Despite legal issues between state-run Philippine National Oil Co. (PNOC) over leased properties, Petron Corp. has guaranteed a safe fuel supply nationwide.
“So far, we continue to enjoy undisturbed possession of the leased properties that are vital to our operations, pending resolution of the issues we raised in court against PNOC and its president, so there is nothing to worry about. We remain committed to providing the kind of services we provide our consumers all over the country,” Petron President and CEO Ramon Ang said.
Currently, the oil firm provides nearly 40 percent of the country’s petroleum needs through its 180,000 barrel-per-day Bataan refinery, 30 terminals, and 2,400 stations nationwide.
Petron has existing lease agreements with PNOC that is set to expire on Aug. 31, 2018. The lease agreement is needed for its $3-billion refinery in Bataan, 24 bulk plants, and 67 gasoline stations.
PNOC in early 2017 threatened to terminate the lease agreement and bid out the leases to other companies unless Petron waives the provision on automatic renewal.
Petron filed a case against PNOC for breach of a binding and compulsory sale-leaseback contract.
Petron owned and developed the land it is leasing from PNOC in 1993. However, the company was pressured to give up its land to PNOC that same year to comply with the requirements of its privatization to make way for foreign partner Saudi Aramco.
However, the turnover was conditional provided that the state-run company would lease back the property to Petron over the long-run.
The properties were conveyed by Petron to PNOC at book value of P150 million through a sale-and-lease-back agreement which included an “automatic renewal” of the contract upon expiry of the first 25 year-term.
Petron has already paid an average of approximately P 140 million annually under the lease agreement since 1993, totaling to P3.4 billion by the end of 2017.
“We hope that PNOC lives up to its reciprocal obligations for the conveyance of our land. Otherwise, said properties should be returned to us. We have invested billions of pesos on these properties and PNOC’s actions clearly weaken the country’s fuel supply security and the government’s thrust to develop key industries, ” Ang said.