Oil exec backs stockpiling plan
An oil industry executive is supporting the study on the possibility of oil stockpiling, which will assure fuel supply stability and provide additional revenue streams for the government.
Eastern Petroleum Corp. chairman and CEO Fernando L. Martinez said setting up these oil reserves would not only assure supply stability but also provide additional revenues for the government.
“Given the significant reduction in world oil prices by 60 percent, it is right time for the government to look into and decide on this (oil stockpiling) as the likelihood of prices to appreciate in the next 18 months is eminent with major oil exporting countries agreeing to either cut or maintain their production levels,” Martinez said.
Earlier, DOE Secretary Zenaida Monsada ordered state-run Philippine National Oil Co. (PNOC) to conduct the study determining the feasibility of oil stockpiling. This, as crude prices have declined by over 50 percent to around $30 per barrel from around $90-100 per barrel in 2014.
Martinez said fuel prices, both local and international, are likely to double to $60 per barrel in the next two years.
“It’s unlikely for fuel prices to drop further since it has already hit bottom or its 13-year low,” he added.
“The government should immediately put in place the mechanisms needed and consider stockpiling either through actual volume storage or paper placement,” Martinez said, adding that the latter could help the government from incurring additional cost for storage.
He said the government could tap the Malampaya fund, and even part of the reserves of the Bangko Sentral ng Pilipinas (BSP).
The oil firm executive noted the country’s annual fuel consumption has already dropped to $6 billion from $12 billion in the past years.
“If $6 billion will be set aside by the Monetary Board as part of its reserves, similar to what it does for gold. Thus, if fuel prices double in the next two years, then the BSP could already reduce, if not erase, the deficit it has incurred in the last three years,” Martinez said.