Maharlika-funded oil reserve plans start after US-Iran war shock

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June 2, 2026 | 8:00am

MANILA, Philippines — The Philippines has started work on its own stockpile of petroleum after the conflict in the Middle East heavily affected oil supply and triggered a price shock in the import-dependent country.

Energy Secretary Sharon Garin said that the war between Iran and the United States has shifted government's perspective on being involved in oil and power.

"But now, because the times are changing and our needs are changing, it’s about time for us to revisit that so we do not experience again what we recently experienced," Garin said at a press conference Monday, June 1.

She said the Philippine National Oil Company (PNOC) has been deemed in position to pursue procurement for the oil reserves beyond private companies' own stockpiles.

"The most fitting government company to embark on this would be PNOC, because it has the mandate to ensure energy security," Garin said.

"PNOC also has properties all over the country that are possible locations for our national reserve," she added.

As for funding, Garin said the Maharlika Investment Corp, which manages the Philippines' sovereign wealth fund, would source and be a conduit for it.

"Why do we need PNOC and MIC for this? This is a huge investment. It will take time, but we are already doing our feasibility studies, evaluation, and identifying the best setup," Garin said.

Early cost estimates peg a stockpile of 500,000 barrels for P5 billion. "One tank would host around P500,000 barrels. So we don't need a huge setup immediately. We just need to build it up and establish the facilities," Garin said.

In addition to the tanks, investment would also go to pipes, ports, equipment and infrastructure.

"All of these would be new: A new entity, a new area, a new atnk, and new operations and management also," Garin said in Filipino.

Garin said the government expects an agreement among DOE, PNOC and Maharlika Corp. to be finalized within the month, after which feasibility work and site evaluation would proceed.

Garin said initial estimates show that completing the process for the first facility, from permitting to financial closure, could take about a year.

"We have talked about this for decades, across many administrations, but the current administration is determined to start it," she said.

The planned strategic reserve follows the oil shock from the US-Iran conflict, which pushed local pump prices sharply higher before a series of rollbacks, the most recent of which started Tuesday, June 2. The DOE said diesel prices would fall by at least P9.26 per liter, gasoline by P4.76 per liter and kerosene by P10.86 per liter, bringing prices closer to pre-war levels.

The stockpile plan would also be different from the old Oil Price Stabilization Fund, which was used to steady pump prices through a fund mechanism.

Beyond private stockpiles

Garin said the goal is to create a reserve beyond the 30 to 60 days of inventory maintained by private oil companies. 

She said the initial minimum being considered is an additional 30 days of storage.

Private companies currently own most petroleum storage facilities in the country and also handle oil importation, Garin said.

"Currently, we don’t have any government location. These are all private company facilities. Probably 80% of the storage facilities are owned by the oil companies themselves, and they are the ones that import," she said.

For decades, Garin said, the government had chosen not to be directly involved in the oil or power business. The proposed reserve would mark a policy shift, with government taking a more active role in ensuring supply continuity.

"Stockpiling will protect us from supply shocks," Garin said. "For example, if we have difficulty buying from the Middle East because the Strait of Hormuz is closed, at least we have reserves here. We have a buffer."

Garin said the reserve could also help the government better understand oil import costs and price movements, especially when deciding whether to release stored fuel during periods of sharp increases.

In March, the government said the worst-case scenario would be to run out of oil, on which the country, not having enough indigenous petroleum and alternative energy sources, is heavily reliant.