Phl eyed as regional oil hub with fuel reserve project

The Department of Energy (DOE) said the proposed Philippine Strategic Petroleum Reserve (PSPR) could transform the country into a regional oil storage hub while strengthening its energy security against global supply disruptions.

During a Senate Committee on Energy hearing on Thursday, Energy Secretary Sharon Garin said the planned reserve would provide the Philippines with a reliable emergency fuel stockpile, improve supply stability, and attract foreign oil companies looking for alternative storage locations in the region.

“One thing for sure, we need our own proper tanks,” Garin told lawmakers, adding that the government is considering the construction of storage facilities that could either be leased to oil firms or developed through partnerships with private and foreign investors.

The DOE is currently in discussions with several prospective partners, including the Maharlika Investment Corp. (MIC), the Philippine National Oil Co. (PNOC), Japanese organizations, Middle Eastern firms, and other foreign companies interested in participating in the project.

Garin said the country’s strategic location makes it an attractive option for oil companies seeking to diversify their storage facilities outside traditional supply routes.

“I think they’re also spreading it out. They have it in other countries. So, they’re also willing here. Because our location is also good; we’re practically in the middle of it,” she said.

Aside from enhancing energy security, Garin said the project could generate investments by allowing companies to lease storage facilities in the Philippines and potentially establish downstream ventures, including refinery projects.

Under the proposal, the government would focus on developing storage infrastructure while permitting private firms to keep part of their fuel inventories in the country, provided that a portion of the supply remains available for domestic use during emergencies.

“As much as possible, only the facilities will be ours. So we can have our own minimum number of days, but we can also have other companies store here on condition that in case of emergency, supply must be retained in the country,” Garin explained.

The energy chief said the initial target is to build storage capacity for one million barrels of oil, with construction expected to take about one year. The DOE is targeting completion by the fourth quarter of 2027 or the first quarter of 2028.

Sen. Erwin Tulfo, chairman of the Senate Committee on Energy, said the reserve is vital to protect the country from geopolitical tensions, particularly conflicts in the Middle East, that could disrupt fuel supplies and drive up prices.

To minimize the project’s impact on government spending, Garin said financing may come from PNOC corporate funds, investments from the Maharlika Investment Corp., and private and foreign investors.

“So, hopefully with what we’re designing, we won’t get it from the budget so the government can use it in more basic services,” she said.

Garin said the reserve project could proceed under PNOC even without new legislation, but a law would eventually be needed to institutionalize the strategic petroleum reserve and provide fiscal incentives that would encourage international oil companies to use the Philippines as a regional storage center.

She noted that tax incentives are crucial because import duties and other charges could discourage firms from storing fuel in the country for eventual re-export.

DOE Undersecretary Riolita Inocencio said the department is also proposing a 60-day government fuel supply requirement, which may be adjusted over time depending on the country’s energy security needs.

Sen. JV Ejercito stressed that the project should be integrated with long-term port and transport infrastructure planning, while Senate President Sherwin Gatchalian called for a comprehensive feasibility and financial study to determine the reserve’s costs, benefits, and strategic value.

Garin said discussions are becoming more concrete, with talks now covering potential locations, foreign technical partners, and funding arrangements for the landmark energy security project.