Gov’t, oil firms race to shore up stockpiles

Inventories of oil and refined petroleum products which are categorized as “reserves” have never been given priority by the government, as the private sector takes care of oil reserves to last from 15 to 30 days as demanded by the law.

That was the case in the local oil industry, with Petron, Caltex, Shell and other oil companies only reporting to the government how much of the primordial commodity of modern civilization are in their storage facilities.  The government through the Department of Energy (DOE) receives these reports, but the people are mostly clueless on the real inventory status.

Last Friday, Energy Secretary Sharon Garin said the government and the oil companies are only now building up fuel inventories for May, having secured available supplies from now until the end of April.

Since the Oil Deregulation Law liberalized the industry, the oil companies and not the government are in charge of ensuring that the country has enough stocks, meaning “for a minimum of 15 days.”

Secretary Garin said the firms have “actually surpassed that.  So they’re ordering now for their May stocks.”

Currently, oil companies are required to maintain at least a 30-day inventory of crude oil and a 15-day inventory of finished petroleum products.

Since the Philippines has very limited domestic oil production to cover demand, local fuel retailers mostly import their supply from the Middle East, the world’s top oil-producing region that is currently being disrupted by the Iran war.

The majority of the finished petroleum products come from Asian countries such as Japan, South Korea, and China, but crude oil is also sourced from the Middle East.

“The stocks for May are supposed to be delivered in April and they’re (oil companies) trying to lock that in. It’s early but we have to do it early in these times. So, oil firms, including the government, are working on the supply for May,” Garin said.

2 Million barrels

Malacañang has directed the oil and gas exploration arm of state-run Philippine National Oil Co. to procure at least two million barrels of oil from global markets.

“There is a chance that their source might not deliver, so the government is also procuring. So, one million or two million stocks, so we have a buffer,”  Garin said.

“Just in case any of our oil companies fail to procure, we have a reserve for May. So that’s what we’re doing now. We’re slowly locking in some offers. Little by little, we’re trying to make sure that May is covered,” she added.

Aside from existing suppliers, the Energy chief said the Philippines is also tapping other countries in Asia like Malaysia, Brunei, and India. It is also considering sourcing from other markets such as the US, Canada, Russia, or South American countries.

Economists and business analysts have pointed out various challenges in building up inventories.  These include higher prices, tight supply, run cuts imposed by refineries due to lack of feedstock, the export ban in some countries, and the weak peso, since the firms will have to buy US dollars to purchase oil.

Already, businessmen are looking into the possibility of solving the country’s total dependence on imported oil in the years to come.

These measures include the ramping up of renewable energy sources right in the country, such as wind, solar, hydro power.  This was advocated by Teresita Sy Coson of SM Investments Corp. and Jaime Zobel de Ayala of Ayala Corporation in one recent forum.