Energy Secretary Raphael P.M. Lotilla has directed state-run Philippine National Oil Company (PNOC) to review its planned "strategic petroleum reserve" (SPR) or oil stockpile in view of recent industry developments, including targeted acceleration of electric mobility (e-mobility) and further diversification of technology deployments in the country’s energy mix.
PNOC President Jesus Cristino Posadas told the Senate budget hearing the energy secretary ordered the review to consider various factors.
He said that one major point raised by Lotilla is for PNOC to ensure that the proposed SPR “will not be in competition with the private sector” given the deregulated state of the downstream oil industry.
The PNOC chief executive further noted that the review must also factor in “the rise of electric mobility and the effect of video and teleconferencing on the need to travel for face-to-face meetings.”
Additionally, the state-run company was reminded on the country’s thrust of “expanding energy resources” not just within the sphere of conventional technologies but also on the more massive integration of renewable energy sources.
Posadas similarly conveyed that PNOC was called upon to be “mindful of the financial sustainability of operating the reserves; as well as the concept of PNOC carrying the SPR inventory,” and for the state-run firm to be “still be part of the solution rather than the problem in the energy transition thrust of the new administration.”
By design, the PNOC chief executive emphasized that strategic oil stockpile shall “ensure long-term stability of oil supply in the country, especially in times of geopolitical events, calamities and emergencies which induce global oil disruptions.”
In the Duterte administration, PNOC has been mandated to work on a feasibility study that will assess the potential of setting up SPR or oil stockpile in the country – and that edict was concretized via the issuance of Department Circular No. DC2021-09-0028 by the energy department.
As cast in the DOE Circular, the proposed SPR will be government-owned; and it shall comprise of crude oil, finished petroleum products and biofuel reserves – and these shall be anchored on addressing potential disruption of oil supply in the world market as well as calibrate targeted fuel relief program.
Nevertheless, the energy department of the past administration had not laid down how the funding for the SPR will be allocated or sourced; what will be the level of reserves to be stored for crude, finished products and biofuels; and siting has not also been specified.
The Circular likewise instructed PNOC to establish “the competence to distribute products to the intended purpose of the strategic reserve – from transport, logistics down to the fuel discharge to the end-consumers.
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.