Russian Oil Giant OAO Lukoil's Subsidiary Getty Petroleum Marketing Defaults on Ethanol Contract

Jun 28, 2010, 15:04 ET from Bionol Clearfield, LLC

QUINCY, Mass., June 28 /PRNewswire/ -- Bionol Clearfield, LLC (Bionol), owner and operator of a $270 million state-of-the-art ethanol facility in Clearfield, Pennsylvania, announced today that Getty Petroleum Marketing Inc., a subsidiary of OAO Lukoil, has defaulted on its billion dollar ethanol contract with Bionol.  

Bionol and Getty entered into a five year contract in which Getty committed to purchase substantially all of the plant's output under a formula-based price.  Just over two months into its 5 year term, Getty breached the contract.  

"A consortium of lenders, investors and the Commonwealth of Pennsylvania have all relied on Getty and Lukoil's good faith, integrity, and experience in pulling this contract and project together, which has generated 65 direct jobs and significant economic development for Commonwealth of Pennsylvania," said Stephen  J. Gatto, Chairman and Chief Executive Officer of Bionol.  "We expect Getty to honor its contractual commitments and we will zealously enforce our rights under the contract."  

"The Commonwealth believes that Getty/Lukoil's demand for arbitration is ill-conceived and inappropriate," said Pennsylvania Governor Edward G. Rendell.  "We believe that they would be better served by reaching an amicable resolution to this problem, which will pay Bionol in accordance with the Take or Pay Agreement. If they are unwilling to do so, I am prepared to take all the steps that are necessary to protect the interests of the Commonwealth in this matter."

In the meantime, the plant continues to operate, producing over 300,000 gallons of renewable fuel per day while purchasing over 100,000 bushels of corn, much of it locally grown.


Samuel McConnell, Vice President

(617) 657-5200

SOURCE Bionol Clearfield, LLC