By Victor V. Saulon
THE Department of Energy (DoE) said its strategy for possible petroleum supply disruptions is to stockpile refined product, government-to-government supply deals, and a possible resort to vessel storage as a short-term measure.
The DoE made the disclosures after the Senate Thursday asked the department to come up with a written plan of action detailing its contingency measures in case of supply disruptions from the country’s main sources of imported petroleum in the Persian Gulf.
“Meron na kami. Matagal na nating ginagawa ‘yan (We have had a plan for some time),” Energy Secretary Alfonso G. Cusi told reporters yesterday on the sidelines of the department’s Senate budget hearing.
Mr. Cusi said his department had held initial talks with Russia, Qatar and Brunei, as well as traditional supplier Saudi Arabia, for a possible fuel supply agreement. He said he cannot ensure that the price of fuel from these sources will be lower than those currently offered by Philippine oil companies.
Asked for details, Undersecretary Donato D. Marcos said the agency is looking at onshore storage and offshore storage options for imported finished product.
“Kung sakali lang hindi umabot sa deadline ‘yung onshore na strategic petroleum reserve (SPR), p’wede ‘yan sa floating vessel. Depende, ang laki kasi ng sizes niyan may 60 million liters, meron ding 30 million lang (If we don’t have a strategic petroleum reserve up and running, we can turn to vessel storage, some of which are 60 million liters, while others are 30 million),” he said.
Mr. Marcos said the DoE has yet to determine whether Philippine National Oil Co. (PNOC), the agency’s commercial arm, will be tasked to handle the imports. He said the oil for the strategic reserves could be used to “resolve” oil price spikes.
Mr. Marcos said if the onshore facility is not completed in two years, the department could turn to tanker vessels for storage.
When the SPR is operational, the country’s minimum inventory requirement (MIR) will double, Mr. Marcos said. The DoE has said that the MIR is equivalent to 30 days’ supply for oil refiners, 15 days for bulk marketers, and seven days for liquefied petroleum gas firms.
He said during initial meetings on maintaining reserves, private oil companies raised the issue of cost related to putting up privately-owned infrastructure for oil reserves. Should they do the stockpiling, the required capital expenditure will be passed on to consumers, he added.
“Kaya government will intervene (That’s why government will intervene),” Mr. Marcos said. The DoE asked for P2.3 billion for 2020, up 7.2% from a year earlier.
Mr. Cusi said his department has been negotiating with foreign governments for a bilateral agreement for an allocation from oil producers in case of a supply problem in the future.
“We are developing the agreement,” he said.
On Sept. 14, a coordinated drone attack on state-run Saudi Arabian Oil Co. (Aramco) oil processing facilities at Abqaiq and Khurais resulted in the suspension of crude oil production totaling of 5.7 million barrels per day, or nearly 60% of the country’s average production, the DoE has said. Saudi Arabia produced 9.8 million barrels per day in Aug. 2019, it added.