during 2016. This deal aims to reduce production of
oil by 1.2 million barrels per day, reducing the global output by around 1%. With the referee act being brought through by
OPEC, this will serve to increase crude oil prices by cutting production in OPEC countries and also in non-OPEC
countries.
Historic crashes in the crude oil price have caused fluctuations in the Philippine oil and gas markets. The significant
regulatory environment within the oil and gas market is restrictive to the entry of new players. A ruling by the South China
Sea in 2016 showed that Philippine oil is still under troubling times. The Philippines will need to come to an agreement
with China as it relies heavily on imports to assist in fueling its growing economy.
Strong declines in historic years could serve to deter new entrants from entering into this market, however with recovery
set to occur in the coming years this could stimulate new entrants to enter this market. However, to do so they would
require significant financial backing especially with a small number of very large players in this market. There is also a
significant regulatory environment within the oil and gas market, which is restrictive to the entry of players.
To keep up with the leading players, utilizing scale economies along with strong research and development (R&D)
capability is required. The presence of such powerful incumbents acts as a significant barrier to entry and the need for
substantial initial investment to set up facilities, such as drilling rigs, also reduces the threat of new companies
establishing themselves in this market. It is more often seen that huge players are co-operating with domestic players.

Permission to explore new fields and extract oil and gas is generally given by national governments, and obtaining it may
be a lengthy process. As well as regulations surrounding taxation and the issue of whether oil and gas exploration is
permitted, there are also restrictions regarding environmental impact.
Much has been made of the extraction of shale gas using the controversial method of hydraulic fracturing (fracking)
which has been linked to issues with air quality, water contamination and earthquakes in nearby areas. Recent attempts
at the discovery and exploration of shale oil has prompted producers to resume their drilling activity growth, making this
part of the market attractive to new entrants. Global reliance on gas is in part due to fracking.
Overall, the threat of new entrants is assessed as weak within the oil and gas market.

Threat of substitutes
Figure 11: Factors influencing the threat of substitutes in the oil & gas market in Philippines, 2016
As awareness of global warming increases, the importance of alternative energy sources to oil, such as solar, biofuel,
coal and wind power, will increase. These substitutes offer notable benefits in terms of environmental impact and
sustainability, although shifting to some renewable energy sources is costly and will take time. Further certain substitute
energy sources are only available intermittently, such as solar power during the day or wind power when the wind speed
reaches a certain level. Biofuels however stand out from the other major substitute sources in the sense that like oil it is a
relatively stable source of energy, not affected by the time of the day or the speed of the wind. On top of this it is
relatively easy to modify engines previously running on hydrocarbons like oil, to subsequently run on biofuel. In the
Philippines, the low price of oil has caused a subsequent drop in prices of other commodities; this could result in mergers
and acquisitions in the near future. Whilst the oil and gas market in the Philippines is controlled by a small number of
large players, further mergers could allow for monopolization of the market. Government reforms have begun to move
more towards renewable energy to increase the level of electricity production; this could serve to increase competition
from substitutes.
Overall production and demand of renewable energy is increasing as climate change becomes a growing issue.
However, currently, the majority of the world’s energy production originates from non-renewable sources, primarily oil,
gas and coal. Whilst power companies can alter their primary energy mix to a small extent without incurring many costs,
a thoroughgoing transition to these substitutes would require investment in new facilities, which constitutes a very high
switching cost. Biofuels however with their low switching costs stand out in this regard.
Overall potential substitutes are starting to occupy a greater share of the energy market as a whole. Moreover, as
reserves of oil and gas decline over the following decades, it is expected that this will increase interest in substitute
sources of energy. However, many industries remain heavily reliant on oil and natural gas, which makes complete
substitution unlikely in the near future.
Overall, there is a moderate threat of substitutes.

Degree of rivalry
Figure 12: Drivers of degree of rivalry in the oil & gas market in Philippines, 2016
Oil and gas companies are typically large, integrated players that benefit from the scale of their operations. Seaoil,
Phoenix and Petron are notable examples, however smaller players also exist. The presence of such incumbents
intensifies rivalry in the market.
Due to the fact that oil and gas operations are highly energy and labor intensive, fixed costs are also high and the market
is hard to exit as leaving would require significant divestments of assets specific to the business.
Main players’ activities are usually geographically and vertically integrated. However, most of them present similar
business models. The rapid growth of unconventional oil supply sources - mainly oil clamped in the US and tar sands in
Canada, liquid fractions of natural gas (NGL) and stroke production from offshore fields in Brazil, means that oil
production in countries outside of the Organization of the Petroleum Exporting Countries (OPEC) is set to rise after 2015,
however recent deals could see a contraction of the oil production by as much as 1% per year in OPEC countries. This
decreased oil production is critical in minimizing the crude oil oversupply.
With global crude oil stores remaining substantially high, evidence suggests that oil prices in 2017 will remain low until
such time that the crude oil supplies are significantly reduced. Rivalry in this market therefore will remain relatively
unchanged until such time that the existing supplies in the market are reduced. Rising demands could serve to increase
rivalry between companies. Whilst in recent years the Filipino government has shown a greater interest in investing in
the renewable energy sector, this is unlikely to affect the oil and gas sector in the Philippines, as the nation possesses
vast reserves of gas, and these commodities form a significant part of the Philippines economy. As supplies of fossil
fuels become scarce, the utilities market is set to move towards more renewable sources.
Overall there is a strong level of rivalry in the Philippines oil and gas market.

LEADING COMPANIES
Petron Corporation
Table 7: Petron Corporation: key facts
San Miguel Corp. Head Office Complex, 40 San Miguel Avenue,

Head office:
Mandaluyong, Metro Manila, PHL
Telephone: 63 2 8863888
Fax: 63 2 8840945
Website: www.petron.com
Financial year-end: December
Ticker: PCOR
Stock exchange: Philippines
SOURCE: COMPANY WEBSITE MARKETLINE
Petron Corporation (Petron) is an oil refining and marketing company. Petron refines imported crude oil into a wide range
of petroleum products such as gasoline, diesel, kerosene, jet fuel and petrochemicals. The company markets and
distributes refined petroleum products in Philippines, India, Malaysia, Japan, Singapore, South Korea, Pakistan, Thailand
and the United Arab Emirates. The company carries out operations through strategically located depots, plants, and
terminals, service stations as well as transportation fleet. It also operates advanced refinery, blending facilities and
polypropylene (PP) plant with a rated capacity of 160,000 metric tons per annum.
Petron classifies its business operations into four reportable business segments namely Petroleum, Insurance, Leasing
and Marketing.
Geographically, the company operates in two regions, namely, Local and International. In FY2016, the company reported
59.74% of its total revenue from the domestic market and 40.26% from international markets.
Key Metrics
The company recorded revenues of $7,239 million in the fiscal year ending December 2016, a decrease of 4.5%
compared to fiscal 2015. Its net income was $213 million in fiscal 2016, compared to a net income of $118 million in the
preceding year.
Table 8: Petron Corporation: key financials ($)
$ million 2012 2013 2014 2015 2016

Revenues 8,943.8 9,761.6 10,159.5 7,583.3 7,239.3
Net income (loss) 35.8 110.5 69.9 118.3 212.6
Total assets 5,902.2 7,526.0 8,239.1 6,195.6 6,714.1
Total liabilities 4,648.3 5,547.7 6,189.8 4,455.9 4,935.2
SOURCE: COMPANY FILINGS MARKETLINE

Table 9: Petron Corporation: key financials (PHP)
PHP million 2012 2013 2014 2015 2016

Revenues 424,795.0 463,638.0 482,535.0 360,178.0 343,840.0
Net income (loss) 1,701.0 5,247.0 3,320.0 5,618.0 10,100.0
Total assets 280,333.0 357,458.0 391,324.0 294,267.0 318,893.0
Table 10: Petron Corporation: key financial ratios
Ratio 2012 2013 2014 2015 2016

Profit margin 0.4% 1.1% 0.7% 1.6% 2.9%
Revenue growth 55.1% 9.1% 4.1% (25.4%) (4.5%)
Asset growth 56.5% 27.5% 9.5% (24.8%) 8.4%
Liabilities growth 89.3% 19.3% 11.6% (28.0%) 10.8%
Debt/asset ratio 78.8% 73.7% 75.1% 71.9% 73.5%
Return on assets 0.7% 1.6% 0.9% 1.6% 3.3%
Figure 13: Petron Corporation: revenues & profitability

Figure 14: Petron Corporation: assets & liabilities

Philippine National Oil Company
Table 11: Philippine National Oil Company: key facts
Building 6, Energy Center, Rizal Drive, Bonifacio Global City Taguig,

Head office:
Metro Manila, PHL
Telephone: 63 2 7897662
Website: www.pnoc.com.ph
Philippine National Oil Company (PNOC) is an oil and gas company that explores, develops and produces natural gas,
oil and coal. The company undertakes shipping, tankering, lighterage, barging, towing, transport, and shipment of goods,
chattels, petroleum, and other products. PNOC’s projects include zamboanga-sibugay coal project, batangas to manila
natural gas pipeline project, solar rooftop projects and persistent organic pollutants project, among others. It serves
various institutions which are involved in the exploration, development and utilization of indigenous oil and non-oil energy
sources. The company operates through its subsidiaries. PNOC is headquartered in Taguig, the Philippines.
Key Metrics
The company recorded revenues of $43 million in the fiscal year ending December 2015, a decrease of 53.6% compared
to fiscal 2014. Its net income was $38 million in fiscal 2015, compared to a net income of $105 million in the preceding
year.
More recent financial information was not available for this company at the time of publication.
Table 12: Philippine National Oil Company: key financials ($)
$ million 2011 2012 2013 2014 2015

Revenues 117.8 42.9 21.4 93.5 43.4
Net income (loss) 109.5 34.8 15.6 105.4 37.9
Total assets 912.5 857.1 855.0 892.8 846.4
Total liabilities 115.5 114.3 113.3 96.8 76.2

Table 13: Philippine National Oil Company: key financials (PHP)
PHP million 2011 2012 2013 2014 2015

Revenues 5,593.0 2,036.0 1,018.0 4,439.0 2,060.0
Net income (loss) 5,201.0 1,654.0 739.0 5,006.0 1,800.0
Total assets 43,341.0 40,707.0 40,609.0 42,405.0 40,202.0
Table 14: Philippine National Oil Company: key financial ratios
Ratio 2011 2012 2013 2014 2015

Profit margin 93.0% 81.2% 72.6% 112.8% 87.4%
Revenue growth 266.8% (63.6%) (50.0%) 336.1% (53.6%)
Asset growth 5.2% (6.1%) (0.2%) 4.4% (5.2%)
Liabilities growth (8.6%) (1.1%) (0.8%) (14.6%) (21.3%)
Debt/asset ratio 12.7% 13.3% 13.3% 10.8% 9.0%
Return on assets 12.3% 3.9% 1.8% 12.1% 4.4%
Figure 15: Philippine National Oil Company: revenues & profitability

Figure 16: Philippine National Oil Company: assets & liabilities

Phoenix Petroleum Philippines, Inc.
Table 15: Phoenix Petroleum Philippines, Inc.: key facts
Head office: Phoenix Bulk Depot, Lanang, Davao City, Davao del Sur, PHL
Telephone: 63 82 2358888
Fax: 63 82 2330168
Website: www.phoenixfuels.ph
Ticker: PNX
Stock exchange: Philippines
Phoenix Petroleum Philippines (PPPI) is an independent oil company engaged in the business of retail and commercial
sale and trade of refined petroleum products and lubricants. The company also operates oil depots; and provides storage
and transport services, and integrated logistics services. PPPI's products and services are distributed and marketed
under the PHOENIX Fuels Life trademark. The company primarily operates in the Philippines.
The company is engaged in the trading, supply and distribution of fuels; and terminaling, hauling and into-plane
services.
PPPI provides a range of petroleum products such as automotive fuels and aviation fuels. The company sells its
petroleum products through a network of retail service stations. The company’s terminaling, hauling, and into-plane
services is engaged in the leasing of storage space in its terminal depot, and hauling and into-plane services (hauling of
Jet A-1 fuels to airports and refueling of aircraft). PPPI has depot and storage terminals in Batangas, Davao, Cagayan de
Oro, Subic, Zamboanga, Cebu, Bacolod, Aklan and Calapan.
The company's subsidiaries include Michael, Inc.; Bunkers Manila, Inc.; Chelsea Ship Management & Marine Services
Corp and PNX - Chelsea Shipping Corp.
Key Metrics
The company recorded revenues of $1,636 million in the fiscal year ending December 2016, an increase of 1.7%
compared to fiscal 2015. Its net income was $58 million in fiscal 2016, compared to a net income of $48 million in the
preceding year.
Table 16: Phoenix Petroleum Philippines, Inc.: key financials ($)
$ million 2012 2013 2014 2015 2016

Revenues 1,850.8 2,330.6 1,858.7 1,608.3 1,636.2
Net income (loss) 34.8 35.6 33.1 48.5 58.5
Total assets 882.6 1,195.4 1,337.8 1,655.0 1,420.1
Total liabilities 642.7 847.6 960.5 1,118.6 897.7

Table 17: Phoenix Petroleum Philippines, Inc.: key financials (MXN)
MXN million 2012 2013 2014 2015 2016

Revenues 34,586.0 43,552.0 34,734.0 30,053.8 30,576.7
Net income (loss) 651.0 665.0 619.0 905.9 1,092.5
Total assets 16,493.0 22,338.0 25,000.0 30,926.6 26,538.0
Table 18: Phoenix Petroleum Philippines, Inc.: key financial ratios
Ratio 2012 2013 2014 2015 2016

Profit margin 1.9% 1.5% 1.8% 3.0% 3.6%
Revenue growth 26.0% 25.9% (20.2%) (13.5%) 1.7%
Asset growth 27.3% 35.4% 11.9% 23.7% (14.2%)
Liabilities growth 29.9% 31.9% 13.3% 16.5% (19.7%)
Debt/asset ratio 72.8% 70.9% 71.8% 67.6% 63.2%
Return on assets 4.4% 3.4% 2.6% 3.2% 3.8%
Figure 17: Phoenix Petroleum Philippines, Inc.: revenues & profitability

Figure 18: Phoenix Petroleum Philippines, Inc.: assets & liabilities

SEAOIL Philippines, Inc.
Table 19: SEAOIL Philippines, Inc.: key facts
Head office: 22 Floor, Taipan Place, F. Ortigas Ave., Pasig City, Metro Manila, PHL
Telephone: 632 397 1010
Fax: 632 398 1011
Website: www.seaoil.com.ph
SEAOIL Philippines, Inc. was founded in 1978. The company offered storage facilities for petroleum and petrochemical
based products. In 1988, the company started operating in commercial lubricants and in 1996 it became the first
independent fuel company to open a retail station in Philippines. As of 2015 the company operated over 240 stations.
The company offers fuel products ranging from automobile gasoline to industry-specific lubricants, and services such as
storage and shipping.
Key Metrics
As a privately held entity, the company does not reveal its financial details.

MACROECONOMIC INDICATORS
Country data
Table 20: Philippines size of population (million), 2012–16
Year Population (million) % Growth

2012 97.3 1.7%
2013 99.0 1.7%
2014 100.7 1.7%
2015 102.4 1.7%
2016 104.1 1.7%
Table 21: Philippines gdp (constant 2005 prices, $ billion), 2012–16
Year Constant 2005 Prices, $ billion % Growth

2012 145.2 6.8%
2013 155.6 7.2%
2014 165.1 6.1%
2015 175.7 6.5%
2016 186.6 6.2%
Table 22: Philippines gdp (current prices, $ billion), 2012–16
Year Current Prices, $ billion % Growth

2012 250.2 11.3%
2013 272.1 8.7%
2014 289.3 6.3%
2015 319.9 10.6%
2016 351.5 9.9%

Table 23: Philippines inflation, 2012–16
Year Inflation Rate (%)

2012 3.2%
2013 3.0%
2014 4.3%
2015 4.0%
2016 3.9%
Table 24: Philippines consumer price index (absolute), 2012–16
Year Consumer Price Index (2005 = 100)

2012 139.5
2013 143.7
2014 149.8
2015 155.8
2016 161.9
Table 25: Philippines exchange rate, 2012–16
Year Exchange rate ($/PHP) Exchange rate (€/PHP)

2012 42.2213 54.1180
2013 42.4393 56.3963
2014 44.3939 58.8841
2015 45.5248 50.5101
2016 47.4961 52.5472

METHODOLOGY
MarketLine Industry Profiles draw on extensive primary and secondary research, all aggregated, analyzed, cross-
checked and presented in a consistent and accessible style.
Review of in-house databases – Created using 250,000+ industry interviews and consumer surveys and supported by
analysis from industry experts using highly complex modeling & forecasting tools, MarketLine’s in-house databases
provide the foundation for all related industry profiles
Preparatory research – We also maintain extensive in-house databases of news, analyst commentary, company
profiles and macroeconomic & demographic information, which enable our researchers to build an accurate market
overview
Definitions – Market definitions are standardized to allow comparison from country to country. The parameters of each
definition are carefully reviewed at the start of the research process to ensure they match the requirements of both the
market and our clients
Extensive secondary research activities ensure we are always fully up-to-date with the latest industry events and
trends
MarketLine aggregates and analyzes a number of secondary information sources, including:
- National/Governmental statistics
- International data (official international sources)
- National and International trade associations
- Broker and analyst reports
- Company Annual Reports
- Business information libraries and databases
Modeling & forecasting tools – MarketLine has developed powerful tools that allow quantitative and qualitative data to
be combined with related macroeconomic and demographic drivers to create market models and forecasts, which can
then be refined according to specific competitive, regulatory and demand-related factors
Continuous quality control ensures that our processes and profiles remain focused, accurate and up-to-date

Industry associations
International Association of Oil & Gas producers (OGP)
209-215 Blackfriars Road, London SE1 8NL, GBR
Tel.: 44 20 7633 0272
Fax: 44 20 7633 2350
www.ogp.org.uk
Related MarketLine research

Industry Profile
Oil & Gas in Canada
Oil & Gas in the United States
Oil & Gas in China
Oil & Gas in Japan

APPENDIX
About MarketLine
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Oil & Gas in

Reference Code: 0115-2116

Publication Date: September 2017

Philippines - Oil & Gas 0115 - 2116 - 2016

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 1

Market value forecast

Market volume forecast

Philippines - Oil & Gas 0115 - 2116 - 2016

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Market value forecast ................................................................................................................................................. 2

Market volume forecast .............................................................................................................................................. 2

Category segmentation .............................................................................................................................................. 2

Geography segmentation ........................................................................................................................................... 2

Market Overview ............................................................................................................................................................ 7

Market definition ......................................................................................................................................................... 7

Market analysis .......................................................................................................................................................... 7

Market Data ................................................................................................................................................................... 9

Market Segmentation ................................................................................................................................................... 11

Category segmentation ............................................................................................................................................ 11

Geography segmentation ......................................................................................................................................... 12

Market Outlook ............................................................................................................................................................. 13

Market value forecast ............................................................................................................................................... 13

Market volume forecast ............................................................................................................................................ 14

Five Forces Analysis .................................................................................................................................................... 15

Buyer power ............................................................................................................................................................. 17

Supplier power ......................................................................................................................................................... 18

New entrants ............................................................................................................................................................ 19

Degree of rivalry ....................................................................................................................................................... 22

Leading Companies ..................................................................................................................................................... 23

Philippines - Oil & Gas 0115 - 2116 - 2016

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Philippine National Oil Company .............................................................................................................................. 26

Phoenix Petroleum Philippines, Inc. ......................................................................................................................... 29

SEAOIL Philippines, Inc. .......................................................................................................................................... 32

Macroeconomic Indicators ........................................................................................................................................... 33

Industry associations ................................................................................................................................................ 36

Related MarketLine research ................................................................................................................................... 36

About MarketLine ..................................................................................................................................................... 37

Philippines - Oil & Gas 0115 - 2116 - 2016

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Table 7: Petron Corporation: key facts ......................................................................................................................... 23

Table 8: Petron Corporation: key financials ($) ............................................................................................................ 23

Table 9: Petron Corporation: key financials (PHP) ....................................................................................................... 24

Table 10: Petron Corporation: key financial ratios........................................................................................................ 24

Table 11: Philippine National Oil Company: key facts .................................................................................................. 26

Table 15: Phoenix Petroleum Philippines, Inc.: key facts ............................................................................................. 29

Table 18: Phoenix Petroleum Philippines, Inc.: key financial ratios.............................................................................. 30

Table 19: SEAOIL Philippines, Inc.: key facts .............................................................................................................. 32

Table 20: Philippines size of population (million), 2012–16.......................................................................................... 33

Table 21: Philippines gdp (constant 2005 prices, $ billion), 2012–16........................................................................... 33

Table 22: Philippines gdp (current prices, $ billion), 2012–16 ...................................................................................... 33

Table 23: Philippines inflation, 2012–16....................................................................................................................... 34

Table 24: Philippines consumer price index (absolute), 2012–16 ................................................................................ 34

Table 25: Philippines exchange rate, 2012–16 ............................................................................................................ 34

Philippines - Oil & Gas 0115 - 2116 - 2016

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Figure 13: Petron Corporation: revenues & profitability ................................................................................................ 24

Figure 14: Petron Corporation: assets & liabilities........................................................................................................ 25

Figure 15: Philippine National Oil Company: revenues & profitability........................................................................... 27

Figure 18: Phoenix Petroleum Philippines, Inc.: assets & liabilities.............................................................................. 31

Philippines - Oil & Gas 0115 - 2116 - 2016

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