Aramco's bet

EYES WIDE OPEN

- IRIS GONZALES

After nearly two decades, Saudi Arabia's oil giant quietly returned to the country through a stake in Co family-led Unioil Petroleum Philippines Inc.

It's a significant 25 percent stake that Aramco has agreed to acquire in Unioil, now among the biggest independent oil companies in the country.

What does this mean for the country?

The way I see it, Aramco's entry would toughen competition in the local oil industry.

While competition usually benefits consumers, this could mean more challenges for existing local players, including the big ones which are already grappling with an increasingly difficult landscape.

The Philippine oil industry's journey has not been smooth sailing for some time now - Pilipinas Shell and Petron Corp. have earlier shut down their refineries because of economic challenges, including high cost of operations. Then there are the challenges such as compliance with the Biofuels Act which has artificially inflated prices of petroleum; maturity of market in certain localities which led to closures of some gasoline stations and permitting requirements in some LGUs which led to additional expenses for oil players.

Outside the Philippines, Royal Dutch Shell has been shutting down refineries and selling assets in other countries as well, a reflection of a changing oil environment across the globe.

In fact, across the US, Shell has a goal of closing 500 gas stations as the company looks into the future by hitching a ride on the growing electric vehicle industry.

But for the government, Aramco's entry into the Philippines is a welcome development.