SAUDI Aramco is selling its 40 percent stake in Petron Corp. for P22.5 billion or P6 per share, it was announced yesterday.

The price is very near the market price but off the P9 per share when Petron was listed 14 years ago.

The buyer is Ashmore, a US-based investment fund with $36 billion in assets. Industry analysts said the fund could have bought the stake for an unnamed principal.

Petron said in a disclosure to the stock exchange that SEA Refinery Holdings, a company owned by Ashmore, offered to buy Aramco Overseas Co.'s (AOC) 3.75 billion shares in Petron. AOC is a unit of the Saudi state oil firm.

The deal is subject to a review of the state-owned Philippine National Oil Co., which also owns 40 percent of Petron, but this was not seen as an obstacle after President Arroyo issued a statement welcoming the deal.

Arroyo described the offer by Ashmore as "a vote of confidence in Petron and the positive environment that has been created for foreign investment in our country."

"While we appreciate that AOC's business focus has changed since it made its investment in Petron 14 years ago, we are pleased that it will maintain its ties to the Philippines through the commitment by its parent, Saudi Aramco, to maintain strong commercial ties with Petron after the sale of the AOC shares to an approved investor," Arroyo added.

A Petron official said Aramco remains committed to supplying Petron's crude requirements. He added sale to Ashmore will have no effect on company's operations.

Independent sources said the sale was brokered by former Industry Minister Roberto V. Ongpin and Vivian Yuchengco.

The team of Yunchengco also brokered the sale of PLDT shares owned Philippine Telecommunication Investors Corp. for about P25 billion.

Petron was the old Philippine Standard Vacuum (Stanvac) owned by Standard Oil (Esso), one of the so-called Seven Sisters which controlled the global business before the 1973 oil embargo imposed by Arab countries against the West.

The Marcos regime wanted the state to have its own refinery for strategic reasons.

In the time of President Ramos, Petron sold 40 percent of its shares to Aramco.

Analysts said the deal might not be good for Petron, as the company will be losing a technical partner.

"Having a fund in place of Saudi Aramco may not be positive for minority shareholders," said Jose Vistan, an analyst at AB Capital Securities. Twenty percent of the firm is held by individual investors.

"With Saudi Aramco, oil supply is assured and Petron is benefiting from the technical expertise offered by Aramco," he said, adding that Petron's profits were expected to improve as its petrochemical business takes off commercially this year.

Petron hopes to increase gasoline production and extraction of propylene, a petrochemical used for food packaging materials and impact-resistant plastics, with the opening of a petro fluidized catalytic cracker facility at its 180,000 barrel per day refinery in Bataan.

Petron is expected to post net income of P5.8 billion for 2007, down 3.5 percent from 2006. That followed flat earnings growth in 2006.

Petron will report 2007 earnings next month.