RI-RP to build $2.2b oil plant

RI-RP to build $2.2b oil plant

MANILA (AFP): The government will allow a Filipino-Indonesian consortium to build a US$2.2-billion oil refinery in southern Philippines exclusively for export to the Asia-Pacific market, the Department of Energy (DOE) said yesterday.

Zenaida Monsada, chief of the DOE's energy resources supply administration division, said the Filipino firm was represented by Kaibigan Holdings Inc. but did not name the Indonesian company.

The refinery, with a capacity of 140,000 barrels per day, is to be built on Nonoc island, Surigao del Sur province, 700 kilometers south of Manila, and is targeted for commissioning in 1997.

Nonoc is an ideal location because it is the current site of a nickel refinery and has storage tanks and facilities for berthing large ships, said Energy Undersecretary Rufino Bomasang.

"This is a project where we have everything to gain and nothing to lose. You import crude, refine it here an export it," he told reporters. "It does not affect the petroleum industry but it is a plus for the country because you are employing Filipino labor and expertise."

The domestic oil industry is heavily regulated, but a law passed in 1992 requires the DOE to start deregulating the industry in 1997.

Monsada told reporters the DOE, through the Energy Industry Administration Bureau, has waived a requirement to conduct hearings before granting the permit since the facility is geared only for the export market and will not compete with domestic refineries.

The country's total refining capacity is 300,000 barrels per day, almost all of which are for domestic consumption. Crude refining operations are being done by three dominant oil firms here -- Petron Corp., Pilipinas Shell Petroleum Corp. and Caltex (Philippines) Inc.

Even if these firms would upgrade their refineries, most of it would still be used for meeting a growing domestic demand, Monsada said.

Petron, the country's biggest oil refiner which is 40-percent owned by Saudi Arabian Oil Co., has expressed plans to expand into the regional market.

Monsada said the consortium has also asked the Philippine government to grant the refinery site as a "free processing zone," allowing for tax breaks and other incentives, but this has yet to be approved.