MANILA (Reuters) - The Philippines’ energy ministry plans to import initially about 240 million liters of diesel, equivalent to three days of the country’s requirements, from Russia and other non-OPEC countries for stockpiling purposes, it said on Thursday.
The southeast Asian country is looking to establish what it calls a “strategic petroleum reserve” that it can tap if and when fuel supply tightens in the world market.
The reserve will complement the minimum inventory requirement that oil companies such as Petron Corp, Pilipinas Shell Petroleum Corp and other local retailers must comply with, the Department of Energy (DoE) said.
The DoE requires oil companies to maintain a minimum inventory of in-country stocks equivalent to 30 days of crude and products for refiners, 15 days of products for importers/bulk suppliers, and seven days of liquefied petroleum gas stocks for LPG sellers.
Energy Secretary Alfonso Cusi has directed a unit of state-owned Philippine National Oil Co (PNOC), PNOC Exploration Corp, to start negotiations with Russia for diesel supply, his spokesman Felix William Fuentebella told a media briefing.
Fuentebella said the initial volume of diesel imports by PNOC Exploration is too small to prompt local oil companies to lower their pump prices.
However, he said the plan is to make the PNOC unit, which is primarily engaged in oil exploration, into an oil trader and retailer, and the DOE hopes such transformation can create a “ripple effect” in the industry.
President Rodrigo Duterte’s foreign policy has led to alliances with both China and Russia while Philippines maintains ties with traditional ally the United States.
The policy has resulted in discussions between Manila and Moscow on cooperation agreements in law enforcement and defense as well as in energy.
About 6.9 percent of the Philippines’ crude oil imports in 2017 came from Russia, DoE data showed. Nearly 90 percent was sourced from Saudi Arabia, Kuwait, United Arab Emirates, Qatar, and Oman.
Reporting by Enrico dela Cruz; Editing by David Holmes