Contingency plans urged after drone attack of Saudi oil facilities
Published Sep 16, 2019 03:48 pm
By Myrna Velasco
The Senate Committee on Energy has jumped the gun on the Department of Energy (DOE) and the oil companies as the body urged them to sort out contingency plans following the drone strikes on the facilities of Saudi Aramco, the world’s biggest oil producer which also holds mammoth spare capacity for global oil supply.
Sen. Sherwin T. Gatchalian
(Senate of the Philippines / MANILA BULLETIN) Following Saturday incident in the oil kingdom’s operations, early market speculations portended a rise in global oil prices to$100 per barrel, and the disruption in the supply flow to markets –given that half of Saudi’s production had been reportedly affected. In a statement to the media, Senate Committee on Energy Chairman Sherwin T. Gatchalian asserted that “the DOE, in cooperation with the oil industry suppliers, should formulate a contingency plan that will temporarily replace Saudi oil in the short term until supply is normalized.” The lawmaker similarly prodded DOE to “ensure that the oil companies and refiners are complying with the required minimum inventory of 15 days and 30 days…to cushion the impact of this disruption.” Nevertheless, it has been pointed out that even before the domestic industry could talk of “replacement supply”, it also worth assessing the level of flexibility that they have in their contracts as well as on the diversity of their supply sources. For the DOE, it indicated that “it is still premature at this moment to say that Saudi Aramco incident would have an adverse impact on the country,” hence, it is keeping its action for now on just monitoring the situation. Energy Secretary Alfonso G. Cusi also sounded off that he has yet to meet with the oil companies “to look into the sufficiency of inventory levels.” However, the department is already anticipating that price hikes will definitely come as a punishing blow on consumers’ pockets by next Tuesday (September 24), which is the routine movement for costs at the pumps. The department added “the impact to prices, if any, may be felt by Tuesday next week. That is, if there will indeed be an adverse impact. To date, the DOE reiterates that the impact of the incident is still premature.” Based on DOE’s end-2018 data, the country has been sourcing 33.7-percent of its oil requirements from Saudi Arabia – and is in fact the biggest supplier for the Philippine market. The rest of supply procurements had been from: Kuwait for 26.3-percent; United Arab Emirates for 20.7-percent; Russia for 7.4-percent; and Qatar for 4.9-percent; while the smaller suppliers include Nigeria, Oman, South Korea, Taiwan, Indonesia, Malaysia, Singapore and Brunei.
Sen. Sherwin T. Gatchalian(Senate of the Philippines / MANILA BULLETIN) Following Saturday incident in the oil kingdom’s operations, early market speculations portended a rise in global oil prices to$100 per barrel, and the disruption in the supply flow to markets –given that half of Saudi’s production had been reportedly affected. In a statement to the media, Senate Committee on Energy Chairman Sherwin T. Gatchalian asserted that “the DOE, in cooperation with the oil industry suppliers, should formulate a contingency plan that will temporarily replace Saudi oil in the short term until supply is normalized.” The lawmaker similarly prodded DOE to “ensure that the oil companies and refiners are complying with the required minimum inventory of 15 days and 30 days…to cushion the impact of this disruption.” Nevertheless, it has been pointed out that even before the domestic industry could talk of “replacement supply”, it also worth assessing the level of flexibility that they have in their contracts as well as on the diversity of their supply sources. For the DOE, it indicated that “it is still premature at this moment to say that Saudi Aramco incident would have an adverse impact on the country,” hence, it is keeping its action for now on just monitoring the situation. Energy Secretary Alfonso G. Cusi also sounded off that he has yet to meet with the oil companies “to look into the sufficiency of inventory levels.” However, the department is already anticipating that price hikes will definitely come as a punishing blow on consumers’ pockets by next Tuesday (September 24), which is the routine movement for costs at the pumps. The department added “the impact to prices, if any, may be felt by Tuesday next week. That is, if there will indeed be an adverse impact. To date, the DOE reiterates that the impact of the incident is still premature.” Based on DOE’s end-2018 data, the country has been sourcing 33.7-percent of its oil requirements from Saudi Arabia – and is in fact the biggest supplier for the Philippine market. The rest of supply procurements had been from: Kuwait for 26.3-percent; United Arab Emirates for 20.7-percent; Russia for 7.4-percent; and Qatar for 4.9-percent; while the smaller suppliers include Nigeria, Oman, South Korea, Taiwan, Indonesia, Malaysia, Singapore and Brunei.