DOE prepares for possible fuel supply disruptions

MANILA, Philippines — The Department of Energy (DOE) is drafting an oil contingency plan to ensure adequate fuel supply amid supply disruptions in the international market.

The agency is organizing a task force for the contingency plan to address internal and/or external supply disruptions, DOE-Oil Industry Management Bureau assistant director Rodela Romero said during the Laging Handa briefing yesterday.

“The DOE is in close coordination with the Philippine National Oil Co. (PNOC) and other government agencies to determine the level of demand or requirements of different sectors, like the transport sector and other industries, to be able to draft the oil contingency plan,” she said in Filipino.

Oil supply disruptions are occurring in the international market, causing global oil prices to skyrocket.

Romero cited the Russia-Ukraine conflict, explosion in Nigeria, maintenance disruption and pipeline leaks in Libya and the oil spills in Ecuador and Kazakhstan as some of the reasons for the continued spike in oil prices.

Local oil prices have climbed for seven straight weeks, with gasoline prices up by P7.90 per liter, diesel by P10.20, and kerosene by P9.20 since the start of the year.

The oil contingency plan is among the measures the DOE is undertaking until the country finally sets up its oil stockpiling program or strategic petroleum reserve (SPR), Romero said.

In September last year, the DOE issued a circular forming the country’s SPR to reduce price and supply shocks from importing oil.

The circular aims to have a government-owned reserve of crude oil, finished petroleum products and biofuel reserve to boost the security of fuel supply in the country and address a severe international supply interruption or implement the Targeted Fuel Relief Program.

The establishment of an SPR will undergo an 18-month detailed feasibility study and work program and budget review and approval by the PNOC and the DOE within 12 months thereafter.

However, Romero said the commencement of the feasibility study hit a snag due to failed bidding for a third-party advisor.

“We are now reviewing the terms of reference for the public bidding for the said consultancy service,” she said.

The detailed feasibility study is necessary to determine the amount of oil reserves, manner of withdrawals and priority sectors, among others, the DOE official said.

The DOE also proposed to Congress to pass a law giving the agency the power to put up a strategic petroleum reserve “whether commercial or strategic to address supply disruptions,” Romero said.

‘Disclose pricing procedure’

Peasant group Anakpawis and fisherfolk group Pambansang Lakas ng Kilusang Mamamalakaya ng Pilipinas (Pamalakaya) have urged President Duterte to compel major oil companies to reveal to the public their process of oil pricing.

In a statement, the groups said Duterte has the power to issue an executive order that would specifically compel the “big three” oil industry players – Petron, Shell and Chevron – to reveal their process of oil pricing attributed to global oil prices.

The groups added that Duterte has the power to “impose a price control on all petroleum products.”

“It would only take less than a day for the government to issue an executive order compelling big-time oil companies to specify in detail their processes of price increases and impose a price control subsequently,” Anakpawis national president Ariel Casilao said. — Cecille Suerte Felipe