DOE wants oil firms to keep minimum inventory of petroleum products on per product, per depot basis

The Department of Energy (DOE) has proposed that local oil firms be mandated to keep a minimum inventory on a per product and per depot basis, with the global supplies hit by ongoing conflict between Russia and Ukraine.

Oil Industry Management Bureau director Rino Abad said the DOE is seeking that the Oil Deregulation Law be amended to provide for such specifications.

“If it will be adopted, the requirement would be on a per company (basis), so that would be basically the primary entry of petroleum products through refiner and direct importers,” Abad told the Senate on Monday.

“Itong dalawa pong mga major type of players, ang ire-require [These two major players will be required on a] per company on a per depot and per product basis, instead of a total country total product basis,” he explained.

Abad noted that the proposal is anchored on two main regulations, one of which is Executive Order 134 signed by former President Gloria Macapagal-Arroyo which mandated the total oil industry to keep a minimum inventory of petroleum for both crude and finished petroleum products during the US-Iraq tensions.

Its implementing guidelines specified that there needs to be a minimum inventory level of a 30-day supply for refiners covering the combination of crude oil and finished petroleum products; a 16-day supply for direct importers for refined petroleum products; and a seven-day supply for LPG importers.

The parameters provide that the supply inventory would be based on the daily average for the past six months.

The DOE proposal comes as the global oil supply has been hit by the ongoing conflict involving Russia, which is a major exporter of petroleum products.

The Philippines does not directly import from Russia, but sources its supply from other countries which in turn source their supply from the country.

For its part, Petron Corp. said it already has a supply which would cover over 30 days, but noted that the DOE proposal would entail additional spending which would be difficult for some firms to comply with.

“There are inherent concerns, logistical concerns in some of the facilities, so if it is going to be imposed, if it’s going to be mandated, it may require huge capex or even inability of some of the players to comply because of the inherent restraints,” Petron representative Mia Santos Delos Reyes said in the same hearing.

Local oil firms last Tuesday hiked prices per liter of gasoline by P3.60, diesel by P5.85, and kerosene by P4.10, marking the 10th straight week of upward movement.

Latest data available from the Department of Energy (DOE) indicate that year-to-date adjustments stand at a total net increase of P8.75 per liter for gasoline, P10.85 per liter for diesel, and P9.55 per liter for kerosene as of February 22, 2022.

An industry source also said a big-time pump price hike could be implemented this week — gasoline to possibly be hiked by P8.28 per liter, and diesel by P12.72 per liter. — RSJ, GMA News