Government of the Federated States of Micronesia

Petroleum Corporation Gets New Chairman

Kolonia, POHNPEI (FSM PetroCorp): October 31, 2008 - The Federated States of Micronesia Petroleum Corporation (FSMPC) has reorganized its Board of Directors following a meeting in Kosrae on the 27 and 28 October, appointing Mr. Willie Hawley as its Chairman. Members on

the Board now include Faustino Yangmog as Vice Chairman, Alexander Narruhn as Secretary, Feliciano Perman, Yalmer Helgenberger, Redley Killion, and Senator Gibson Siba.

The FSMPC is a government commercial organization formed by public law in 2007. It commenced operations in July 2008 and was designed to manage the exit of ExxonMobil from the States of Pohnpei, Yap, and Chuuk and provide a strategic long term focus for securing the energy requirements of the nation. The FSMPC was established through independent financing from commercial lending institutions, and is required to pay all taxes, duties and rates as any private sector operation.

"Heading this new Corporation will be challenging but exciting. It is arguably one of the most strategic and important decisions made by our Leaders based on sound economic rationale. They have tasked us with operating this entity on a sustainable commercial basis, without the benefits of tax concessions or establishment grants. It has not and will not be easy, and I am honored to be appointed as Chairman during this period of establishment " says Mr. Hawley.

The FSMPC procure their fuel requirements from ExxonMobil under a national fuel supply agreement that was approved by Congress. The agreement ensures that the FSM continue to receive regular and secure supplies of products over the next five years, with a pricing structure that is linked to world market movements. In recent weeks international crude oil

prices have reduced to sixty-five dollars per barrel as a result of weakening demand and a strengthening US dollar however domestic prices have been slow to reduce.

"I recognize that international crude oil prices have reduced, however people must be aware that we purchase refined products like gasoline, diesel and kerosene, and these prices remain relatively high. We have reduced prices twice since taking over the operations three months ago, and I personally can't wait for the price of fuel to drop further. But we must all remember that our corporation is still young and we must take a conservative approach when dealing with volatile oil prices. In the last twelve months, oil prices have proven to rise just as fast as they fall" says Chairman Hawley.

The FSMPC has terminal facilities in all three States and maintain strategic oil storage to ensure that there are uninterrupted supplies of products for all the States. Petroleum products for the Pacific are produced by refineries in Singapore. Products are then shipped by medium range tankers to large storage facilities in Guam, and then shipped to the FSM by a smaller local coastal tanker called the Golden Micronesia. The Golden Micronesia also serves Palau, the Republic of Marshall Islands and the CNMI.

"We maintain a significant amount of inventory in our tanks. It is often well over twenty

thousand barrels of fuel valued at over four million dollars. Because we receive cargoes on a monthly basis, we review the average value of our stock on hand after each delivery and determine what savings we can pass on. For example we received a tanker of fuel into Pohnpei this week, and we will pass on these savings to the general public from opening of business next week" says Chairman Hawley.

For more information contact the FSMPC on 691 322 6364.


For further information on this release, please contact:

FSM Office of the President
Public Information: Press, Radio, Video
P.O Box 34
Palikir Station, Pohnpei, FM 96941
Tel.: (691) 320-2548/2092
Fax.: (691) 320-4356
e-mail: fsmpio@mail.fm
http://www.fsmpio.fm/