Eastern Petroleum nixes plan to lease refining facilities

Eastern Petroleum Corp. (EPC) has abandoned plans to forge a lease processing agreement with some local and foreign oil refiners due to uncertainties in the world crude market.

EPC chairman Fernando L. Martinez said they are currently having problems with the crude supply. "We have decided not to push through with the negotiations since we are uncertain about our crude supply which comes mostly from Iraq," he said.

The deal, he said, could have been sealed within this month were it not for the Sept. 11 terrorist attack in the US.

"Everything is in place except for the guaranteed crude supply. If we will not get the supplier to agree, we can’t also negotiate with the refiners," Martinez said.

He said they would probably push through with the deal once the world crude market "is back to normal".

According to Martinez, the price of crude when the negotiations started in April this year was $26 per barrel.

"What we are trying to work out is for these refiners to give us discount. But with the current price of crude, this will be difficult," he said.

Under the proposed refining agreement, Martinez said the EPC could utilize refining facilities of a local or foreign firm to refine its crude imports into finished petroleum products.

EPC had approached the Big 3 oil companies in the country. But the oil majors apparently were lukewarm to the proposal.

When the oil industry was deregulated in 1998, EPC was among the first to take advantage of the liberated environment. Since 1998, EPC had participated in various activities such as retail business wherein it was able to put at least 30 service stations. Most of these gasoline stations are situated within Luzon.

Aside from retail downstream oil business, EPC is also eyeing opportunities in the upstream segment of the local oil sector. – Donnabelle Gatdula