Petron Corp. said it is prepared to bring its lease agreement dispute with state-run Philippine National Oil Co. to international arbitration to ensure that its rights are protected.
“We have yet to go into arbitration. I will bring that to international arbitration…[but] I will wait for the decision of the Philippine court,” Petron president Ramon Ang said.
Petron has existing lease agreements with PNOC for the sites of its $3-billion refinery in Bataan, 24 bulk plants and 67 gasoline stations. The company supplies over a third of the country’s petroleum requirements.
Petron filed a case against PNOC last year for alleged breach of a binding and compulsory sale-leaseback contract, saying it threatens to hurt the company’s operations.
Petron obtained a temporary restraining order with the Mandaluyong Regional Trial Court against PNOC.
“If we win [in the court], then that’s it. If not, we will go to arbitration,” Ang said.
He said the TRO nullified the August deadline previously set by PNOC for Petron to come out with its environmental assessment for the leased facilities which are due to expire in August 2018.
“In fact, what we are talking about today, is give back to us our land and our payment. We put that in your name for P115 million one time but now they are asking P60 million a year for 25 years. That’s almost P1.25 billion,” Ang said.
He said PNOC wanted to remove the automatic renewable clause in the contract so it could offer the sites to other oil companies, disregarding the rights of Petron.
“If PNOC will continue to disregard its reciprocal obligations on the conveyance of our land, then they should return the properties to us. Petron has invested billions of dollars on these properties. PNOC’s action clearly jeopardizes the country’s fuel supply security and government’s thrust to develop key industries,” Petron said earlier.
Petron said it offered to negotiate the agreement with PNOC as early as 2016 but it was constrained to seek judicial intervention when PNOC president Reuben Lista announced plans to terminate the lease agreement with Petron on the basis of provisions in the contract allegedly disadvantageous to the government.
PNOC asked Petron to abandon and clean up the contested sites on or before the expiration of the lease agreement.
Petron said the leased properties are originally owned by Petron, and acquired over several years to be used for its refinery, distribution and sales operations. Petron said it was compelled to give up its land to PNOC in 1993 to comply with the requirements of its privatization.
The company said the transfer of the properties was enabled through a deed of conveyance and lease agreements that guaranteed its long-term and continuous use by Petron in a bid to secure foreign and local investments in Petron and ensure stability of its operations.
