New PNOC chief gives Bicol solon hope for future of national fuel reserve

Published March 21, 2022, 9:23 AM

by Ellson Quismorio

Camarines Sur 2nd district Rep. LRay Villafuerte remains hopeful that the government’s planned strategic petroleum reserve (SPR) would get off the ground before President Duterte ends his term on June 30, 2022.

(Photo from LRay Villafuerte’s Facebook)

This, after the Chief Executive tapped a touted energy management expert in Jesus Cristino Posadas be at the helm of the Philippine National Oil Company (PNOC).

“We are keeping our fingers crossed that after the DOE (Department of Energy) had obviously dropped the ball on this SPR plan, which has progressed at a snail’s pace at this department, the newly named PNOC president Posadas would manage to—at last—put this project on the fast track in the remaining months of the Duterte presidency,” Villafuerte said.

He was referring to the recent election of Posadas, a former DOE undersecretary, as president-chief executive officer (CEO) of the PNOC during a special meeting of the board.

President Duterte approved last month the nomination as PNOC president-CEO of Posadas, who took over the post from former president-CEO Admiral Reuben Lista. Lista who passed away in 2021.

The PNOC is a state-run firm that DOE Secretary Alfonso Cusi claimed his office had tapped to do a feasibility on the SPR, “a facility that the DOE already considered way back two years ago to establish as a way to stabilize domestic supply and prices of gasoline and diesel to shield consumers from the kind of volatile situation now gripping the global oil market as an offshoot of Russia’s invasion of Ukraine,” Villafuerte said.

According to the PNOC website, licensed mechanical engineer Posadas is a “certified National Energy Management System (EnMS) and ISO 50001 Expert by the DOE and the United Nations Industrial Development Organization (UNIDO)” … who will bring “valuable insights and experiences to the pursuit of PNOC’s mandate under the Philippine Energy Plan (PEP) such as the establishment of the country’s SPR.”

“Although the SPR is not expected to be up and running anytime soon to be of use to us in the current episode of rocketing gasoline and diesel prices following Russia’s attack on Ukraine, we are hoping the PNOC—on the watch of its newly elected president-CEO—would be able to wrap up its feasibility study and set this petroleum reserve infrastructure in motion before President Duterte leaves office in June,” the Bicol solon said.

Villafuerte said among the main points that the PNOC would likely consider in this SPR plan is whether or not the government needs to have an interim floating storage facility or build separate facilities in Luzon, the Visayas and Mindanao; whether or not the SPR would have to be run by the government alone, by the private sector or via a public-private partnership; and where to source the very huge amount needed to acquire and maintain such a national fuel inventory.

From an average per-barrel cost of about $80 at the onset of 2022, the Russia-Ukraine conflict has driven up crude prices at the global benchmark Brent rate to as high as $139.13 two weeks ago. This drove up the local pump rates to about P78.33 per liter for gasoline and P68.97 per liter for diesel.

But the Brent rate fell to $107.93 per barrel last week, and both the DOE and fuel industry players have predicted pump prices to go down temporarily this week by P6 per liter for gasoline and by P12 per liter for diesel.

Since the start of 2022, pump prices have increased by over P20 per liter for gasoline, over P30 per liter for diesel, and nearly P25 per liter for kerosene.

“the new PNOC boss should be able to put to good use his UNIDO-certified expertise in energy management to keep the SPR moving—at least much, much faster than how this project has progressed (or not)—at the DOE since Cusi bared nearly two years ago the DOE plan to consider establishing such a national fuel reserve,” Villafuerte said.