Philippines eyeing Russian oil to lower local crude prices

MANILA, Philippines — The Philippine government is eyeing Russia as a source of 240 million liters of diesel that it plans to procure to enhance competition among local players and eventually lower prices of crude, Energy Undersecretary Felix William Fuentebella said yesterday.

According to Fuentebella, President Duterte has given the marching orders to the Philippine National Oil Co.-Exploration Corp. on the stockpiling of diesel for energy security.

The Department of Energy said its target of 240 million liters of diesel from Russia will be equivalent to a three-day supply.

“The immediate impact on prices, this is a jumpstart. If you are asking me if that figure will be significant, not yet,” he said in a briefing at Malacanang yesterday.

But even if the quantity is still not significant to bring down diesel prices, Fuentebella said the government is hoping that the strategy will allow private fuel suppliers to look at other options to get supply from countries not belonging to the Organization of Petroleum Exporting Countries (OPEC).

He said the government hopes to enhance competition that will in the long run cause a favorable impact on local prices and alleviate the burden on consumers. 

“We are challenging the business as usual (attitude)…  although we are limited at 240 million liters of stocks, we are pushing that it will move forward,” he said.

Fuentebella said the government is committed to oil deregulation and the government-owned and controlled corporation’s participation will enhance competition.

Once the government gets the supply, Fuentebella said this will open possibilities among old players to tap supply from non-OPEC suppliers.

“We see that this will have a rippling effect,” he said, referring to crude prices.

“It’s not the volume but the practice because we are exploring all these different venues to circumvent what the non-OPEC and OPEC are doing,” Fuentebella said.

The procurement will be government-to-government, he added.

“It’s business for them. For us, it is all about… security but... aside from subsidies, we have to show a strategy… The rippling effect is the most important to enhance competition, in a way that there are governments that are open,” Fuentebella said.

The move will break the oil cartel controlled by the OPEC, he said.

“OPEC is partnering with non-OPEC groups. We are breaking that by pushing the government-to-government relationship. Why don’t you look at it this way? We are utilizing our government-to-government relationship to open up the OPEC also,” Fuentebella said.

If talks materialize, energy officials are looking at tapping the Philippine Coastal Storage and Pipeline Corp. for storage.

The PCSPC, inaugurated last year, has 540,000 barrels of additional storage capacity and loading facilities within Subic Bay Freeport.