State-owned Philippine National Oil Company (PNOC) said it will begin its feasibility study on establishing a strategic petroleum reserve next year due to delays brought by the COVID-19 pandemic.
The study, which was supposed to begin this year, intends to secure the country’s fuel supply in case of volatilities and disruptions in the oil market.
The project received a budget of Php50 million, which was unused after it failed to get a transaction advisor, PNOC officials told the Senate Committee on Finance, which conducts the hearings on the proposed 2021 budget of the Department of Energy (DOE).
PNOC then asked for an increase of Php65 million for 2021, citing the comprehensive and nationwide nature of the project.
PNOC Senior Vice President for Energy Investments Lila Czarina Aquitania said the government-owned energy firm hopes to update the terms of reference and that it can secure a transaction advisor early next year, assuming its budget request is approved.
Back in April, the DOE’s Oil Industry Management Bureau said the country could have benefited from the slump in oil prices if it had the capacity to store fuel.
The pandemic has pulled down demand for energy globally. As a result, international oil price benchmarks have yet to return to pre-pandemic levels, remaining at about $40 per barrel. In the Philippines, fuel demand in the first half of the year declined by 22.8%, while imports also went down by 35.4% to 5.95 billion liters.
The DoE recorded a 22.8% decline in Philippine fuel demand in the six months to June, while imports also declined 35.4% to 5.954 billion liters.