PSE Circular for Brokers No. 2718-99

October 25, 1999 PSE CIRCULAR FOR BROKERS NO. 2718-99 Philippine Stock Exchange, Inc. (PSE) Philippine Stock Exchange Center Exchange Road, Ortigas Center Pasig City Attention: Ms . Grace de Guia Assistant Manager, Disclosure Department Gentlemen: Pursuant to SEC and PSE's disclosure requirements, attached is a press release regarding President Estrada's appeal to the oil companies to lower fuel prices. prcd Very truly yours, (SGD.) LIBERADOR V. VILLEGAS Corporate Secretary Statement of Chairman Jose A. Syjuco Jr. On President Estrada's Appeal to the Oil Companies to Lower Fuel Prices Petron Corporation October 22, 1999 We are sensitive to the President's sentiments about oil prices and his desire to lessen the impact of these on the public and on the economy. We do respect what he is requesting of us, and we are studying how we can respond to his appeal. As a matter of fact, on our own initiative we have been holding back on price adjustments out of the very same concerns that the President has. In August, for example, Mr. Raul Concepcion of Oil Price Watch said that he expected local prices to increase by 64 centavos per liter. Petron-actually increased retail prices by only 35 centavos on August 23. In September, Mr. Concepcion warned of a 58-centavo increase, but Petron raised prices by only 44 centavos by October 2. As a result of our pricing restraint, we have accumulated an underrecovery of P1.37 per liter since crude prices started moving up in March. prcd So we do take a very cautious approach to the pricing of our fuels. But while we want to accommodate social concerns, we want to do this without greatly undermining the viability of our business and the interests of our shareholders. We have to remain a viable company if we are to continue to perform our role as a major supplier of fuel at reasonable prices. Like everyone else, we are caught in this crisis caused by the rapid surge in global oil prices, and the continuing weakness of the peso against the US dollar.