The threat of an oil shortage in the country looms large, as petroleum companies on Thursday warned that fuel supplies beyond April are not guaranteed amid global oil disruptions stemming from the closure by Iran of the Strait of Hormuz.

On the second day of the Senate’s Proactive Response and Oversight for Timely and Effective Crisis Strategy (PROTECT) hearing, the Independent Philippine Petroleum Companies Association (IPPCA) said that while fuel importations were still arriving, there was no assurance that petroleum firms could secure deliveries beyond April.

“Our members have already confirmed with the DoE (Department of Energy) that so far, our incoming importations are still arriving, but we haven’t received any confirmation for future deliveries beyond April,” said IPPCA president Tanya Samillano, adding that the situation is currently “wait-and-see.”

Although there are offers in the market, Samillano said these come at very high prices.

Raphael Capinpin, executive director of the Philippine Institute of Petroleum, agreed that supply is tightening and may be depleted by May.

Members of the PIP include major oil firms such as Petron, Shell, Chevron (which owns Caltex), PTT and Isla LPG Corp.

Very expensive

Capinpin said many trading firms are withholding information on supply sources and May deliveries to gain leverage in securing a steady supply.

“It is not a secret that it’s very hard to secure supplies now. So many of the traders are keeping quiet, especially for deliveries in May. There have been no responses to tenders for May,” Capinpin told senators.

He echoed Samillano’s concerns, saying securing supply remains a major challenge because it is “very expensive.”

Petron Corp. general manager Lubin Nepomuceno shared the same concern, saying that sourcing crude and finished products has become “very challenging” amid the ongoing US-Israel conflict with Iran.

Petron, the country’s largest oil refining firm, primarily sources crude from the Middle East, where the energy infrastructure has become a target of Iranian strikes.

Nepomuceno said Petron cannot source supplies from nearby exporters such as China, Thailand and Singapore, which have imposed temporary restrictions on fuel exports amid the crisis.

Facilitation sought

“To this end, the government may need to intervene through the facilitation of supply arrangements with other countries,” he said.

He suggested the administration consider India’s strategy of building petroleum reserves, including buying Russian crude. He noted that the United States temporarily lifted sanctions on Russian oil to offset supply disruptions.

India has reportedly secured around 60 million barrels of Russian crude for April delivery amid worsening supply disruptions linked to the prolonged closure of the Strait of Hormuz, a key route for global oil shipments.

“Our government may consider securing [a] waiver from the United States to allow importation of crude from Russia. Currently, with the embargo on Russia, we are constrained from procuring crude, which is a viable feed for our refinery in Bataan,” Nepomuceno said.

President Ferdinand Marcos Jr. said the country is considering sourcing fuel from Russia, although it is not a traditional trading partner.

Nepomuceno also proposed establishing a strategic petroleum reserve to build buffer stocks and stabilize prices during crises.

He said the government would need about $108 billion to maintain a six-month oil reserve at $60 per barrel.

Economic catastrophe

“A supply disruption is more expensive and will be a catastrophic consequence for the economy. The investment for the strategic crude facility is estimated to be $50 billion, for which the government could provide a soft loan for the interested investor,” he said.

Marcos said Wednesday that current oil reserves could last at least 45 days and expressed confidence that shipments would continue to arrive afterward.

The Department of Budget and Management said it has activated a P20-billion emergency fund for the Department of Energy (DoE) to stabilize oil prices and ensure uninterrupted essential services.