Philippine Strategic Petroleum Reserve Act

Senate Office of the Setretary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES } First Regular Session } 26 MAR -4 P5:50 SENATE S.B. No. 1934 RECEIVED BY: INTRODUCED BY SENATOR VICENTE C. SOTTO III AN ACT ESTABLISHING THE PHILIPPINE STRATEGIC PETROLEUM RESERVE, MANDATING A STATE-MANAGED PETROLEUM STOCKPILE EQUIVALENT TO A DEFINED NUMBER OF DAYS OF NATIONAL CONSUMPTION, PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES EXPLANATORY NOTE Energy security is national security. The Republic of the Philippines remains heavily dependent on imported petroleum products to sustain transportation, agriculture, manufacturing, power generation, logistics, and essential public services. This structural dependence exposes the country to external supply shocks arising from geopolitical conflicts, regional instability, maritime disruptions, sanctions regimes, climate-related disasters, and speculative volatility in global oil markets. Recent international developments have once again underscored the fragility of global energy supply chains. As an archipelagic nation situated along vital sea lanes and within an increasingly contested Indo-Pacific region, the Philippines must adopt a long-term and institutionalized approach to energy resilience. At present, the country does not maintain a comprehensive, state- managed strategic petroleum reserve capable of cushioning prolonged supply interruptions. While private oil companies maintain commercial inventories, these are not designed nor mandated to serve as national emergency reserves. Many economies-including the United States, Japan, South Korea, China, and member-states of the International Energy Agency-maintain strategic petroleum reserves equivalent to 90 to 180 days of consumption. These reserves function as stabilizing instruments during supply crises and serve as signals of credibility in international markets. The absence of a legally mandated Strategic Petroleum Reserve exposes the Philippines to the following risks: • Sudden and severe fuel price spikes

• Transportation and logistics paralysis • Disruptions in agricultural and food supply chains • Power generation instability • Inflationary pressures affecting basic commodities • Heightened national security vulnerability This proposed Philippine Strategic Petroleum Reserve Act seeks to establish a state-managed petroleum stockpile equivalent to not less than ninety (90) days of national consumption, subject to periodic review and adjustment based on strategic risk assessments. This measure aims to: • Dampens supply disruption shocks through emergency buffers • Enhances the country's energy security credibility • Demonstrates foresight in national risk management • Strengthens economic stability during geopolitical volatility • Protects Filipino consumers from extreme price instability In a world defined by uncertainty, preparedness is not optional. It is a responsibility. The establishment of a Strategic Petroleum Reserve is a forward-looking investment in national stability, economic continuity, and sovereign resilience. In view of the foregoing, immediate passage of this measure is earnestly sought. al.. VICENTE C. SOTTO III

Senale Offiep of the Sertetary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES } First Regular Session } 26 MAR -4 P5:50 S.B. No. SENAI934 RECEIVED BY: INTRODUCED BY SENATOR VICENTE C. SOTTO III AN ACT ESTABLISHING THE PHILIPPINE STRATEGIC PETROLEUM RESERVE, MANDATING A STATE-MANAGED PETROLEUM STOCKPILE EQUIVALENT TO A DEFINED NUMBER OF DAYS OF NATIONAL CONSUMPTION, PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES Be enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title. — This Act shall be known as the "Philippine Strategic

2 Petroleum Reserve Act."

Sec. 2. Declaration of Policy. — It is hereby declared the policy of the State

to: • Ensure energy security and supply stability; • Protect the national economy from external petroleum supply shocks; • Maintain strategic fuel reserves sufficient to sustain essential services during emergencies; • Promote national preparedness in the face of geopolitical and economic uncertainties; and • Strengthen the country's resilience against inflationary and supply chain disruptions.

Sec. 3. Definition of Terms. - For purposes of this Act:

a. Strategic Petroleum Reserve refers to a government-owned and managed stockpile of crude oil and refined petroleum products maintained for emergency use; b. Days of National Consumption refers to the average daily national petroleum consumption based on verified data from the Department of Energy for the preceding calendar year.

c. Emergency Release refers to the authorized drawdown of reserve stocks during supply disruption, national emergency, or extraordinary price instability. 4 Sec. 4. Establishment of the Philippine Strategic Petroleum Reserve. — There is hereby established a Philippine Strategic Petroleum Reserve to be 6 owned and managed by the National Government through the Department of 7 Energy. 8 The Reserve shall maintain petroleum stocks equivalent to not less than ninety (90) days of average national consumption, which may be increased by Congress upon recommendation of the Department of Energy.

Sec. 5. Composition of Reserve Stocks. - The Strategic Petroleum Reserve

shall consist of: 1. Crude oil; 2. Refined petroleum products including diesel, gasoline, jet fuel, and liquefied petroleum gas; 3. Other energy products deemed critical by the Department of Energy. The Department of Energy shall determine the optimal mix of crude and refined products based on consumption patterns and supply risk assessments.

Sec. 6. Storage and Infrastructure. - The Department of Energy shall:

a. Develop and maintain secure storage facilities nationwide with strategic geographic dispersion; b. Enter into public-private partnerships where appropriate; c. Ensure compliance with safety and environmental standards; d. Implement inventory rotation mechanisms to maintain fuel integrity.

Sec. 7. Administration and Oversight. - The Department of Energy shall

serve as the primary implementing agency. A Strategic Energy Security Council composed of representatives from the Department of Energy, Department of Finance, Department of Trade and Industry, National Economic and Development Authority, and Department of National Defense shall provide policy oversight and risk assessment guidance.

Sec. 8. Conditions for Emergency Release. - The President, upon

recommendation of the Strategic Energy Security Council, may authorize release of reserve stocks under the following conditions: a. Severe supply disruption; b. Declaration of national emergency; c. Extraordinary price volatility threatening economic stability; d. Natural disasters affecting fuel logistics.

Sec. 9. Funding. - Initial funding shall be charged against the current

2 appropriations of the Department of Energy. Thereafter, funding shall be included in the annual General 4 Appropriations Act. The Department of Energy may also utilize energy security bonds, 6 structured procurement contracts, and concessional financing arrangements. 7 Sec. 10. Reporting Requirement. - The Department of Energy shall submit an annual report to Congress detailing reserve levels, infrastructure 9 development, financial status, risk assessments, and any emergency releases conducted.

Sec. 11. Implementing Rules and Regulations. - Within ninety (90) days

from effectivity of this Act, the Department of Energy shall promulgate the necessary rules and regulations.

Sec. 12. Separability Clause. - If any provision of this Act is declared

unconstitutional, the remaining provisions shall remain in force and effect.

Sec. 13. Repealing Clause. - All laws, decrees, executive orders, rules, and

regulations inconsistent with this Act are hereby repealed or modified accordingly.

Sec. 14. Effectivity. - This Act shall take effect fifteen (15) days after its

publication in the Official Gazette or in at least two newspapers of general circulation. 23 Approved.