Philippines Oil Chief Meets NIOC Officials

Philippine National Oil Company (PNOC) is negotiating with Iran's state oil company NIOC for a long-term oil supply deal to feed a new refinery to be constructed in the Southeast Asian country.

"We plan to build an oil refinery with a daily processing capacity of 400,000 barrels. The plan has got the blessings of President (Rodrigo Duterte)," Pedro Aquino, chief executive officer of PNOC, told reporters on the sidelines of a meeting with NIOC officials in Tehran, ISNA reported on Saturday.

"The National Iranian Oil Company can be one of the main oil suppliers of the new refinery. We plan to purchase between 250,000 barrels and 260,000 barrels a day from the NIOC," the official noted.

Earlier this year, Aquino had said the PNOC was in talks or over 130,000 barrels per day of Iranian crude, or 4 million bpd per month.

The prospective refinery will have the capacity to process different oil grades, including Iran Heavy and the country's lighter oil blends, Aquino said, speculating that the complex will be built in three years at an estimated cost of $3 billion.

He indicated that the oil deal with Iran is not contingent on the refinery project.

"Imports could begin after the complex is built, but it could also take place sooner," he said without elaboration.

According to Philippine government data, Saudi Arabia (49.6%) and Russia (15%) were the top crude suppliers to the country in 2015. Iran missed out on the Philippine market that year as it was grappling with international economic sanctions over its nuclear energy program.

Manila halted oil imports from Tehran in 2012 following the imposition of tougher restrictions on Iran's trade and banking sector.

PNOC is also weighing up investment in a liquefied natural gas (LNG) plant in Iran with 2 million tons annual output capacity, Aquino added.

NIOC is pursuing plans to secure new customers by supplying crude oil to refineries that are designed or retooled to process Iran's heavy and sour grades. South Africa, which once relied on Iran for most of its oil imports, is in talks to resume the flow of crude oil from Iran for some of its oil processing facilities.

South African refineries were designed to process heavy grades of oil such as Iranian crude, but were refitted to process lighter blends after the US-led sanctions were imposed.

Iran and six world powers (the five permanent members of the United Nations Security Council plus Germany) struck a landmark deal in July 2015 to lift the economic curbs against Tehran that had shut it out of the global banking and financial system and hurt its oil export.