The Department of Energy (DOE) said pursuing a strategic petroleum reserve (SPR) for the country will need further studies as this will entail significant costs and proper timing, but it will not directly help in lowering local fuel prices.
Energy Secretary Raphael Lotilla said it must be considered carefully, noting that the SPR in the United States is being used only during times of supply constraints and not as a price adjustment mechanism.
The SPR involves storage of crude oil and it is replenished ideally only when fuel prices are low, Lotilla added in a recent interview.
“It’s in the form of crude oil and in the case of the Philippines, our single refinery accounts only for 30 percent of our domestic supply so 70 percent is (imported) refined products and not crude oil since it is more difficult to store than refined products,” Lotilla said.
The DOE also mentioned that among the US’ storage facilities for SPR are underground natural caverns and empty oil fields to prevent leaks and avoid the need to construct additional facilities.
Lotilla added: “We don’t have that (in the Philippines). Unfortunately, our geology in onshore areas is not designed for that. So, if we have to build storage facilities, can you imagine the amounts we will be investing?”
The DOE said the government must also consider the fact that the entire world is now preparing to veer away from the use of fossil fuel and is focused on developing electric vehicles.
“We’ll have to take a look at all of these things but it is a very legitimate question to be asked whether by our legislators or by the public on what do we do with a strategic reserve. In 1973, when Saudi Arabia increased their prices of oil… even at that time, the Philippine government did not go for a strategic reserve. We need to study why our previous generations did not go for that kind of a solution,” Lotilla said.
In 2021, the DOE issued a circular that serves as a guideline for the establishment of the SPR.
Under the circular, the DOE will establish the reserves while the Philippine National Oil Co. (PNOC) will 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.
PNOC is also tasked to 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.”
Likewise, PNOC will establish the competence to distribute products to the intended purpose of the SPR, from transport logistics down to the fuel discharge to the end consumers.
At present, minimum inventory requirements in the country are 15 days for finished products, 30 days for crude oil and seven days for liquefied petroleum gas.
During the previous administration, the DOE said implementing SPR will double the current inventory requirements.
