Philippine oil companies must meet the minimum inventory requirement set by the Department of Energy to ensure that the recent drone attacks on Saudi Arabia’s oil facilities would not have an adverse impact on domestic prices and supply, according to consumer advocacy group Laban Konsyumer Inc.
“The consumers should be assured that the oil industry complies strictly with the minimum inventory requirement of 30 days for crude oil, 15 days for finished products and 7 days for LPG (liquefied petroleum gas),” Laban Konsyumer president Vic Dimagiba told reporters late Monday.
“The inventory should cushion the country against supply distortion that may impact on the ability of the country to replenish import volume,” he said.Saudi Arabia supplies 40% of the country’s crude imports, Dimagiba noted.
Yemen’s Iran-aligned Houthi group over the weekend took responsibility for the attack on two oil facilities at the heart of Saudi Arabia’s oil industry on Saturday, which knocked out over half of the Kingdom’s output, according to a Reuters report.
The drone attacks are expected to cut Saudi’s output by 5.7 million barrels per day or over 5% of the global oil supply, according to state-run oil company Saudi Aramco.
“We are seeking to ensure that the energy family will be sufficiently prepared to face the potential impact of this unfortunate incident, if any, on the country,” Energy Secretary Alfonso Cusi said in a statement.Oil prices surged to six-month highs when markets resumed on Monday, driving more worries about the geopolitical situation in the region, and worsening relations between Iran and the United States.
Laban Konsyumer noted the controversial plan compelling oil companies to “unbundle” or reveal the details of how pump prices of petroleum products are adjusted could be an effective instrument to ensure that the industry is in check in light of the attacks in Saudi Arabia that impacted on global oil supply chain.“On prices, the unbundling of the weekly oil prices adjustments could have been a powerful tool to track that existing inventory products are priced at its pre-Saudi oil incident,” Dimagiba said.
The Department of Energy (DOE) is facing stiff opposition from oil companies regarding the department’s controversial circular on unbundling.Department Circular No. DC2019-05-0008 mandates oil companies to provide the DOE with the detailed computation and corresponding explanation and supporting documents on the causes or reasons behind the weekly adjustments of petroleum pump prices.
The lower courts in Taguig and Mandaluyong have issued separate injunctions against the circular following a petition by Petron Corp. and Pilipinas Shell.Oil companies are opposing the circular, claiming it leads the downstream industry back towards a regulation regime.
“Oil industry must not take advantage of a force majeure situation at the expense of the consumers. Hopefully the courts reverse the injunction they issued against the circular,” Dimagiba said.The Philippine government convened an emergency meeting on Sunday, September 15, 2019, with officials of the Electric Power Industry Management Bureau, the Oil Industry Management Bureau, the National Electrification Administration (NEA), the National Power Corporation (NPC), the Philippine National Oil Company (PNOC), and the PNOC-Exploration Committee. https://www.gmanetwork.com/news/money/economy/708236/phl-to-ensure-enough-oil-supply-after-drone-attacks-on-saudi/story/
Petron Corporation earlier said the attacks on oil facilities will not lead to supply disruptions on its downstream system.“We wish to assure the public that there will be no supply disruption from our end. We have adequate supply to support our domestic requirements,” Petron said.
Pilipinas Shell Petroleum Corp. is also working to ensure sufficient supply for consumers. “Rest assured that Pilipinas Shell will exert all effort to ensure continuous supply of fuel to the motoring public and all our customers.” —VDS, GMA News