By:
Ronnel W. Domingo - 05:21 AM June 02, 2018
The government expects
to secure an initial shipment of lower-priced diesel from abroad within this
month, but does not yet know where this is coming from nor where this will be
stored.
Energy Secretary
Alfonso G. Cusi yesterday said in an interview that Russia was previously
mentioned only as a possible supplier, but that the government was looking at
other potential sources and has not made a deal with any seller.
Officials at Malacañang
earlier said the government intended to buy cheaper oil from sources that were
not members of the Organization of Petroleum Exporting Countries (Opec).
Russia was mentioned in particular, although Moscow has a two-year standing
agreement with Opec related to a coordinated cutback in crude oil production in
an effort to “rebalance” global supply and demand—and, hence, raise prices.
“I would like to
clarify that it’s not only Russia [that we are looking at for cheaper diesel].
Russia is an option, but there are other options that we are looking at,” Cusi
told reporters.
The state-run
PNOC-Exploration Corp. “is looking toward the end of June for the arrival of
shipments,” he added.
Asked where the refined
fuel would be stored, Cusi said PNOC-EC was negotiating for at least three
locations.
“There are available
storage tanks, and PNOC-EC is negotiating. One is in Subic [in Zambales], one
is in Phividec [in Misamis Oriental], another one is in Quezon [province], and
there are other areas” under consideration, he said.
Phividec refers to the
industrial complex run by the state firm Phividec (Philippine Veterans
Investment Development Corp.) Industrial Authority.
“This is what we have
been saying [from way back], we need to have a strategic supply,” Cusi said.
“Our oil industry is
deregulated but the private sector is required to have 15 days’ supply of
refined products and 30 days’ supply of crude oil,” he said. “Of course, we are
concerned that we would be affected should there be a disruption in supply.
That is why the government is developing a strategic reserve.”
Earlier this week, Cusi
said the government was gearing up for a national oil stockpile as crude oil
prices touched four-year highs near the $80-a-barrel mark in previous weeks.
As Opec and non-Opec
countries including Russia continue efforts to raise prices by reducing output
through an agreement made in late 2016, the World Bank’s forecast as of April
put crude prices averaging at $65 in 2018 and 2019.
“The government is
aware of the country’s vulnerabilities to abrupt changes in the international
oil situation and impending threats on the same,” Cusi said. “Hence we are formulating
various strategies to address those vulnerabilities to cushion the impact for
our consumers.”
Cusi, who is ex-officio
chair of PNOC-EC, said the state firm was preparing for oil trading and retail
“to provide competition to existing oil industry players and pacify domestic
oil prices.”
In particular, PNOC-EC
has been directed and authorized to source fuels such as diesel from Russia and
non-Opec members, which will be “sold to independent oil firms and directly to
the public.”
Oil companies are currently
required to maintain a minimum inventory that is equivalent to 30 days’ supply
of crude and products for refiners like Petron Corp. and Pilipinas Shell
Petroleum Corp. Non-refiners are required to keep a stock good for at least 15
days of diesel, gasoline and kerosene as well as seven days’ worth of liquefied
petroleum gas.
Cusi said the creation
of a strategic petroleum reserve was based on a number of joint international
studies that were done in 2003 and 2004, on the feasibility of building and
maintaining such stockpiles. But the Philippines has not gone so far as to
build a stockpile as prices of crude and refined products plummeted a few years
ago. Until oil ministers of 14 Opec member-countries along with non-Opec
producers—including the Russian Federation—agreed in November 2016 to reduce
their crude oil output by 558,000 barrels a day for each country.
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