Energy Secretary Raphael Lotilla said his office is currently reviewing the work plan of the Philippine National Oil Co. (PNOC), a state firm mandated to provide stable and secure supply of oil, including the exploration of oil and gas.
“We are reviewing their work plan and projects so that they can concentrate on some alternatives fuel for example. We don’t compete with the private sector,” said Lotilla who is also the chairman of PNOC.
PNOC’s budget this year has been slashed by P2.5 billion by the Senate Committee on Finance Sub-Committee E, which is chaired by Senator Sherwin Gatchalian.
The P2.5-billion reduction in PNOC’s budget was originally meant for its Targeted Fuel Relief Program (TFRP) and its strategic petroleum reserve (SPR) program.
However, Gatchalian said that the fuel relief program is a duplication of the government’s Pantawid Pasada program and that the SPR program is yet to hurdle feasibility issues and could require billions of pesos.
“The original mandate of PNOC is to provide a stable and secure supply of oil, including exploring oil and gas. But some of the projects being implemented now by PNOC are not aligned with its original mandate, such as the fuel relief program. Some of these projects too lack feasibility studies and won’t help the government achieve energy security,” the senator had said.
Lotilla commented that the proposed SPR remains a plan for now. However, he said, the SPR should be thoroughly reviewed and should take into consideration the demand and market volatility. “If you continue to invest in the oil strategic reserve right now and what you have is a declining market for oil so you will have to take a look at how long will be the useful life of your investment. It is something that involves cost. These are the things that we are considering.”
PNOC’s SPR has been put on hold. The SPR was conceptualized as a strategic oil stockpile to ensure long-term stability and security of oil supply in the country.
Serving as the vice-chair of the Senate Committee on Energy, Gatchalian earlier called on the Department of Energy (DOE) to put the PNOC in order and set guidance for the company, noting that PNOC and its subsidiaries have failed in upholding their original mandate.
To help PNOC refocus its operations towards its original mandate, Gatchalian has filed a bill seeking to establish a national policy and framework for petroleum exploration and development in the country by amending the PNOC charter.
He said the end goal of Senate Bill No. 380, which gives PNOC an exclusive mandate to undertake oil and gas exploration and development programs, is to reduce the country’s dependence on oil imports amid the rise in petroleum prices, driving inflation rate at record levels and dampening economic growth.
PNOC was created in 1973 primarily to provide an adequate supply of petroleum products to meet domestic requirements as well as promote the exploration and development of local petroleum sources.
“The importance of government presence in the field of oil exploration and development cannot be overemphasized especially as the country deals with energy-related challenges coming from external forces. It is high time the energy department provides a focused direction for PNOC,” the senator said.