Fuel prices seen to go down in next few weeks

Energy Secretary Vincent S. Perez said yesterday he expects local pump prices to ease in the next few weeks if the current downward trend in world crude prices continues.

"I am hopeful that if this trend continues, prices would retreat by between $7 to $8 per barrel. Then we will see some adjustments in local pump prices," Perez said in a press conference at the start of a three-day international ministerial conference on energy.

He said the Organization of Petroleum Exporting Countries’ decision to enter into a two-stage accord to raise their crude output ceiling by two million barrels to 25.5 million barrels per day from July 1 and to 26 million barrels per day from Aug. 1 is slowly taking effect on the international oil market.

As of June 4, the Dubai crude average reached $33.92 per barrel compared to the previous day‚s $35.36. But the average $34.93 per barrel Dubai crude for the period June 1-4 was still higher compared to the $34.74 average in May.

Perez claimed that the economic diplomacy of the Arroyo administration is slowly bearing fruits as he has received a number of letters of support from various energy and trade officials of oil and non-oil producing countries like the Saudi Arabia, Kuwait, Indonesia, Qatar and Venezuela.

He said the week-long meeting of every official in ASEAN and APEC will focus on theme "Enhanced Energy Security Towards Sustainable Development".

According to Perez, the ASEAN energy ministers will try not to focus on the rise of oil prices as a result of terrorism but will seek ways to address security of oil supply by reducing dependence on imported crude.

He said the ministers are expected to map out a new five-year plan of action for stronger cooperation in light of growing concerns on energy security and sustainability vis-a-vis the highly volatile world oil prices.

"The global energy industry is continuously faced with different challenges that could pose threats to the economic gains already achieved by the member economies. A secure and reliable energy supply to support and sustain these economic activities has become very crucial. The ASEAN energy ministers will be meeting to forge a closer and enhanced cooperation within and outside the region to address these concerns," Perez said.

ASEAN or the Association of Southeast Asian Nations groups Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, Vietnam and the Philippines.

Perez said the ministers will look at specific action plans to pursue in the next five years to implement the policy statements adopted during last year’s meeting.

At the same time, Perez underscored the need to develop further the use of indigenous sources of energy to reduce dependence of imported crude oil.

He said the development of alternative sources other than imported oil on the transport sector is also very crucial.

Perez cited a new initiative of Unocal Corp., EnerSea Transport LLC and "K" Line to pursue proposed marine-based compressed natural gas (CNG) transportation project to help meet the increase in electricity supply in different parts of the country.

In a recently-held marine-based CNG transportation conference, Unocal and its partners indicated that they have completed the feasibility study for the commercial viability of the project which would allow the transport of gas via marine vessels instead of the current mode of putting up pipelines and LNG infrastructures from the gas source to the demand center.

Unocal said it is in the second phase of the project which would include scouting for offtakers for its gas, siting requirements and financing structures with international and local power producers.

"The introduction of this kind of technology in the Philippines gives us options in fasttracking the development of our downstream natural gas industry as well as in looking for various measures to address the growing demand for electricity in each of the three regions of Luzon, Visayas and Mindanao," Perez said.

Additional generating capacity would be needed as early as 2006 in Mindanao and 2008 in Luzon. The energy department is looking at natural gas power projects, among others, to help meet the projected increase in demand. Natural gas as an indigenous, environment-friendly energy resource helps reduce dependence on imported fuel and improve air quality.

Unocal and its partners said they plan to source gas from its Philippine and Indonesian operations. Unocal holds a service contract for the exploration of the Sulu Sea. It also operates exploration fields in the Kutei Basin, Indonesia, which is near the Philippine markets.

Unocal noted that a marine-based CNG transport project proves suitable to the Philippine energy market because it could transport gas even to relatively small power plants, making it a cost-effective option.