Philippines Pursues Oil Reserve Deals with Saudi Arabia, Japan, UAE

The Philippines is actively pursuing oil reserve partnerships with Saudi Arabia, Japan, and the United Arab Emirates (UAE) as part of its strategy to expand emergency fuel stockpiles. A proposed facility backed by Saudi Arabia could potentially hold 50 million barrels of oil. Energy Director Rino E. Abad informed the Senate Energy Committee that while the country aims to expand its current reserves to 15 million barrels, initial discussions with Saudi Arabia involve a much larger capacity of 50 million barrels. The Department of Energy (DoE) has already held preparatory talks with Japan’s Ministry of Economy, Trade and Industry and Saudi Arabia, submitting concept notes for these collaborations. Negotiations with the UAE are expected to commence soon. According to Mr. Abad, the proposed Saudi facility would grant the Philippines access to reserves during emergencies. He highlighted that both Saudi Arabia and the UAE are crucial suppliers from the Persian Gulf, possessing exit pipelines that bypass the Strait of Hormuz, thus ensuring more reliable supply routes. These initiatives align with Senator Erwin T. Tulfo's call for the DoE and Philippine National Oil Co. (PNOC) to pursue reserve partnerships, concurrently with the development of a planned government-owned oil depot in Bataan. PNOC Department Manager Antonio G. Buenviaje indicated that site preparation for the Bataan property is underway and the depot is targeted for completion within one-and-a-half years. With the Philippines consuming approximately 460,000 barrels of oil daily, a one-million-barrel reserve would only cover about two to three days of demand. The government's goal is to establish a more robust buffer. In addition, new regulations allow local government units (LGUs) to utilize their development funds for energy security projects, including oil storage facilities, in response to supply disruption risks, particularly those linked to geopolitical tensions such as the Iran war. Energy Undersecretary Riolita C. Inocencio stated that P8 billion has been requested to construct the country’s first government-owned petroleum reserve, which would initially hold up to one million barrels. She emphasized the reliance on private sector reserves and the necessity of a government-owned reserve for a sufficient buffer. Senator Tulfo pointed out the current reserve's inadequacy against daily consumption. Mr. Abad reiterated the aim to expand capacity to 15 million barrels, with Saudi Arabia considering a 50-million-barrel storage hub. He confirmed that Saudi Arabia would bear all costs for its proposed facility, similar to the potential arrangement with the UAE. The Department of Budget and Management, in conjunction with the Departments of Finance and Interior and Local Government, issued Joint Memorandum Circular No. 1, authorizing LGUs to use their 20% development funds for energy security projects. These eligible projects include oil storage facilities and renewable energy infrastructure. The circular explicitly prohibits the use of these funds for recurring operational expenses. President Ferdinand R. Marcos, Jr. declared a state of national energy emergency via Executive Order No. 110, prompted by supply disruptions associated with the Iran war. This has contributed to elevated inflation and slowed economic growth in the Philippines.