Strategic oil reserve seen boosting energy security

Added: 2026-06-03

[00:00:00]Philippines moves [music] to establish its first systematic strategic petroleum reserve program to shield the economy from volatile global supply chains and [music] geopolitical shocks. The plan's strategic petroleum reserve is backed by Japan, [music] a long-standing official dialogue partner of ASEAN, and is now moving towards a comprehensive [music] strategic partnership with the Philippines. With us for more is Department [music] of Energy Secretary Sharon Garin. It's good seeing you, Sec.

[00:00:27]Garin. Welcome to the program.

[00:00:29]>> Good morning, Kathy. Good morning, everyone. Thank you for having me here.

[00:00:33]>> So, how did the partnership with Japan come about to build the strategic oil reserves?

[00:00:39]>> Uh uh it started way back before when the they had a meeting with the prime minister and all of the Asian countries. Uh the discussions started during uh well, like last month uh while the war in the Middle East was ongoing, the realization that we are so dependent with the Middle East. So, um it was a it was a consultation of sorts at that time and and with the visit to Japan there was a a more firm agreement and embarking into the into the project.

[00:01:16]>> So, it's a firm agreement, Secretary.

[00:01:18]What exactly did the both of the governments agree on this time?

[00:01:22]>> Uh the the firm agreement on on studying and and exploring the idea. So, so the Japanese uh counterparts will be here by by next month and as since last week we have been doing virtual meetings with them and so that it's a multi-faceted group. It's the the METI, their their trade and industry, also their banks, also the the possible uh institutions that will evaluate the situation. So, their interest basically is to explore regional hub for for Asia. So Philippines is we are we are presenting ourselves and we are at the same time exploring how to set up our own national reserve. So so we're moving along and then hopefully by July we can have a more concrete direction.

[00:02:19]>> So it's this is for sure. I mean we're presenting ourselves as you say but this one's in the bag that the Philippines is going to be the location of this reserve.

[00:02:30]>> I guess I guess that I think depends on what we present right and what the other countries will be willing to present also. So so there's no contract or under agreement yet as to where it will be because being a regional project then it has to be decided by the whole region.

[00:02:53]>> So how does this complement what's been agreed upon then last month in Cebu when President Marcos and fellow ASEAN leaders moving toward a shared regional fuel reserves? How do these two initiatives then fit together in our government's long-term energy security plan?

[00:03:12]>> There's two there's two groups. There's the ASEAN and there's the the group with with Japan and so Japan is proposing a regional hub the same way that ASEAN also is studying a regional hub.

[00:03:27]It's different but it come come together. Now how will that impact on energy or oil security for that matter?

[00:03:37]If we have our own stock piling the Philippines it protects us in in a way that the inventory is here already but as well as the impact of any other you know the what are the determinants of the price or the the inventory it's it's a situation in the other countries.

[00:03:55]It's the forex exchange, the currency exchange that we have with that has a very substantial impact now on the price. And of course the the availability and the price also. So so if the inventories in the Philippines, whether it's crude or it's it's a it's finished product already, we are protected as against the impact of the war in the Middle East or wherever it may be and the uh exchange rate. So uh in I would make some runs, initial runs, that if we do stockpile in the Philippines, in fact we have a regional hub here. And in fact better so if we have the refined additional refineries here in the Philippines, we are our our GDP is is uh is uh protected as well as our inflation because of the that uh alone of the impact of the uh having it here in the Philippines. If I have it will be a different you know, dynamics for our oil industry if it's here already.

[00:04:56]>> And who are the other contenders then if it's not going to be here in the Philippines?

[00:05:02]>> I don't think any other country has volunteered yet.

[00:05:05]Um so that's the privilege we have and our our opportunity being the chair of ASEAN.

[00:05:13]We are we get to be more I guess in the forefront and more seen.

[00:05:19]So this is this is a good opportunity for Philippines and this is one advantage of being chair of ASEAN. So so hopefully we're louder and we have a better proposal.

[00:05:30]>> And a better sequencing. I'm seeing that on the one hand we do have the Japan back strategic oil reserve for the Philippines and on the other the Cebu summit endorsing studies on that regional fuel stockpile and and faster implementation of APSA, the uh, ASEAN petroleum security Agreement. So, which comes first then in practice and how do you avoid the overlap or or maybe even the confusion between the national and the ASEAN reserves?

[00:05:57]>> Yeah, but the national can be stand-alone, but it cannot do combined.

[00:06:01]We have um We have several sites that we can explore. We can explore Mindanao, uh, we can explore Luzon, uh, PNOC has several properties all over the country and we have several economic So, you can it can be all of it, Cathy, or it can be one. So, but for sure, we will pursue our own national reserve. Um Uh, having a reserve, though, Cathy, is having a bank for your own, and and and having a bank farm, you can have a bank farm where the national combination of a national reserve and the regional reserve that can work hand-in-hand together. Uh Uh, where would it fall in? Will be Will it be with the Japan Japan this initiative or the ASEAN initiative? Um That is still under study because what we have agreed in ASEAN is for for uh, Ace Ace Asian Center for Energy. We'll do the um somewhat of a feasibility study on what what's the best uh, set up for uh, ASEAN hub, no? So, so, uh, in the same way that Japan will be coming here and do the study. So, I I think it's too it's too early to determine yet which one would be best for our country, but definitely, uh, I think, uh, we will choose what will be most fitting in order to protect our own interest.

[00:07:26]>> But if we go back and and refer to that framework for the Strategic Petroleum Reserve, which foreign state institutions and and private commercial entities will you be coordinating with to develop the the national oil stockpiling mechanism?

[00:07:40]>> All right. Uh, since since the declaration in there's so much interest in it. So So there are the technical side, which is like the the ASEAN Center for Energy.

[00:07:53]And then there's IREA also. So many many of the institutions are interested in doing the studies and the evaluation.

[00:08:00]And hopefully we I think we've already done the signing with them and then the work is ongoing and hopefully within the year we will find that the best solution for that. And on the other hand well on financing we have the usual supporters like World Bank and ADB that would help with the with the studies. Now on the other hand Japan has their own groups also in similar sense. But how to I guess maybe I think your question would be what institutions will embark on this project especially financing. So that will be determined once we have the studies, but I think we are on our part we are trying to study that it won't be it won't come from the from the Apple from from the from from the national fund. It can be funded in any way like Maharlika can come in or even even even private institutions that would partner with us.

[00:09:02]>> Well let me pick up on Maharlika as you mentioned it, our sovereign wealth fund manager Maharlika Investment Corp as a key financier.

[00:09:09]What is the latest in the talks there because Mr. Consing had in the past month expressed interest in funding the storage infrastructure?

[00:09:18]>> Correct.

[00:09:19]There we've been meeting with Maharlika a few times already about this topic and and in fact they will be entering to an agreement with PNOC in exploring especially the property of PNOC in Batangas. They have a huge property there that might be ideal. So So this is the this is an agreement to explore the and and evaluate the study.

[00:09:41]So, what's the part of PNO C? PNO C can provide the real estate or even the support of the government. While on the other hand, Maharlika can do can can study how the financing will go and which partners we we are best partners for us in this project.

[00:09:59]>> Well, we can see that this is all highly collaborative and and commendable secretary, but but also challenging as JP Devado of PIDS told us on this program, the recurring hurdle in the Philippines is that many agencies have overlapping responsibilities. So, how then will the Department of Energy take the lead in coordinating with the government agencies and the other stakeholders to get this reserve off the ground?

[00:10:23]>> All right. We we are we're still in the early stages and it might take like a year just to have one finished already as a like a one bank. You know, so it will be a several several several agency essence that possibly on the permitting like the environmental security and and and land classification or many of the usual permits, but I think DOE as the mandated agency under the all the regulation law should take the lead. You know, which we are already and but but collaborative in the sense that we are using other other especially our own attached agencies and Maharlika for for the moment and we will find out if we will need Department of Finance eventually or or any other agency, but right now I think it's best for us to formulate first what the direction will be and find what are the other agencies that we should collaborate. So, we're trying to fast track this If we do want it fast-track, then we do need support of all the agencies, and we'll come to that.

[00:11:40]>> Under the scenario of an energy emergency, as we are for the full year, in what way does that help hasten and fast-track your plans?

[00:11:47]>> Um the the national emergency provisions uh are limited to the emergency. And And the a stock piling is beyond the emergency.

[00:12:00]The current emergency we have had triggered the conversation and probably the the initiative of the OE also. So So what is happening now is that there's a ongoing debate or or discussion in in in legislative for a bill on stock piling.

[00:12:19]But on the other hand, uh uh the issuance of the president also gives DOE more let's say more teeth or or vision in that sense. Now we we we address this now so that we can we can use the emergency provisions in order to hasten any of the permitting processes that we have. So it will help while the emergency is there because it's only valid while there is an emergency. But I think I think in the long run it will go beyond the EO 101.

[00:12:55]>> You know, critics are quick to raise the risk that the strategic petroleum reserve could create a false sense of security. How do we ensure that it complements rather than substitutes the deeper reforms in in both energy security and and domestic energy development?

[00:13:11]>> Well um the When when you Well well it's it it should give them It should give us a sense of security in that sense. We are not producers of oil, and having stock piling here, whether it's national or regional.

[00:13:29]Um it it has its benefits and it gives us security and I I think it it is it is correct in that sense that that sentiment is there because that too is what we need. We have realized that for the past 2 months. So, um we will uh this uh this format is not just to to uh secure the Philippines, it's also to give give uh make the Philippines more attractive as an investment uh destination because stockpiling we have to do some reforms uh uh in in in some of our policies including the OF, the OE, and other agencies in order for this to be successful. But this could also be a good investment or there are returns.

[00:14:10]So, it serves both ways, the economics of it as well as the energy security part. So, I think this is a really uh uh it's it's a very big project. It's a I think the estimate is 1 ton that will host 1 million barrels is 5 billion already without still without the uh uh without a refinery. So, it's very expensive. But uh there are ways to to uh design this that it will be more beneficial than just having it there. It can be a business by itself also.

[00:14:42]>> Just as a final point, Secretary, on the Luzon economic corridor, very important for the government as that's got an AI layer on top of it and as we know, it's huge energy requirements. How ready are we for it?

[00:14:55]>> We uh it's it's quite difficult uh Cathy because the requirement of a AI or data center, not just availability of uh of uh of power, it uh the normal the usual requirement is it has to be clean, basically renewable, uh and it has to be very steady, uh 24 hours. Uh there's a certain quality of power that they require and it has to be cheap.

[00:15:24]Uh so uh there are there are we are actually currently drafting a circular. Like what are the options for a data center? One option for example is build a power plant on site.

[00:15:41]If they you need clean, it could be gas or or SMR, nuclear for example, or any other in that that could pass their test.

[00:15:53]So that that is for example one solution, or we can have other designs where they can they can get a power plant to be built by somebody else, or they can build it on their own. So there are many ways to keep price down, keep it steady, but there has to be certain technologies to come to make sure that certain it's that's that part we have to talk to DICT and DTI on how to go about it.

[00:16:22]>> A lot more work to be done, but thank you so much for the update, Secretary Sharon Garin of [music] the Department of Energy.

[00:16:27]>> Thank you.