Asean members sign oil, coal supply security agreement

MANILA, Philippines – Members of the Association of Southeast Asian Nation (ASEAN), which includes the Philippines, have signed an agreement to pursue a regional oil supply facility, the country’s top energy official said.

Energy Secretary Jose Rene Almendras said the proposed facility may also include a coal stockpile. “We are proposing even coal. It’s under discussion,” he said.

But Almendras clarified that the agreement would not actually involve setting up of a stockpile facility. “It’s not a regional stockpile, it’s a supply security agreement where we are appealing to the ASEAN members who have oil, in cases of emergency, that there will be (supply if needed),” he said.

He said the agreement calls for members to share their stockpile to those who would have an urgent need for supply.

He said the ASEAN members are now finalizing the mechanism on the supply share agreement.

“That’s what we would like to do. The basic idea is for those oil producing, we can go to them for help if and when needed,” he added.

Last year, the idea of putting up a national oil stockpile was raised amid the continuing volatility of oil prices which may trigger a supply shortage. But at present, Almendras said the Philippines has a long way to go with regard to having an oil stockpiling facility.

“So far, we do not have facilities, no places to put it. If we do it, who’s going to pay for it? If you give it to the private sector, they’ll be the ones to take the advantage of the efficiency that comes out with the arbitrage,” he said.

Developing a strategic oil stockpile is part of the DOE’s Energy Reform Agenda for the medium-term to promote oil supply security. For the past years, especially during times when the country was faced with oil supply issues, the DOE always raised the possibility of sourcing its oil requirements from other countries and put it in a stockpile.

Bulk of the Philippines ’ oil requirement is being sourced from the Middle East, particularly in Iran and Saudi Arabia.

In 2005, the US Department of Energy urged the Philippines to develop a strategic stockpile program. During that time, the country had been severely threatened by a possible supply disruptions amid high oil prices in the world market.

Since then, the government, led by the DOE, has been trying to push through with the planned establishment of an oil stockpilie.

There have been areas identified to house an oil stockpiling facility. These include the Coastal Subic Bay Oil Terminal which could accommodate 500,000-600,000 barrels of oil, and the Nonoc Terminal in Surigao.