Establishment of National Strategic Petroleum Reserve sought

Thursday, 09 June 2011 02:45

A bill seeking to create a National Strategic Petroleum Reserve to secure the country's supply of petroleum products during a crisis or emergency has been filed at the House of Representatives.

House Bill 4526, authored by Rep. Arnel Ty (Party-list, LPGMA), gives flesh to the country’s commitment under the Association of Southeast Asian Nations (ASEAN) Petroleum Security Agreement.

The bill encourages ASEAN member countries to forge an agreement to build extra stockpiles and forge emergency oil-sharing agreements. Ty said it is the policy of the State to serve as the people's supplier of last resort and establish a strategic reserve that will serve as buffer in the event of potential shortages.

"This is consistent with the mandate of the Philippine National Oil Corporation (PNOC) to provide and maintain an adequate and stable supply of crude oil and finished petroleum products for the domestic requirement," Ty said.

According to Ty, the social upheaval and political unrest in oil-producing countries of the Middle East and North Africa have revived fears of possible disruptions to and reductions in the global production and supply of crude oil.

Ty said this has roiled the global commodities markets, pushing up crude oil prices to their highest levels in 30 months.

"Worries that the country might face a shortage of finished petroleum products have prompted the Philippine government to obtain assurances from our good neighbor, Indonesia to extend us the extra supplies should the need arise in the future," Ty said.

Ty said regardless of the conditions in oil-producing regions, there is really a need for the Philippines, through its own efforts, to establish an emergency reserve supply of finished petroleum products, to secure the country's requirements estimated at the equivalent of 300,000 barrels of oil per day.

"Fortunately, we have a state-owned entity, the PNOC, clearly and specifically mandated by law to provide and maintain an adequate and stable supply of oil and refined petroleum products for the domestic requirement," Ty said.

Ty said other countries such as the United States, China, Russia, Japan, India, Taiwan, South Korea, Singapore, Thailand and Pakistan have already established or are in the process of building their strategic petroleum reserves for emergency use.

Under the measure to be known as the "National Strategic Petroleum Reserve Act of 2011," a National Strategic Petroleum Reserve shall be put up and maintained by the PNOC.

The reserve shall store refined or ready-to-use petroleum products such as gasoline, diesel, and liquefied petroleum gas and the supplies may be used in trade to provide funds for the maintenance of the reserve.

The bill directs the PNOC to operate, manage and administer by itself the reserve in partnership or joint venture with other parties. It shall function as the government's controlling agency for the reserve.

The PNOC shall likewise formulate strategies for petroleum shortage prevention; monitor and determine the volume of petroleum products needed to keep the reserve adequate and manage the reserve to ensure that the country's petroleum product needs are met by releasing supplies to the public, either directly or through private distributors when the need arises.

Moreover, the PNOC shall set the prices of petroleum products originating from the reserve based on current market standards; exercise the right to eminent domain as may be necessary for the purpose of establishing the reserve; enter into contracts with any person or entity by way of purchase, lease or rent and to provide funds for the maintenance of the reserve, increase the capacity of the reserve and replace refined petroleum products that are about to degrade.