Oilink

July 10, 2011, 12:00am

MANILA, Philippines — As the multi-billion royalty share of the government from the Malampaya gas field development is hot in the eyes of probing policymakers, proposals are being reinforced to earmark a fraction of it for the planned Philippine oil stockpiling facility.

Two legislative measures – both in the House of Representatives and the Senate – are pending for deliberations. One of them targets to allocate Malampaya funds for the setting up of the propounded strategic reserve.

“Government should use a chunk of the P77.2 billion Malampaya fund to build a permanent emergency fuel stockpile that would cushion the country from future global oil shocks,” LPGMA Party-list Representative Arnel Ty has noted in a press statement.

Under his House Bill 4526, he wants the establishment of oil stockpile to be bestowed as a responsibility for state-owned Philippine National Oil Company. His legislative measure runs parallel with counterpart Senate Bill 159 filed by Senator Teofisto Guingona III, which is also pushing for the creation of a government-funded oil emergency reserve.

Of the gas field project-derived royalty shares, Ty is recommending that at least P19.3 billion be allocated for the stockpile plan.

Nevertheless, he admitted that this may only be able to cover 15 days of supply, which still falls short of the 90-day requirement which should have been the standard for strategic reserves being designed by countries affiliated with the Paris-headquartered International Energy Agency.

The lawmaker is apparently referring to the P77.2 billion which is supposedly sitting as “idle cash” of the Department of Energy (DoE) from the Malampaya royalties. As of end-2010, the government’s revenue share from the gas project already reached P184 billion, but this included the portion of the host local government units.

Just this week, struggles in searching for definitions of “what constitutes an emergency in oil markets” also rocked the decision of the United States to draw oil from its Strategic Petroleum Reserve (SPR). While it momentarily eased global oil prices, deeper policy issues are being debated and these are seen having implications for all other countries running their own oil stockpiles.

In the Philippines, the proposed creation of oil stockpile runs more along the aims of softening domestic pump prices – especially during drastic upswings in international prices.

Under Ty’s proposal, he specifically wants that “funding for the SPR may be sourced from government royalties from the commercial exploitation of the country’s natural gas and oil deposits,” emphasizing on what the national government already cornered from the Malampaya project.

Guingona’s version, on one hand, propounded sale of “certain PNOC assets, if necessary, to raise extra cash for the SPR.”

Ty manifested that given “the availability of potential funding, government is now in a position to put up the emergency oil stockpile we’ve been pushing for.”

He further proposed that “a state-controlled stockpile of refined petroleum products to secure our requirements – estimated at the equivalent of 300,000 barrels of oil per day – during a crisis” be created.

via www.mb.com.ph