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Citgo, Tesoro Reach Pact With Unocal on Gas

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Reuters

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.

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