Pilipinas Shell Petroleum Corp. has expressed interest to purchase crude from the Alegria oil and gas discovery in Cebu, according to the parent firm of the project proponent, Polyard Petroleum International Group Ltd.
Polyard disclosed to the Stock Exchange of Hong Kong unit China International Mining Petroleum Co. Ltd. received a letter of intent from Shell, the country’s second largest oil company.
“Pursuant to the letter of intent, CIMP may sell and PSPC may purchase the crude oil produced by CIMP from the Alegria Oil and Gas Field,” Polyard said.
Polyard cited the letter of intent in which an initial analysis of the quality of the crude oil produced by CIMP was found to be acceptable as a feedstock to Shell’s refinery, “but it is subject to further detailed analysis.”
Shell owns a 110,000 barrel-per-day refinery in Batangas. Shell officials did not comment as of press time.
The letter said the price of the crude oil produced by CIMP and additional contractual terms and clauses would be subject to negotiations.
“Upon successful resolution of the above conditions and negotiations, a formal sales and purchase agreement shall be negotiated and executed by CIMP and PSPC,” Polyard said.
It clarified that no definitive consideration, means and terms of the formal agreement had been formulated, and no binding agreement in relation to the letter of intent had been signed.
“The board of directors of the company considers the potential transactions contemplated under the letter of intent, if materializes, (offer) potential opportunities for CIMP to secure sales of crude oil and enhance its performance which will be in the interest of the company and its shareholders as a whole,” it said.
CIMP holds Petroleum Service Contract No. 49 which covers the Alegria oil field, an onshore site in the fourth-class town of Alegria in the southern part of Cebu province.
CIMP acquired an 80-percent stake in the participating interest of the SC 49 project and became its operator in July 2009. The contract covers a 25-year production period.
Energy Secretary Alfonso Cusi earlier said the Alegria oil field can power up to 60 megawatts of natural gas-fired power plant and produce up to 360 barrels of oil per day.
“There are two wells that already produced 180 barrels per day. They are ready so we are just scheduling when will be the first delivery, first output,” Cusi said.