The Department of Energy (DOE) is eyeing to firm up a deal with the Japanese government, via the Japan Oil, Gas and Metals National Corporation (JOGMEC), for the conduct of a feasibility study that could concretize the proposed strategic petroleum reserve (SPR) or oil stockpiling in the country.

According to Director Rino Abad of the DOE’s Oil Industry Management Bureau (DOE-OIMB), the department thought of engaging JOGMEC because the initiative of state-run Philippine National Oil Company (PNOC) on tapping a consultant for the SPR study had not materialized.

He indicated that PNOC carried out two biddings last year to tap a third party consultant that will undertake the feasibility study on the proposed SPR, but no parties signified interest.

“On our assessment, the Philippines may have been lacking of experts on this field (SPR study), And since Japan, through METI (Ministry of Economy, Trade and Industry) has an initiative on this under Asean + 3 convention, then we are thinking at DOE that we can tap them through JOGMEC for our SPR study,” he said.

Abad emphasized that the pact could be a government-to-government arrangement with PNOC working with JOGMEC for the oil stockpiling study.

The energy official admitted that the government does not have concrete idea yet what would be an appropriate oil stockpiling or strategic reserve for the country, hence, that is the reason why the department would want to engage Japan because it is a key energy market in Asia that has strategic petroleum reserve.

Last year, the DOE already signed a memorandum of agreement (MOA) with JOGMEC for the updating of the 2002 Philippine National Oil Contingency Plan and for the Japanese entity to also lay down recommendations for the country’s proposed establishment of SPR.

It is worth noting that the Philippines had relentlessly targeted to set up its oil stockpiling facility, but such plan has always been hobbled with questions ranging from the entity that can ably manage it; the funding source; the volume of reserves to be sustained at the SPR; as well as outlining the conditions that shall warrant commodity drawdown from the facility – especially in times of calamities as well as when prices skyrocket to unprecedented levels.

In the MOA with JOGMEC, the parties will also scrutinize the state of SPR programs in the last five years and how these have been utilized to address supply disruptions; the existing international oil supply security agreements both in the ASEAN as well as the other regional blocs and how the Philippines could fit in into these paradigms.

Further, the study will weigh up the storage facilities for crude and finished petroleum products in the Philippines in the last five years and their growth trajectory in 20 years – and such shall cover those that are owned both by private as well as that of government-run entities.

The DOE similarly noted that the study updating will re-evaluate the existing Philippine policies and the implementation frames across scenarios – including addressing oil supply for normal demand, and if there would be emergency or contingency situations that have to be responded to – whether these are triggered by international or domestic geopolitical events.

Additionally, the parties agreed to analyze the gaps in the oil storage facilities in the country, “to address the existing and expected growth in demand, as well as the contingency/emergency response during any international and domestic supply disruption.”