Philippine leading oil firm Petron Corp. is negotiating for the renewal of a 10-year supply contract for crude oil that shall be fed and processed at its Port Dickson refinery in Malaysia.
According to company documents, Petron is “in negotiation for renewal” of its supply contract for Tapis crude oil and Terengganu condensate with Exxon Mobil Exploration and Production Malaysia Inc. (EMEPMI). The oil firm’s existing supply contract will expire by March next year.
“About 67-percent of the crude and condensate volume is sourced from EMEPMI, while the balance from other term and spot purchases,” Petron said.
The oil company said the pricing for the crude supply contract is “determined through a formula that is linked to international industry benchmarks.”
Petron noted that beyond its own requirement for refined petroleum products, it is likewise utilizing Port Dickson refinery spare capacity “for crude processing arrangement of third parties to optimize utilization and benefits.”
The oil firm specified that it already completed the construction of its diesel hydrotreater process unit that enabled Port Dickson refinery to comply with the Euro 5 specifications for diesel - as mandated by the Malaysian government in April this year.
Further, the company already finished the construction of onshore facilities and one of two additional product tanks as of March this year, while the remaining product tank and offshore facilities are also due for completion. With these undertakings, Petron noted that it would be able to save on freight costs.
The Philippine oil company has been ramping up its operations in Malaysia. It has now 720 service stations serving customers in that Southeast Asian neighbor-market as of March this year.
Apart from its retail petroleum network, Petron additionally set up approximately 300 convenience stores and 10 product terminals in the Malaysian market.
The company emphasized that it also has presence in the aviation segment, with 20-percent ownership of multi-product pipeline servicing Kuala Lumpur International Airport.
The Malaysian government regulates the pricing structure of certain refined petroleum products, quotas, certain fixed amounts for marketing, transportation and distribution costs corresponding to the state-prescribed subsidy structure.
Starting in 2017 in particular, the government has been mandating the retail prices of RON 95 and RON 97 petroleum and diesel products on a weekly basis, and this is being benchmarked on Mean of Platts Singapore.