DOE to penalize oil companies not complying with minimum inventory

MANILA, Philippines - The Department of Energy (DOE) said it will slap appropriate penalties to oil companies failing to comply with the minimum oil inventory requirement.

Energy Secretary Jose Rene Almendras told reporters that as of March 2, the oil inventory stood at an average of 24-25 days worth of supply.

He said based on DOE data on finished petroleum products onshore inventory, Petron Corp. has 22 days inventory; Shell, 23 days; and Chevron has 15 days.

On crude inventory, Petron has 32 days and Shell has 15 days.

In transit oil, he said, the inventory stands at 21 days for crude and three days for finished products.

Under Department Circular 2011-03-0002, the DOE increased the minimum inventory requirements of all companies and bulk suppliers operating in the country. The circular was issued on Feb. 28 and will take effect after it is published in a newspaper of general circulation.

All oil companies, except refiners, operating in the country and bulk suppliers shall maintain a minimum inventory equivalent to 15 days supply of petroleum products, excluding liquefied petroleum gas, which shall be maintained at seven days supply; and refiners shall maintain a minimum inventory equivalent to 30 days supply consisting of petroleum crude oil and refined petroleum products.

In a report from the DOE’s Oil Industry Management Bureau (OIMB), the country’s daily fuel consumption is estimated at about 300,000 barrels or 48 million liters. This translates to about P1.6 billion per day at $120 per barrel and exchange rate of P44 to a dollar.

At the same time, Almendras said the Philippines is exploring talks with several countries for possible petroleum supply cooperation as part of the contingency measures once the oil crunch in the Middle East persists.

The energy chief said he had preliminary discussions with the Saudi Arabian government. The possible cooperation, he said, may be made through government-owned Saudi Aramco and state-run Philippine National Oil Co. (PNOC). This may involve a potential stock inventory agreement.

He said they looking for an arrangement that would not entail costs to the Philippine government.

In 2010, crude imports were sourced from the Middle East (mainly Saudi Arabia and UAE) accounting for 81 percent; Asia; 12 percent; and Russia, seven percent. Refined petroleum products, however, came mostly from neighboring Asian countries, particularly Singapore, except for liquefied petroleum gas, which the country imports from Saudi Arabia, Qatar and the United Arab Emirates.

Almendras said they are also pursuing talks with other countries such as Japan and Russia for possible cooperation on beefing up oil stock inventory.

Recently, President Aquino had also issued Administrative Order No. 6 (AO 6), which called for the formation of the Inter-Agency Energy Contingency Committee (IECC). The committee will undertake the evaluation and enhancement of the current contingency plan and will be participated in by representatives from Departments of Finance, Budget and Management, Justice, Trade and Industry, Agriculture, National Defense, Interior and Local Government, Transportation and Communications, Foreign Affairs, National Economic and Development Authority, and the National Security Council. The energy secretary will chair the committee.