Citgo, Tesoro Reach Pact With Unocal on Gas

Oil refiners Citgo Petroleum and Tesoro Petroleum said Tuesday that they reached agreements with Unocal Corp. that will allow them to produce Unocal’s patented anti-smog gasoline blends for a fee of 1.2 cents to 3.4 cents a gallon.

The deals could mean higher U.S. production of the cleaner-burning reformulated gas, required at a third of U.S. pumps, particularly if other refiners follow suit, analysts said. Reformulated gas is most often used in population centers such as the West Coast--areas with some of the worst smog and highest pump prices. The oil industry has blamed Unocal’s patents as a major factor behind high gasoline prices.

Unocal expects its licensing plan to add roughly 1 cent a gallon to retail prices, though analysts said they expect the entire fee to get passed on to drivers. Unocal shares fell 34 cents to close at $37.82 on the New York Stock Exchange. San Antonio-based Tesoro shares fell 1 cent to close at $14.89 on the NYSE. Citgo, in Tulsa, Okla., is the U.S. refining unit of Petroleos de Venezuela and doesn’t have publicly traded shares.