Philippines moves to build strategic petroleum reserves

MOTORISTS may get some relief from high fuel costs this week as pump prices are set for a major rollback, while the government moves to build strategic petroleum reserves to shield the Philippines from future oil supply shocks linked to the war in the Middle East.

At a briefing on Monday, Energy Secretary  Sharon S. Garin said there will be a major rollback this week, with gasoline prices set to decrease by at least P4.76 per liter, diesel by P9.26 per liter, and kerosene by P10.86 per liter.

The decline in fuel prices came after five consecutive weeks of hike in gasoline prices and a second week for diesel.

With the downward adjustments, the prevailing fuel prices in the National Capital Region will reach as high as P84.74 per liter for gasoline, P82.54 per liter for diesel, and P102.94 per liter for kerosene.

While the Iran war remains unresolved, Ms. Garin said the fuel prices are now moving closer to the “pre-war prices” of around P50 to P60 per liter.

“Hopefully, with no more surprises in the events that are happening in the Middle East, especially with Iran, Israel, and US hopefully it goes steady and we go back to the previous prices, or at least not as high as before,” she said.

The Philippines is increasingly vulnerable to the Middle East conflict as it depends heavily on the region for its oil imports, raising concerns over energy security and higher fuel costs.

As of May 29, the country’s fuel inventory is equivalent to 45.97 days, slightly higher than the 44.82 days last week.

The average inventory for gasoline is 47.10 days, while diesel has an average inventory of 44.36 days. Kerosene has an average inventory of 143.64 days; 65.03 days for jet fuel; 41.30 days for fuel oil; and 42.13 days for liquefied petroleum gas.

Ms. Garin said the government is working on the establishment of a strategic petroleum reserve program, which includes building new stockpiling facilities.

“This will be a more systematic and a more organized system, one that won’t be reactive, as we will have our own reserves in the Philippines, sufficient enough to weather any effects or disruptions in the other parts of the world or in the countries where we get our oil,” she said.

The Energy chief said the DoE is working with state-run firms Philippine National Oil Co. (PNOC) and Maharlika Investment Corp. (MIC) to explore options to build at least 30 days’ worth of additional reserves.

PNOC, which is mandated to ensure a stable, adequate, and sustainable supply of energy for the country, will take the lead in this effort to secure reserves.

Funding for the program will be managed by MIC, which oversees the country’s sovereign wealth fund.

“We will start with an initial inventory and then later over the years, we can keep on improving and improving and have more and more every year,” Ms. Garin said.

The planned strategic petroleum reserve program was among the matters discussed by President Ferdinand R. Marcos, Jr. with the Japanese government during his state visit to Japan last week.

Ms. Garin said Japan will support the initiative by conducting necessary feasibility studies and providing capacity building in the development of a stockpiling system.

This program will involve collaboration with the Economic Research Institute for ASEAN and East Asia, Japan Organization for Metals and Energy Security, Japan Bank for International Cooperation, and Japanese trading and engineering companies with relevant technical expertise.

“Both sides will explore the possibility of Japanese government institutions and private companies participating in EPC (engineering, procurement, and construction) and financing for relevant projects,” Ms. Garin said.

Beyond strengthening national petroleum reserves, the Philippines has also committed to participate in the establishment of an ASEAN-wide joint stockpiling to strengthen regional energy security and resilience.

“We are also presenting ourselves as the venue for the regional stockpiling because we have possible areas where we can host regional stockpiling,” she said. — Sheldeen Joy Talavera