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Business

PNOC mulls investment in fuel storage facility

Danessa Rivera - The Philippine Star

MANILA, Philippines — State-run Philippine National Oil Co. (PNOC) is considering investing in a fuel storage facility as part of the government’s thrust to put up a strategic petroleum reserve to cushion the impact of  rising oil prices in the international market.

Energy Secretary Alfonso Cusi, who also sits as chairman of the PNOC board, said the Department of Energy (DOE) has directed PNOC to be part of the SPR policy of government.

“We want PNOC to participate in the supply chain, of course we are also addressing the reserve requirement of the country,” he said.

PNOC’s participation will be in the form of investing in a storage facility for the fuel to be imported by its subsidiary, Philippine National Oil Co.-Exploration Corp. (PNOC-EC).

“We are introducing a new policy and that is establishing a strategic reserve, and the strategic reserve requires additional storage facility so we need to invest in that,” he said.

However, Cusi said this would require amending the charter of PNOC to let it invest freely in various projects.

“We need to change the fiscal policy of PNOC.  I already submitted the proposal to Congress,” Cusi said.

While it has the money, the PNOC finds it difficult to pursue projects since it has to seek the approval of Congress.

Moreover, venturing in the storage of fuel would also require a framework to lay down rules and guidelines.

Last year, the DOE announced plans to establish a strategic oil reserve for the country as part of efforts to shield consumers from volatile international oil prices and ensure supply security. 

It had directed PNOC-EC to engage in the selling of petroleum products sourced from non-OPEC members to independent petroleum dealers and vulnerable sectors such as public utility transport groups.

Cusi, who is also the ex-officio chairman of PNOC-EC, said the move was meant to enhance competition among existing oil industry players and stabilize domestic oil prices. 

 During that time, global oil prices skyrocketed to $80 per barrel, while the peso’s weakness against the dollar drove local fuel prices higher.

In the past, the DOE has explored several times the creation of the SPR.

In 2003, the Philippines and Thailand signed a memorandum of understanding to jointly study, investigate and assess the possibilities of cooperation, including the identification of strategic locations for oil stockpiling and distribution points.

Another study was conducted in 2004 by the US Department of Energy to assist the country in assessing the options and potential for strategic oil stockpiles as well as give recommendations to enact legislation pertaining to the oil stockpiling program.

PETROLEUM PHILIPPINE NATIONAL OIL CO.
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