Philippines Taps Japan to Help Build Oil Reserve

Japan has agreed to help the Philippines establish a government-owned oil stockpile, while Manila is also pushing for a Southeast Asian reserve as ASEAN chair this year.

"As part of this commitment, Japan's Ministry of Economy, Trade and Industry and the DOE agreed to advance cooperation under the Partnership for Wider Energy and Resources Resilience in Asia, focusing on the development of national stockpiling systems and the development of an ASEAN-wide joint stockpiling framework", the Philippine Department of Energy (DOE) said in an online statement.

"The goal is simple: to ensure that the Philippines has sufficient fuel supply to withstand disruptions in the global market and to protect our economy, industries, and households from external shocks," DOE Secretary Sharon S. Garin said.

On March 24 President Ferdinand Marcos Jr declared a one-year state of national energy emergency, citing "an imminent danger of a critically low energy supply" amid the closure of the Strait of Hormuz.

Saudi Arabia was the Philippines' top source of crude oil in 2024 accounting for 51.4 percent of 45.37 million barrels imported by the country, according to the DOE's latest annual energy statistics. The United Arab Emirates accounted for 30.9 percent, Iraq 13.4 percent and Qatar 1.1 percent.

"At present, fuel inventories maintained by industry provide approximately 15 days of mandatory stock requirements, with actual inventories often extending to 30 days or more depending on market conditions", the DOE said. "The government is studying options to establish an additional strategic reserve that would further strengthen the country's ability to respond to unforeseen disruptions".

The DOE expects the project, which is being coordinated with Philippine National Oil Co (PNOC) and sovereign investor Maharlika Investment Corp (MIC), to be implemented in phases. "Feasibility studies, site evaluations, financing options, and implementation models are now being developed", it said.

"Under the planned arrangement, PNOC will provide technical and industry expertise consistent with its mandate to support the country's energy security objectives, while MIC will assist in evaluating financing structures and investment options for the project", the DOE said.

Japan will take part through technical assistance, feasibility studies and capacity-building programs. The Philippines expects a working visit from a technical mission comprising Japanese government and private sector representatives this year.

"The cooperation will involve collaboration with the Economic Research Institute for ASEAN and East Asia, the Japan Organization for Metals and Energy Security, the Japan Bank for International Cooperation, Japanese trading companies, and engineering firms with expertise in stockpiling infrastructure and energy security systems", the DOE said.

"Both sides are also exploring opportunities for Japanese institutions and private companies to participate in engineering, procurement, construction, and financing activities for future projects".

At the same time the Philippines is supporting the establishment of an oil reserve under the Association of Southeast Asian Nations.

"The initiative seeks to establish a framework through which ASEAN member states can collectively enhance preparedness against fuel supply disruptions and other energy emergencies", the DOE said.

"As ASEAN Chair this year, the Philippines has been actively promoting discussions on regional energy security and exploring opportunities to host future strategic stockpiling facilities should ASEAN member states pursue the initiative".

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