Subic deemed not suitable as oil depot for Asia-Pacific

SINGAPORE — An oil trading expert said over the weekend that Subic may not be a suitable location for an oil warehouse for the Asia Pacific market.

Platts Asia editorial director David Ernsberger, in a briefing with Philippine energy reporters here, said the former US naval base is "inaccessible" to sellers in the Middle East and at the same time far from major oil buyers–Japan and Australia.

"It’s a little far from Australia and Japan; and cargo vessels cannot travel back easily to Middle East where the bulk of oil supply is sourced," Ernsberger said.

At present, Platts is a media organization that established itself in setting benchmarks primarily for energy commodities like oil.

It was learned that as far as regional oil trading is concerned, Singapore is still the most feasible place due to its ability to accommodate bigger capacity for large cargo and shipments handling.

Singapore, he said, is also accessible to both buyers or sellers of oil products. At the same time, Singapore had already developed capital and financial markets which will allow smooth trading of oil commodities.

This concern, for the time being, may also affect the possibility of Subic being made into an oil supply hub for the region.

It would be recalled that some government officials have proposed to transform part of Subic as a regional oil stockpiling facility.

Oil importers in the Philippines have been using as benchmark the Mean of Platts Singapore (MOPS).

In energy commodities trading, MOPS is an assessment and price indexing mechanism for oil products in the region.  For oil refiners, the pricing gauge being used is Dubai Crude.

According to Ernsberger, they normally gather data from buyers and sellers to enable them to come up with price markers for various products including oil and coal.

He said before the day’s end, Platts will compute the average price for the day for each product traded in the market.

Aside from MOPS, Platts also makes price indexes for Dated Brent for European markets; West Texas for the US and Dubai/Oman which is widely used as price reference in Asia Pacific markets.