DOE in talks with 4 countries on strategic ‘oil diplomacy’

Published October 12, 2019, 10:00 PM By Myrna M. Velasco

https://business.mb.com.ph/2019/10/12/doe-in-talks-with-4-countries-on-strategic-oil-diplomacy/

The Philippine government is scouring two-track option on its strategic petroleum reserve (SPR) – including a floating storage facility; and a government-to-government (G to G) oil diplomacy arrangement.

Energy Secretary Alfonso G. Cusi disclosed that the Philippine government had so far initiated discussions with four countries on targeted allocation of oil for the Philippines in case a global emergency that could disrupt supply would happen.

These countries, he said, are Brunei Darussalam, Saudi Arabia, Qatar and the latest had been Russia – the talks on the last one happened in the recent state visit of President Rodrigo Duterte to that ally-country.

“We have been negotiating for a bilateral agreement that we should get allocation from oil producers just in case a problem arises,” the energy chief said.

The preferred deal, he said, shall be a government-to-government pact, although he qualified that the frame of the agreement is still being sorted out.

Cusi explained that this oil supply scouring strategy had been an upshot of the recent drone attacks on the oil facilities of Saudi Arabia which had ignited global fears of “super spikes” in prices as well as oil supply disruption in markets if the oil kingdom had not been quick in its production restoration measures.

The other recourse of the government, according to Energy Undersecretary Donato D. Marcos will be floating storage for oil products – which will be an interim infrastructure in case there is an emergency situation in the industry and the onshore strategic petroleum reserve (SPR) cannot be completed yet in the next two years.

The energy official emphasized that the SPR alternative will have to be carried out by the state-owned Philippine National Oil Company (PNOC) – and the siting of the oil stockpile will likely be at its property either in Bataan or Batangas.

Often, according to Marcos, a floating oil storage would be of smaller capacity – but he said the requirements to be procured for this will have to be firmed up yet through a feasibility study.

Part of the concerns to be fleshed out, he said, shall be the volume or capacity to be purchased which will likely be finished products; and how much budget shall be allocated for such.