Petroleum Giant Considers Building Panama Refinery

Oil and natural gas producer Occidental Petroleum Corp. is considering plans to build a refinery in Panama that could produce fuels for export to the United States, a company spokeswoman said Wednesday.

In late December, Oxy signed a memorandum of understanding with the government of Panama to research whether operating a crude oil processing plant in the country would pay off, said Jan Sieving, spokeswoman for the Westwood-based company.

“We’re still just looking at the feasibility of it.... It’s very, very early in the concept,” Sieving said. “There are no plans at this time to go forward with a project.”

The attraction for Occidental, which doesn’t own or operate any refineries, is the emerging shortage of plants that can process the heavier grades of crude oil that are more plentiful in today’s markets.

In addition, the location under consideration has access to a pipeline that could carry the refinery’s gasoline, jet fuel and diesel to the west or east coasts of Panama for export, Sieving said. From there, the fuels could be easily exported to California or other West Coast states or to the U.S. Gulf Coast.

Oxy, the fourth-largest U.S. oil company, could use the crude oil it produces in Ecuador and Colombia or buy oil produced by other companies.

Sieving declined to confirm a Reuters report that the proposed refinery would process as many as 400,000 barrels of oil a day and cost about $6 billion.

“They’re looking at what potential supply would be and what potential demand would be and what capacity would be needed,” she said. “There’s just a good business opportunity, but it wouldn’t be one that we’d do alone.”

Shares of Oxy rose $1.01 to $95.61.