The Department of Energy (DOE) is reviving plans for the creation of a government-run oil stockpile that will store both crude oil and finished petroleum products amid global oil prices hitting all-time high at $75 per barrel.

The energy department is eyeing to concretize that plan via its issuance this month of Department Circular No. DC2021-09-0028, that chiefly calls for the conduct of a feasibility study to underpin the establishment of a propounded Philippine Strategic Petroleum Reserve (SPR) Program.

As noted by Energy Secretary Alfonso G. Cusi, the creation of an oil stockpile “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.”

According to the DOE, the government-owned SPR shall comprise crude oil, finished petroleum products and biofuel reserves that will address potential disruption of oil supply in the world market and to calibrate targeted fuel relief program.

“The SPR consists 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 DOE said.

However, stakeholders in the deregulated downstream oil sector are not cool about the plan saying the proposal will likely be a “dead on arrival” mainly because the country has just one operating refinery now. They said it is also a self-defeating strategy to plan for oil stockpiling when prices are reaching peaks, causing heavy financial burden on consumers.

In the DOE Circular, it was not laid down how the funding for the SPR will be allocated or sourced and the level of reserves to be stored for crude, finished products and biofuels. Siting has not also been specified.

The DOE just stated that the SPR will be jointly implemented by the department and that of state-run Philippine National Oil Company (PNOC). A memorandum of the energy department, in particular, is directing PNOC to conduct the feasibility study that will then serve as the guide and framework for the oil reserve’s implementation.

Under the Circular, "PNOC is tasked to acquire the necessary storage and blending capacity for 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 agency added that “the approval of supply contracts and maintenance of product type portfolio should take into account the feasible and sustainable operation of the SRP in the manner most economical and advantageous to the government.”

PNOC was further instructed to establish “the competence to distribute products to the intended purpose of the SRP – from the transport logistics down to the fuel discharge to the end-consumers.”

In DOE’s initial assessment, “the distribution chain may be done through lease or acquisition.” In times of disasters, PNOC will also make sure that ‘mobile distribution vehicles’ are available for deployment.

The plan to set up oil stockpiling facility was already a 20-year dream for the Philippines, and it is being revived in every administration – but not a single feasibility study has been completed yet in the past two decades.