Tesoro to Ship Oil to Pacific Through Panama Pipeline

By Steven Bodzin and Jordan Burke

Dec. 16 (Bloomberg) -- Tesoro Corp., the largest refiner in the U.S. West, entered a seven-year agreement allowing it to ship crude oil from the Caribbean Sea to the Pacific Ocean through a pipeline owned by Petroterminal de Panama.

The deal for 107,000 barrels a day of pipeline capacity and storage-tank space will let the company move Atlantic oil to its five Pacific Rim refineries accessible by tanker, San Antonio- based Tesoro said today in a statement. The conduit will be ready in the third quarter of 2009, the company said.

Petroterminal will build terminals on both sides of the Isthmus of Panama and Tesoro will use their pipeline and storage to blend and ship different crude-oil grades. The terminals will open in the first quarter of 2010, Tesoro said.

Companies are seeking ways to ship oil produced in the Atlantic Basin, which includes West Africa and Brazil, to the Pacific markets, where Chinese and Indian demand drive up prices. BP Plc secured 65,000 barrels a day of pipeline capacity from Petroterminal de Panama on May 27.

Terms of the deal weren’t disclosed and Sarah Simpson, a Tesoro spokeswoman, didn’t immediately return a telephone call seeking comment.

Tesoro rose 39 cents, or 4.2 percent, to $9.59 as of 9:31 a.m. in composite trading on the New York Stock Exchange. Before today, the stock had dropped 81 percent this year.

To contact the reporter on this story: Steven Bodzin in Caracas at sbodzin@bloomberg.net; Jordan Burke in New York at jburke29@bloomberg.net.