The Department of Energy (DOE) is crafting the guidelines on the establishment of a government-owned reserve of crude oil, finished petroleum products and biofuel reserve..
The DOE said Department Circular No. 2021-09-0028 signed last September 16 establishes the Philippine Strategic Petroleum Reserve (SPR) Program meant to lessen the country’s vulnerability brought about by disruptions in the supply or price of imported oil.
The DOE as early as 2019 directed the Philippine National Oil Co. (PNOC) to conduct a feasibility study on the establishment of a SPR consisting of large stockpiles of crude oil as well as petroleum products, stored in facilities located around the country and possibly overseas that are released during periods of local or international oil supply disruptions.
The new circular will serve as the implementing guidelines for the establishment of the SPR program with the PNOC and DOE jointly implementing it.
Under the circular, DOE will establish the reserves while the PNOC is tasked 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 a feasibility study that is yet to be conducted.
The PNOC will acquire the appropriate supply contracts and product type portfolio that allows it to secure the necessary volume to attain the objective of the SPR that must be done “in a manner most economical and advantageous to the government.”
PNOC will determine the competence to distribute products to the intended purpose of the SPR from transport logistics down to the fuel discharge to the end-consumers.
However, DOE’s Oil Industry Management Bureau said before the actual implementation of the SPR, another feasibility study will have to be done to determine the following: requirements for the creation of the PNOC SPR management team; acquisition and maintenance of storage, blending, transport, distribution and other ancillary facilities and equipment; and the establishment of supply contracts of fuel products.
The standards for inventory management; setting of inventory purchase and drawdown prices; implementation of the different types of drawdown; preparation, evaluation and approval of budget and financial performance; health, safety, security and environmental assurance; performance indicators; reportorial requirements; and other guidelines necessary for the implementation of the SPR will also be produced by the study.
At present, minimum inventory requirements in the country is 15 days for finished products, 30 days for crude oil and 7 days for liquefied petroleum gas.
The DOE said before that the implementation of the SPR will double the current inventory requirements.
