New oil player offers to lease refineries of Shell

Newcomer Eastern Petroleum Corp. (EPC) is looking into the possibility of leasing the refining facilities of Pilipinas Shell Petroleum Corp. and Caltex Philippines Inc., company officials said.

EPC chairman Fernando L. Martinez said they are now drawing up a plan. "Potential business partnerships like this is very healthy under a deregulated environment," Martinez said.

Ask for comment, Shell country chairman Oscar R. Reyes said they would look into the proposal. "We encourage partnerships among the new players especially if the proposal would put us both in win-win situation," Reyes said.

Shell has an oil refinery in Tabango, Batangas which has a total capacity of 155,000 barrels of oil per day (BOPD). Because of the current economic slowdown, however, the refinery is now processing only 135,000.

EPC has previously approached Petron Corp. but no agreement was reached.

When the oil industry was regulated in 1998, EPC among the first to take advantage of the liberated environment. Since 1998, EPC has been participating in the retail business. The company now has at least 22 service stations in Luzon.

EPC is also eyeing opportunities in the upstream segment of the local oil sector. Martinez said the company would resist some oil prospects in Palawan, which were earlier explored but abandoned by several exploration firms.

"We are reviewing the profiles of these prospects. We plan to revisit the oil exploration experience of the country together with an Asian partner," Martinez said, adding that he had initiated talks with a number of exploration companies in the region.

Last February, EPC announced a plan to increase its authorized capital stock from P45 million to P500 million to finance its expansion project in the medium-term.

Martinez said the increase is necessary to raise funds for the company‘s P240-million investment to put up more service stations all over the country. Each station requires P3-million investment.

The company intends to establish this year at least 80 more service stations nationwide, of which 50 will be located in the Visayas and Mindanao region and the rest in Metro Manila.