POSSIBLE CO-MANAGEMENT OF THE AMERICAN SAMOA GOVERNMENT PETROLEUM TANK FARM

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By Fili Sagapolutele

PAGO PAGO, American Samoa (August 12, 2000 – PIDP/CPIS)---The American Samoa government and petroleum suppliers are exploring the possibility of co-managing the Gataivai Tank Farm.

The Governor's Legal Counsel, Henry Kappel, said a meeting to this effect was held in Honolulu recently. Represented at the meeting were Tesoro South Pacific, Mobil Oil and BP Southwest, while the government was represented by Kappel and Jack Kachmarich of the Territorial Office of Financial Reforms.

Kappel said the purpose of the meeting was two fold: to work out a tank farm operating agreement and to begin discussion on a possible Mobil Oil and BP joint venture in co-managing the government tank farm when Tesoro pulls out of American Samoa.

Tesoro has been in the territory for close to 20-years (starting as PRI), but the company announced last year that it would end its role as petroleum supplier for the local market, citing competition with suppliers who import fuel from Australia and Singapore.

Tesoro, the parent company of Tesoro Hawai‘i, which is owned by Texas-based Tesoro Petroleum Corp., remained the tank farm operator. But Nathan Hokama of Tesoro Hawai‘i said the company will leave the territory after its contract expires at the end of the year.

The actual date of departure is not yet firm. The company said it will offer its current employees a severance package and provide for a smooth transition.

Mobil Oil, however, has an appeal with the Administrative Law Judge (ALJ) over the earlier awarding of the contract to Tesoro, which is set for a hearing on October 15th.

According to Kappel, Mobil and BP representatives will return to their corporate headquarters and present what was discussed during the meeting, details of which have not been made available.

However, Kappel, who returned on Monday, said, "The co-management of the Tank Farm is not a question of if, but more of a question as how and in what particular form do we want this to take place."

A positive reaction from both Mobil and BP on a joint management of the Tank Farm, hopefully would lead to the dismissal of the pending litigation with the ALJ, said Kappel.

The benefit of a joint management venture, according to Kappel, is that American Samoa consumers would have a continuous petroleum supply as well as competitive prices.

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