Guingona filed a bill for the creation of RPs strategic petroleum reserve

By Jason de Asis


SENATE OFFICE, Manila, October 31, 2010-Senator Teofisto Guingona, vice-chairman of the Senate Committee on Energy has filed a bill proposing for the creation of Philippine Strategic Petroleum Reserve in the country to prevent possible shortage in the petroleum products.


The supply of liquefied petroleum gas (LPG) in the retail market in the early months last year abruptly became scarce wherein the consumers have to wait for two (2) or there (3) days for supplies to be able to deliver, adding that the big LPG players blamed LPG re-fillers as the culprits or the roots of shortage, pointing out that these re-fillers chose to hoard since importers and refiners were refusing to supply them with bulk LPG.


Guingona said that the LPG shortage last January to February 2009 gives us valid reason to pause and come up with a strategy to ensure that the people’s supply of petroleum products is secure and one of the obvious solutions is to establish a reserve to be used primarily in times of emergency.


He added that the Philippine National Oil Company (PNOC) is mandated to provide, operate and administer or form a joint venture with other parties to put up a stockpile facility for refined petroleum products such as gasoline, diesel and liquefied petroleum gas (LPG) under Senate Bill 159.


The Department of Energy (DOE) proposed the idea of putting up a stock file facility many years ago and the proposed oil stockpile program has gone as far as tapping the United States (US) counterpart in 2004 for a feasibility study.


Guingona stressed that this is the time to establish a reserve to be used primarily in emergency, to increase the existing supplies in the anticipation and prevention of a shortage, adding that this strategy has been used by countries such as USA and Japan and were proven effective, pointing out however, unlike foreign reserves, which consist of crude oil, the strategic petroleum reserve will serve the Philippines best if the reserves consist of refined and ready-to-use petroleum products.


The PNOC must take into account program management and organization, storage method and location, cost of storage facility, price setting of petroleum products originating from the reserve based on current market standards and other issues to put up a strategic petroleum reserve.


Guingona proposed that the Secretary of Energy must authorized full drawdown in the event of an emergency situation and there is a significant reduction in supply and a severe increase in the price of petroleum products which resulted from such emergency situation and such price increase is likely to cause a major adverse impact on the national economy.


A proposed for a trade drawdown which may be determined by the President such as sale or exchange of petroleum products with other ASEAN member countries as provided for in the ASEAN Petroleum Security Agreement (APSA) or with other parties for higher quality petroleum products, in exchange of storage capacity, or to resolve petroleum delivery problems of oil companies in terms of drawdown of petroleum reserve.


“It is important that the government has a direct hand in protecting the country’s supply security, especially these commodities, adding that a new balance between the market system and state control be put in place in order to stabilize the price of petroleum products and supply,” Guingona concluded. (Jason de Asis)


Opinion: The proposed bill of Senator Teofisto Guingona is a big help in the Philippines industry to avoid the fears that the government-imposed ceiling on prices that sparked a supply shortage in our country.

Last year, Zenaida Monsada, head of the oil industry management bureau at the Department of Energy (DOE) reported that the country's inventory of petroleum products has dropped to 8 to 13 days consumption from the normal 21 days since the government ordered oil firms to cap pump prices in Luzon in the aftermath of the back-to-back typhoons, adding that some oil companies have stopped imports which resulted in the dwindling of supply in many gas stations.

The Petron Corp. also reported a net loss of P1.5 billion in the fourth quarter, due to the price freeze, adding that the Petron and the Philippine unit of Royal Dutch Shell had around 70% of the domestic markets were the only companies that operate refineries in the country. The rest are import finished petroleum products.

I therefore suggest to the Philippine government to develop the substantial oil reserves in Palawan. It will help the country to become self sufficient in energy needs and can be the major oil producer.


As I remembered the Department of Energy (DOE) Assistant Director Ismael Ocampo pointing out that the majority of the country’s key oil and gas are located in the territorial waters of Galoc field located about 50 kilometers west of Culion Island in northern Palawan.


It is optimistic that the flow of oil in the Galoc Fields will be sustained at 17,000 to 20,000 barrels of crude oil a day for the first three (3) to six (6) months before the declaration of commercial quantity according to DOE.


Another is the municipal waters of Kalayaan Island Group (KIL) which is known as Spratly Island in the South Palawan. It was five (5) times larger than the Malampaya gas project which is also located in Palawan waters. It was first reported by Dr. Jose Antonio Socrates, a Palaweño geologist. Malampaya only has an estimated 2.5 million cubic feet of natural gas reserves, and 85 million barrels of condensate which could provide 2,700 megawatt of electricity in Luzon for 20 years.


Aside from Marantao, KIG could be hosting other prospects like Sirinao, Bajallanura, and a string of other structures collectively known as the Rizal Leads.


These structures, or areas where possible oil and gas deposits can be located, lie along the giant petroleum fields offshore Borneo up to Mindoro in the continental shelf of the eastern coast of the South China Sea.


However, Camago Malampaya Reservoir is still the largest natural gas development project in the country’s history and one of the largest-ever foreign investments of the country.


The 4.5 billion US dollar Malampaya Deepwater Gas-to-Power Project has an estimate gas reserves of 2.5 trillion cubic feet and 85 million barrels of condensate and which provide power of 2,700 megawatts for 20 years.


In 2005, the DOE estimated that the country had a total of 456 million barrels of fuel oil. The volume consists of 54 million barrels of condensate, 2,135 billion cubic feet of gas and 25 million barrels of oil.


If all of these will be given full attention and proper management we can be a supplier of it in other countries and surely our economy will rise up. (Jason de Asis)


Government should invest more trains to maximize ridership

By Jason de Asis

SENATE OFFICE, Manila, October 31, 2010-The government should invest in procuring more train coaches to maximize the ridership potential of the railway system and, in the process, turn in a decent return of investment (ROI), instead of a fare hike to boost the viability of Metro Rail Transit 3 (MRT-3).


Sen. Ralph G. Recto disclosed the whole MRT-3 line is actually good for a daily ridership of 650,000 but only about 500,000 or even less are serviced daily due to lack of coaches.


The projected 650,000 commuters daily are determined when the government allocates its annual subsidy for MRT-3.


Recto said that essentially, taxpayers are shouldering the fare subsidy of 650,000 passengers but since only 500,000 show up daily, there are, in effect, 150,000 ghost riders, adding that they are subsidizing the phantom fare of 150,000 ghost riders with or without them on the trains. Fare rates for the MRT-3 have been kept low over the years due to the subsidy provided by government, which averages to P5 billion a year.


The fare subsidy is pegged at P7.3 billion from this year’s subsidy of P5.4 billion. The allocation effectively increases the subsidy per passenger from the current P45 to P47.77 per commuter or up by P2.70 per passenger in 2011. The current fare rate in MRT-3 is P11 to P14, depending on the distance but proposals call for a fare hike that would bring the fare rate to P20-P25. The mass transit railway line that runs along EDSA earns only an estimated P1.8 billion a year.


According to Recto, the subsidy could be significantly reduced if government would invest in providing new coaches to address the current shortage and finally capture the 150,000 ghost riders.


There is a shortage of coaches. The MRT-3 is no longer living up to its promise as a safe and convenient way to reach one’s destination.


The MRT-3 as seen by the Senator is servicing 150,000 reel drivers. The 150,000 host commuters have yet to actually ride the MRT-3 but the train system is already operating with congestion, adding that with the increase in volume of passengers due to the new coaches, the MRT-3 would be able to make some modest profit and gradually scale down its subsidy dependence. This way the need for fare hikes would be lessened.


He urged government to re-evaluate plans to increase the fare rates in the MRT 3 and in the two (2) lines of the Light Rail Transit (LRT).


“If the increase seeks to unburden the government of the subsidy it provides to these mass transport systems, then I oppose the plan for being ill-conceived. But if it will be used to improve the services of the MRT and LRT, then further discussions are in order,” Recto said.


He said the government may be provoking a commuter revolt if it proceeds to hike the fare rates of these rail systems without improving their operations for the benefit of the riding public.


“MRT and LRT passengers who are used to paying a subsidized rate would find it very difficult to shell out more of their hard-earned money without seeing any discernible enhancement in their riding experience,” he said.


The MRT-3 has been taken over by the government through Land Bank of the Philippines (LBP) and Development Bank of the Philippines (DBP) from a local private consortium led by the Sobrepeña family.


MRT 3 has a 17 kilometer stretch from Taft Avenue in Pasay City to North Avenue in Quezon City and soon will be linked to the LRT Line 1, which ply from Baclaran in Pasay City to Monumento in Caloocan. (Jason de Asis)