PNOC taps advisor for feasibility study on strategic petroleum reserve

MANILA, Philippines — State-run Philippine National Oil Co. (PNOC) is engaging a transaction advisor (TA) to do a feasibility study on the strategic petroleum reserve (SPR).

PNOC is preparing to launch another bidding for TA services following a failed bidding.

“PNOC advertised the request for expression of interest and submission of eligibility documents for the engagement of transaction advisor for the SPR program in May 2021. To date, PNOC has not engaged a transaction advisor after a failed bidding. PNOC is currently preparing for a re-publication,” the company said in a reply to The STAR.

Earlier this year, PNOC said it had updated the terms of reference for the engagement of a TA for the SPR program, which was then approved by the company’s board last March 29.

The public bidding to search for a TA was supposed to take place in April.

Once the rebidding is successful, the feasibility study shall commence immediately, PNOC said.

The state-run firm said the national SPR is an extensive undertaking which aims to provide an oil stockpile, either crude oil, finished petroleum products or both, equivalent to 90 days of the country’s domestic oil requirements.

“Such magnitude and considerable funding required for an all-encompassing SPR will necessitate the implementation of the program in phases, depending on resources available,” it said in its project update last March.

In its 2020 annual report, PNOC said the establishment of a national SPR in the Philippines is its initiative to mitigate the effect of sudden oil supply disruptions that can affect the economy of the country.

This follows the Department of Energy’s mandate to PNOC in late 2019 to conduct a comprehensive feasibility study for the establishment of an SPR and prepare an implementation plan based on the study conducted.

So far, the state-run company has conducted a comprehensive desktop study for the SPR project framework and has prepared the terms of reference (TOR) for the hiring of a TA to conduct and prepare the detailed feasibility study for the said project.

At that time, PNOC said it identified several agencies and institutions as potential candidates to provide the necessary expertise and advisory assistance for the development of the national SPR for the Philippines.

In support of the establishment of an SPR, House Deputy Speaker Michael Romero filed House Bill 4689 or the proposed Philippine Strategic Fuel Reserve and Fuel Price Stabilization Act, which mandates all government-owned, operated or controlled stockpiles and facilities to be part of the strategic fuel reserves system of the country.

Based on current regulations, oil companies have a minimum inventory of 15 days. Meanwhile, stocks for household liquefied petroleum gas (LPG) have a minimum inventory requirement of seven days.

The DOE has been pushing for the establishment of a strategic oil reserve for the country since 2018.

It had even floated a proposal to procure a floating oil storage facility as an initial measure in its plan to establish the country’s SPR since an onshore facility would take a long time to construct.