Stockpiling oil

The case for a national oil buffer is already obvious. We import nearly 90% of our fuel, we have one active domestic refinery, and we have no strategic reserve. That is not an energy policy. That is a gamble. Japan holds around 200 days worth of strategic reserve. South Korea holds 90. The United States holds 90. We have about 30.

Senate President Tito Sotto has filed Senate Bill 1934, proposing the creation of a Philippine Strategic Petroleum Reserve. The bill mandates a reserve equivalent to at least 90 days of the country’s average consumption. Senator Chiz Escudero filed a companion measure proposing a 180-day tank farm.

But a reserve is created not just by law, but by having fuel physically stored somewhere, protected, financed, and ready for use. The harder, more urgent questions are these: where will the fuel come from, where do we put it, who pays for it, and how fast can we get it in place?

A tank farm in Bataan or Subic seems logical. Both have deep-water ports. Both have existing energy infrastructure. But a national stockpile requires the kind of facility that takes years to build, permit, secure, connect, and insure. A four-year answer is not much comfort in a four-week supply shock.

The Strait of Hormuz does not wait for our construction schedule. So, the more useful discussion now is not whether the Philippines should have a strategic reserve. It should. The more useful discussion is how to execute one quickly enough to matter.

We should stop thinking of the reserve as one giant construction project. We need to think in phases. First, lease what can be leased. Second, store what can be stored. Third, diversify where we buy from. Fourth, build the permanent infrastructure after the emergency buffer is already in place.

This is where the most significant recent move in energy security comes in. Enrique Razon, Jr., through Prime Infrastructure Capital, acquired SierraCol Energy, Colombia’s largest independent oil producer. SierraCol produces 77,000 barrels of crude oil per day. That single asset could, in theory, cover roughly one-fifth of our daily fuel needs.

The Razon acquisition does not solve our whole problem, but it creates something valuable: a Filipino-controlled upstream source outside the Middle East, in this case South America. Of course, SierraCol produces crude, not finished fuel.

Thus, Colombian crude will have to pass through refining complexes, possibly in Singapore, where it is processed into finished fuel for a fee before making the final leg to the Philippines. This is a long chain. But it is one in which a Filipino group controls the source, and in energy security that matters.

If the crude is loaded from Colombia’s Caribbean side, which is where most Colombian exports now move, it would likely sail either through the Panama Canal, if vessel size and slot availability allow, or else take the longer route around the Cape of Good Hope or through Suez before reaching Singapore. This can take four to six weeks.

Once in Singapore, the crude itself need not sit long. Refineries run continuously, and tanker port turnaround times are typically measured in days, not weeks, so a practical assumption is that discharge, processing, blending, and reload could take a few days.

From Singapore, the final leg to the Philippines is much shorter. The cargo would pass through the Singapore Strait and then across the South China Sea to Philippine terminals, a run that is roughly another four to six days by tanker under normal conditions.

The logical domestic link in this chain is Bataan. The storage and distribution network there is controlled by Petron, which belongs to Ramon Ang’s San Miguel Corp. Razon controls oil at the source. Ang controls critical infrastructure at the destination. If the country wants a reserve strategy that can be executed faster than government alone can manage, these two men will have to be part of it.

The combination of Razon’s upstream supply and Ang’s downstream infrastructure provides energy security that is privately financed and Filipino-controlled. It also allows for an energy cushion that can be assembled faster than a purely public stockpiling initiative.

In the near term, we still need finished fuel. This means being practical about our suppliers. Despite everything happening in the West Philippine Sea, China remains one of the most practical energy suppliers available to us. It runs the largest refining network in the world. Its ports are near enough that tankers can reach ours in days rather than weeks.

But the political relationship is strained. The government and the private sector can work on this together and treat trade separately from any territorial dispute. Easier said than done, but we have to try. Quid pro quo may be necessary. This is not moral surrender. This is basic statecraft.

Regional diversification is also an option, and Brunei may be the quicker and quieter answer. Brunei already exports high-quality crude and refined petroleum to the Philippines. It is small, stable, close, and energy-rich. Deepening our supply relationship with Brunei gives us a reliable regional counterweight.

Petron can again play a role here. Ramon Ang can seek help from his fellow San Miguel stockholder Iñigo Zobel to raise the matter with Brunei’s Sultan Bolkiah, Zobel’s fellow polo aficionado. Long-standing relationships among Ang, Zobel, and Brunei royalty may sound informal, but informal channels often move faster than formal diplomacy. If the goal is to secure supply quickly, personal ties can become national assets.

The ASEAN Petroleum Security Agreement already exists, and ASEAN ministers this month agreed to hasten work on its updated framework ahead of the May 2026 summit. Under the mechanism, a member state facing a critical shortage may trigger a formal distress process, but only after taking short-term steps of its own to manage demand.

The Philippines, as current ASEAN chair, should push to finalize the updated arrangements at once and be prepared to invoke the mechanism immediately if the legal threshold is met. In an oil shock, a regional backstop that buys even a little time is worth having.

But supply is only half the equation. The other half is storage. And this is where urgency should change the model. The obvious answer is a large land-based reserve in Bataan or Subic. But the obvious answer is not always the quickest one. It will take years to complete a tank farm that can hold a 180-day supply of oil.

Also, one lesson from the present US-Iran conflict is that a single giant tank farm is a fixed and visible target. In a serious conflict, one well-placed strike could hit both the reserve and the downstream supply chain at the same time. That is not a strategic buffer. That is a concentration of risk.

The faster and more flexible option is floating storage. Large vessels called Floating Storage Units, or FSUs, can be leased and deployed in months rather than years. They are expensive, but they are mobile. In an archipelago, mobility is protection.

We can anchor FSUs deep within our internal waters, disperse them across the Visayas, and place some along the eastern seaboard facing the Pacific. Our geography then becomes part of the defense plan. Instead of one visible fuel stockpile, we have multiple movable reserves spread across islands and sea lanes that are harder to neutralize in one blow.

FSUs are not perfect. This is precisely why we need a hybrid system. Privately funded land storage in Bataan or Subic for scale and stability. Then state-leased floating storage in internal waters for speed, flexibility, and dispersal. One backs up the other.

The reserve should be designed with the future in mind. This is not infrastructure meant to serve unchanged for 100 years. The country is slowly moving toward electric vehicles, electrified public transit, and a different transport energy mix.

Over the next two to three decades, daily demand for diesel and gasoline may change materially. This means we should be careful about locking too much capital into oversized permanent tank farms designed around today’s consumption forever. A hybrid system gives us a buffer now without overcommitting us to a fuel future that may not last.

So, while the Senate can quickly pass a law creating a national oil reserve, the real issue is execution. We need a reserve, but how fast can we lease it, fill it, disperse it, and defend it? Because in an energy crisis, the only reserve that really matters is the one already in place.

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippine Press Council.

matort@yahoo.com