DOE eyes PHP 20B strategic fuel reserve

The Department of Energy is preparing to spend as much as PHP 20 billion to build a strategic fuel buffer stock, as the government moves to shield the country from global oil market volatility.

During a press conference on Monday, March 24, Energy Secretary Sharon S. Garin said the government, through the Philippine National Oil Company, is targeting the procurement of at least 1 million barrels of fuel, or roughly one week of national supply.

Garin said initial purchases covering about 400,000 barrels have already been completed, with the volumes sourced from Asia, particularly Southeast Asia.

She said the government is also negotiating for an additional 600,000 barrels from outside the region to complete the 1-week supply target.

The energy chief said even a short-term reserve would carry a steep price tag, with 1 million barrels requiring more than PHP 10 billion.

“If you want to have a five-day supply, you need to have about PHP 10 billion,” she said.

Garin said the DOE is also studying whether the buffer can be expanded to as much as 2 million barrels, a move that could push total costs to around PHP 20 billion, depending on external market conditions.

She said the proposed stockpile is meant to serve as a contingency measure if global supply conditions deteriorate further.

At the same time, Garin said the country’s present fuel position remains adequate, with around 45 days of inventory available based on current consumption trends.

She said the government still relies on the private sector for most fuel procurement under the country’s deregulated oil industry.

Garin said oil companies continue to face limits in financing and storage capacity, which constrains how much emergency stock the private sector can carry on its own.

She added that the government is working through PNOC to diversify supply sources, secure additional deliveries, and maintain coordination with international partners.

The proposed buffer would add a state-backed layer of protection in a market that has largely depended on private oil firms since the passage of Republic Act No. 8479, or the Downstream Oil Industry Deregulation Act of 1998, which liberalized the sector while aiming to ensure fair prices and adequate, continuous supply.

Separate DOE rules also require minimum inventory levels from oil companies and bulk suppliers as part of broader supply-security measures.

The reserve plan also comes as energy-importing Asian economies grapple with fresh market shocks.

Reuters reported on March 24 that Brent crude had surged as much as 65% this month to USD 119.50 a barrel amid Middle East supply disruptions, underscoring the exposure of net oil importers in the region to sudden price and supply swings.

Earlier this month, Finance Secretary Frederick Go said the government, through PNOC-Exploration Corp., was looking to secure 2 million barrels of oil from global markets as a precautionary measure to strengthen the country’s buffer stock.

That earlier signal suggested the administration had already been weighing a larger reserve before Garin detailed the DOE’s cost estimates and phased procurement plan.