Gulf oil producers propose funding storage facilities using their own funds.
Dubai: The UAE and Saudi Arabia have offered to build oil storage facilities in the Philippines using their own funds, in a move that could strengthen Manila’s ability to respond to fuel supply disruptions.
According to the Philippine News Agency, the offers were disclosed during a hearing of the Senate Committee on Energy, where Rino Abad, director of the Department of Energy’s Oil Industry Management Bureau, confirmed Saudi Arabia’s interest in establishing an oil storage hub.
“Saudi Arabia will shoulder all the costs,” Abad told committee chairman Senator Erwin Tulfo.
Tulfo noted that the UAE had made a similar offer. Under the proposal, the facility would remain UAE-owned while providing the Philippines with an accessible source of petroleum products during emergencies.
Priority access during supply crises
While the proposed foreign-owned facilities would generally operate on a commercial basis, Philippine officials are seeking an arrangement that would give the country priority access to stored fuel during supply disruptions or emergencies.
“Our concern, in essence, is that we are prioritised and have a reserve right when a crisis occurs,” Abad explained.
The proposed arrangement would provide the Philippines with an additional source of fuel if disruptions to international supplies affect the country.
Saudi Arabia proposes 50 million-barrel capacity
The Department of Energy has already submitted a concept note requested by Saudi Arabia for the proposed storage hub.
The facility could have a target capacity of 50 million barrels, although its timeline and remaining documentary requirements have yet to be finalised.
Abad said the DOE’s newly established Philippine Strategic Petroleum Reserve team would continue discussions with Saudi Arabia to determine the next steps.
The Philippine government plans to formally approach the UAE next.
Gulf producers key to Philippines’ oil supply
Abad also highlighted the UAE and Saudi Arabia’s longstanding role as petroleum suppliers to the Philippines.
He noted that both countries have export pipelines that provide alternative routes that bypass the Strait of Hormuz.
The alternative routes are considered important to energy security because disruptions along major shipping corridors can put pressure on fuel supplies and prices. For Manila, additional storage capacity could provide a buffer against such external shocks.
Philippines’ own reserve
The foreign-backed proposals are separate from a government-owned strategic petroleum reserve being developed by the Philippine National Oil Co. (PNOC) in Bataan.
PNOC deputy manager Antonio Buenviaje said the facility is targeted for completion next year, with an initial capacity of one million barrels. The government plans to eventually expand the facility to 15 million barrels.
At current consumption levels, however, the initial one-million-barrel reserve would cover only slightly more than two days of Philippine fuel demand.
Abad estimated the Philippines’ oil consumption at around 450,000 to 460,000 barrels per day.
Faster action
Meanwhile, Tulfo urged the DOE and PNOC to accelerate the administrative requirements for the proposed projects.
He said the offers from major oil-producing countries could help the Philippines build a stronger buffer against disruptions in global petroleum markets.
“We need adequate reserves. We need to build our capacity to withstand external shocks,” Tulfo said.
The proposed UAE and Saudi facilities, together with the Philippines’ own strategic reserve, could provide additional capacity to help maintain fuel supplies during periods of global market disruption.
