Tesoro Corp.
(TSO) shipped its first barrels of crude oil through a reversed Panama pipeline, which runs from the Atlantic to the Pacific Basin. Owned by Petroterminal de Panama (PTP), a cooperative venture between the Government of the Republic of Panama and private industry, the 81-mile pipeline formerly flowed from the Pacific to the Atlantic.
At the time of signing the agreement to use the PTP pipeline in December 2008, Tesoro said that it will ship 107,000 barrels per day (Bbl/d) of crude through the pipeline under a seven-year agreement.
Reversal of the pipeline establishes a new conduit for crude oil transportation and will help Tesoro to economically deliver a broader range of crude oils produced in Africa, the Atlantic region of South America and the North Sea, through Panama, to the company’s five Pacific Rim refineries (two in California and one each in Washington, Hawaii and Alaska).
Additionally, Tesoro’s ability to utilize the tankage dedicated for its exclusive use at PTP is likely to provide the company with strategic advantages related to freight, storage, blending, and delivery scheduling optimization.
San Antonio, Texas-based Tesoro is an independent refiner and marketer of refined petroleum products in the western U.S. It owns and operates seven refineries with a combined crude oil processing capacity of approximately 665,000 Bbl/d.
We currently rate Tesoro shares as Underperform.
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