At the mercy of geopolitics…

Every time a conflict erupts in the Middle East or the Persian Gulf involving an oil-producing state the Philippines is rendered helpless against the energy instability and inevitable negative impact on our economy.

Notwithstanding the government policy favoring a shift to renewable energy sources, it cannot be denied that our country will for some time continue to be dependent on imported fuel products. In fact, only one petroleum refinery, the Petron Bataan Refinery, is in operation today after Pilipinas Shell Petroleum Corporation shut down its Batangas refinery in 2020.

Petron, once the crown jewel of the Philippine government through the Philippine National Oil Company (PNOC), was wholly privatized following the deregulation of the downstream oil industry during the administrations of Fidel V. Ramos and Gloria Macapagal-Arroyo. And each time an energy crisis like the one we are about to face again with the escalating tensions in the Israel-Palestine-Iran conflict, the decision to sell Petron keeps biting us in the *ss.

Lost to history was the grand design of the late President Marcos Sr. that created PNOC to acquire then Esso Philippines and rename it Petrophil Corporation (later shortened to Petron) in response to the oil crisis brought about by the imposition of an embargo by the Organization of Arab Petroleum Exporting Countries (OAPEC) on supporters of Israel in the Yom Kippur War.

At its peak, and while it was government-owned and -controlled, Petron was a fully integrated petroleum company that also served as the country’s strategic petroleum reserve with assets in the entire value chain from importation to refinery, storage to distribution and logistics, and even retail stations.

Marcos Sr. understood that energy security was key to a stable and progressive economy, after all why else would First World countries bother waging wars and conquering nations for control of vast reserves of oil if it was not crucial to industrialization and wealth.

Sadly, today, we only bother with energy security during times of geopolitical instability involving petroleum-exporting nations. No one really talks about establishing a strategic petroleum reserve unless the government is forced to because when crude prices breach the US$80 or even US$100 per barrel threshold, the people start to feel its impact and bemoan the lack of preparations. Soon, talk of the relevancy of a national oil company will come up along with instructions to draft a plan only to abandon it as soon as conditions improve.

Marcos Sr. was probably rolling over in his grave when we sold off and “privatized” Petron. He would be utterly disappointed at how assets of PNOC subsidiaries including Petron were slowly sold off until nothing was left but the holding company it is today. If not for the government shares in Service Contract 38 or the Malampaya Gas to Power Project, PNOC and any of its last remaining subsidiaries would have no real relevance or significant contribution to the nation’s energy security.

If we are to address the country’s inherent vulnerabilities in energy security, we should institutionalize oil stockpiling and strictly impose the minimum inventory reserves.

When I was senior vice president for Energy Projects at PNOC, I proposed a Targeted Fuel Relief Program alongside a Strategic Petroleum Reserve Program for the country. These were shelved once the crisis was averted. So now, we have to study again and begin preparations instead of being ready to simply implement the programs each time a crisis comes up.

As a last resort and only if it should come to it, I hope this administration will have the b*lls to exercise its authority in times of national emergency and when the public interest so requires — to temporarily take over or direct the operation of any person or entity engaged in the industry.