PNoy: 50-M liters of diesel to boost PHL's strategic reserve

President Benigno Simeon Aquino III said some 50 million liters of diesel, scheduled to arrive next month, will boost the government's "strategic diesel reserve," and hopefully, mitigate the impact of the recent oil price hikes. In a speech at the PNOC Exploration Corp.'s (PNOC-EC) 35th anniversary celebration on Friday, Aquino said the Philippine government "will accumulate a stockpile of fuel for the country’s use in times of extraordinary need." "The recent turmoil in the Middle East and North Africa has made life more difficult for us. We are a country where a large portion of our oil requirements are imported; making us vulnerable to forces we have no control over," Aquino said. "If something happens in Libya, Bahrain, or even Egypt, we pay the price—in the form of higher fuel cost. Consumers end up spending more for fuel and have less money for other necessities," he added. "Our government is not taking this lying down. We are taking steps to protect our people from possible disruptions in supply and the volatility of the world oil market," Aquino said. Storage for diesel reserve PNOC-EC chairman Gemeliano Lopez said the company has laid the groundwork for securing storage for the 50-million liter diesel reserve. The average diesel requirement of the country is 400 million liters per month. PNOC-EC is in negotiations to lease storage facilities at the Subic Freeport (30 million liters) and Sariaya, Quezon (28 million) liters for the said diesel stockpile. PNOC-EC, the government's oil and gas arm, will spend around P2.25 billion for the 50 million diesel importation at $138 per barrel (or P43 to P44 per liter). "We aim to bring into the country the first shipment of oil by May 2011," Lopez said. Joseph Omar Castillo, PNOC-EC vice president, said they intend to source the imported diesel from Middle East countries. Castillo said the imported diesel will be sold at a lower cost to small oil players who can also offer lower diesel prices to their customers. He said PNOC-EC has the capacity to do this because it has low overhead cost and their target profit margin is very low. "We target to sell at less than market price. We're targeting that they (oil firms) will be able to sell P3 per liter lower. We will negotiate it at sale agreements with the oil firms. Amount of discounts, if any, will depend on ultimate price of our supply and our cost of storage," he said. Castillo said PNOC-EC will likely finance the importation through "trade financing by its creditor banks." Castillo said they expect a "sustainable oil delivery window every two months." Another oil price hike Meanwhile, oil prices are expected to go up again next week. However, Energy Undersecretary Jay Layug said the hike will only be "minimal." As of April 14 this year, the revised rates were: