Petron buys 2.48M barrels of Russian crude to avert supply crunch

Petron Corp. has procured 2.48 million barrels of crude oil from Russia to safeguard the country’s fuel supply amid escalating geopolitical tensions that have disrupted the Philippines’ traditional import routes.

In a disclosure on Monday, the Ramon S. Ang-led company said the move was formalized under the state of national energy emergency declared on 24 March through Executive Order No. 110. The purchased crude, along with other secured volumes, will support Petron’s petroleum inventories until June .

“The procurement of Russian crude oil is not part of the Corporation’s business-as-usual sourcing strategy, and the purchases were undertaken strictly out of extreme necessity as an extraordinary emergency measure in response to unprecedented geopolitical and supply-chain disruptions and only after exhausting all commercially and operationally viable alternatives,” it said.

ME supply collapse

The company recounted that on 28 February—when the United States and Israel launched a military campaign against Iran—it was informed that a shipment of two million barrels could not pass through the Strait of Hormuz after Iranian forces announced its closure to merchant vessels. 

A second shipment of two million barrels was cancelled on 7 March due to heightened risks in the Red Sea and Hormuz Strait.

With 98 percent of the country’s crude imports coming from the Middle East, the sudden loss of supply posed an immediate national threat. 

Petron, which holds 30 percent of the domestic fuel market and operates the country’s only refinery, said it was “constrained to procure Russian crude oil” to protect not only its commercial operations but “more importantly, the security and interests of the nation.”

The company warned that failure to secure crude would have triggered “serious nationwide fuel shortages, sharp price spikes, panic buying, disruption to transportation and logistics, and broader economic dislocation”, severely affecting households, businesses, and critical public services.

Gov't coordination, legal clarity

Petron said it is closely engaged with the Departments of Energy and Finance, which have encouraged companies to find alternative supply sources. 

It also cited guidance from the Bangko Sentral ng Pilipinas, which confirmed on 12 March that “there is no prohibition under Philippine law against sourcing foreign currency for import and trade transactions.”

The company added that its understanding, based on engagements with government, was that “there were likewise no domestic legal prohibitions on the importation of Russian crude oil.” 

If the situation worsens, Petron said it may again consider repurchasing Russian crude.

“If the current crisis persists and alternative crude sources remain unavailable or insufficient, the Corporation may again be compelled to consider purchases of Russian crude oil to augment the national fuel supply and directly mitigate the inimical consequences resulting from the absence of a stable and reliable source of crude.”