The Philippine National Oil Company (PNOC) is considering procuring up to three million barrels of diesel to build up government standby reserves to be released to oil companies when supply disruptions occur.

Director Rino Abad, of the Department of Energy Oil Industry Management Bureau, said one option being discussed is for PNOC to secure a diesel supply to keep in reserve for private oil companies when their supplies are disrupted.

“One of the options is for PNOC to procure and lock in a diesel supply using government funds as standby reserves. Later, that could be distributed to the private oil sector if they need a supply in case their supply contracts are disrupted,” Abad said.

Initial discussions involve procuring around one million barrels, but this could be increased to three million barrels following reports that China may stop fuel exports.

“That’s a game changer. About 30 percent of diesel exports come from China. South Korea accounts for 40 percent, so hopefully they will not follow,” he said.

Abad said the additional supply could provide a temporary buffer for the country, which consumes about 33 million liters of diesel daily.

“We are consuming 33 million liters per day of diesel, equivalent to 200,000 barrels a day. If you have one million barrels, that will give us five days. Three million barrels would be about 15 days,” he said.

The diesel would be sold to oil companies, possibly at cost, to help stabilize the domestic supply.

“It could be advantageous if PNOC sells it at cost without profit. It would be cheaper when passed on to domestic oil companies,” Abad said.

He added the proposal is still under discussion and will need PNOC board approval before it can proceed.