Petron Corporation has disclosed details of crude oil shipments from Russia
Russian crude oil has helped the Philippines as oil supplies from the Middle East become increasingly difficult to obtain with the near-total shutdown of Strait of Hormuz.
Petron disclosed on Monday, March 30, the details of the crude oil shipment that arrived last week via the tanker, Sara Sky, as captured by the French news agency Agence France-Press (AFP) Ted Aljibe on March 26.
AFP reported that the ship was carrying 700,000 barrels of crude oil from Russia’s East Siberian-Pacific Ocean or ESPO pipeline and was destined for Petron. According to ESPO’s website, the pipeline “is a pioneering work in the oil industry, designed to transport crude oil from Eastern Siberia to the Pacific Ocean, ensuring a stable and efficient supply of energy to the Asia-Pacific market.”
Petron, in its disclosure, gave more details on how it was able to acquire the shipment.
The shipment is part of the 2.48 million barrels of crude oil from Russia that the Marcos administration is buying following the declaration of a state of national emergency on March 24. Energy Secretary Sharon Garin said the government successfully negotiated to bring in 1 million barrels of oil in one week, part of the 2 million that are sought under the state of emergency. The Philippines had a daily demand of about 200,000 barrels of diesel in 2024, according to data from the Department of Energy (DOE).
Petron said its decision to buy Russian crude oil came after receiving information that two of its crude oil shipments could not pass through the Strait of Hormuz after the United States and Israel attacked Iran on February 28, causing the Islamic Revolutionary Guard Corps of Iran to close the Strait of Hormuz.
Petron was notified of the first damaged shipment of 2 million barrels on February 28, while the second shipment of 2 million barrels of crude oil was canceled on March 7, a week after the war began.
At the meeting of the Senate PROTECT committee last Thursday, the general manager of Petron Lubin Nepomuceno, without mentioning at the time that it came from Russia, said that “Petron was able, “although it was very challenging, to buy crude and finished products.”
“Suppliers are bidding up available quantities resulting in higher replacement costs. In addition, other costs including freight, import charges, and insurance have increased significantly,” Nepomuceno said.
Petron, in its disclosure, defended its move to buy Russian crude oil amid the US embargo on the sale of Russian crude oil which has since simplified.
“Given the importance and in view of the sudden reduction in supply, the Corporation was forced to purchase Russian crude oil, which at that time was the only usable crude, to protect not only its interests as a company, but more importantly, the security and interests of the nation,” it said.
How important is Petron in terms of the Philippines’ oil supply needs?
- It has a market share of 30% of the Philippine oil supply
- It operates the only oil refinery in Bataan
Petron said the “shutdown of the oil refinery would lead to “major fuel shortages across the country, sharp price hikes, panic buying, transportation and logistics disruptions, and major economic consequences that would have negative effects on households, businesses, and essential public services” given that the Philippines imports 98% of its crude oil needs from the Middle East.
Petron said it worked closely with the DOE and the Department of Finance (DOF) in buying Russian crude oil.
It also said that the Central Bank of the Philippines issued a letter saying there is no law against using foreign currency for the transaction.
“According to these agreements, the Organization’s understanding was that there were also no domestic legal restrictions on the import of Russian crude oil,” Petron said.
It added that if the current supply crisis continues “and alternative sources continue to be unavailable or insufficient, the Agency may again be forced to consider the purchase of Russian crude oil in order to increase the national oil supply and directly reduce the adverse effects resulting from the lack of a stable and reliable source of crude oil.”
Other petroleum companies operating in the Philippines testified in the Senate last week that their inventories were only good until April, and nothing beyond that is guaranteed as other oil-exporting countries seek to protect their own needs.
By March 20, the Philippines’ oil inventory was down to 45 days from nearly two months’ supply before the war began.
– Rappler.com
