PH seeks to actualize crucial oil stockpile plan
The government is a step closer to realizing a years-long plan of building a stockpile of crude and refined fuels that will protect the country from the effects of supply disruptions here and abroad.
The Department of Energy on Wednesday said it has issued the implementing guidelines for the establishment of the Philippine Strategic Petroleum Reserve Program (PSRP), a strategic hoard that it would jointly manage with state-run Philippine National Oil Co. (PNOC).
According to the DOE, Department Circular No. DC 2021-09-0028 dated Sept. 16 was meant to lessen the country’s vulnerability brought about by disruptions in the supply or price of imported petroleum.
“This circular will help bring the country closer to attaining energy security by decreasing our dependence on the importation of crude oil and finished petroleum products to meet our fuel requirements,” Energy Secretary Alfonso G. Cusi said in a statement.
This follows a directive issued in November 2019, under DOE Memorandum Order No. MO2019-11-0001, which ordered the PNOC to conduct a feasibility study.
According to Energy Undersecretary Felix William Fuentebella, the new circular includes a target to finish the study within 18 months.
As envisioned by the DOE, the PSPR would consist of “large stockpiles” of crude oil as well as petroleum products, stored in facilities located around the country “and possibly overseas” that should be released during periods of local or international oil supply disruptions.
During an international price spike in early 2018, Malacanang announced that the DOE was importing diesel from countries that are not members of the Organization of Petroleum Exporting Countries, such as Russia, as a way of providing a lower-cost supply of the refined fuel.
Despite pronouncements that PNOC Exploration Co. has secured a shipment of 240,000 metric tons supposed to arrive in June 2018 , no delivery materialized.
One significant reason was, as Cusi explained back then, the country’s limited ability to receive and store such cargos.
Another reason was that the DOE wanted to bring in Euro 2-grade diesel. However, the Department of Environment and Natural Resources pointed out that this would violate regulations which required oil firms to sell fuels that pass the more stringent Euro 4 standard.
According to the DOE, its latest circular tasks the PNOC to “acquire the necessary storage and blending capacity by construction, lease, or other acquisition options based on the agreed minimum and maximum volume level determined by the feasibility study and specified on the approved guideline on securing storage and blending facility.”
The PNOC was also tasked to acquire the appropriate and most economical supply contracts and product type portfolio for the PSRP.
Further, PNOC was also made responsible to make itself competent in distributing stockpile products when the emergency conditions arise—from the transport logistics down to handing the fuel over to end-consumers.
“The distribution chain may be done through lease or acquisition,” the DOE said.