‘Philippines should boost oil reserves, build refineries’

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April 19, 2026 | 12:00am

MANILA, Philippines — The Philippines should simultaneously build facilities for strategic oil reserves and additional domestic refineries to combat future pump price shocks, Energy Secretary Sharon Garin said.

Garin is backing proposals to establish a 90-day national oil reserve, which would provide a longer lead time for fuel companies to secure supplies, from the current 60 days the Philippines can handle.

“Building up reserves, though, is not enough. I would couple the national reserve with an additional refinery,” Garin told The STAR’s online show “Truth on the Line” on Thursday night.

The country has hosted four refineries: the oldest, operated by Caltex; two managed by Shell and one under Petron.

However, only Petron’s refinery in Limay, Bataan, is operating, capable of producing 180,000 barrels of finished petroleum products daily, equivalent to 30 percent of national demand.

In 2003, Caltex’s refinery in San Pascual, Batangas, which opened in 1954, was replaced with a “world-class” import terminal because the facility was no longer equipped to produce cleaner fuels.

Shell quietly closed its baseoil refinery in Pililia, Rizal, in 2002 and shut down its Tabangao refinery in Batangas City in 2020 due to the impact of the pandemic.

Garin said it’s better to have more domestic refineries, as they provide supply stability at a time when geopolitical tensions create uncertainty in energy flows.

“You see it in the prices of Petron, they are usually lower than most of the gas stations because it’s refined here. They buy crude oil, refine it here, and produce diesel, gas and kerosene for domestic use,” the energy chief stressed, adding, “That’s more stable and prices are better.”

Economist Joey Salceda noted in a commentary that when pump prices skyrocketed the first time in mid-March, Petron was one peso away from Flying V and Seaoil, the two cheapest brands in the country. Shell and Caltex were more expensive by P6 to P7, respectively.

Salceda, a former Albay lawmaker, stressed that Petron’s refinery is the closest thing to a strategic oil reserve because it could absorb shocks.

“Petron is a partial defense against the import bill rather than a contributor to it,” Salceda said.

“Importing finished product costs more per unit than importing crude and processing it domestically. The value-added that accrues abroad when we import finished products is value-added we are giving away,” he added.

The loss of domestic refineries, however, can be traced back to the Downstream Oil Deregulation Law of 1998, which freed the industry from government regulation.

The law imposed a three-percent uniform tariff on both imported crude oil and imported refined products, eroding refineries’ competitive advantage, since the raw material was previously taxed at lower rates.

Companies with refineries must also make a public offering of at least 10 percent of their common stock – a rule that has no counterpart for pure importers of refined products.

When Caltex shut its refinery in 2003, then-country chairman, Timothy Leveille, cited the drastically different economics it faced under the deregulation law.

“It costs us more to manufacture our products at Batangas than it costs our competitors to import theirs,” Leveille said.

These are some of the complex matters that Congress would have to address if both chambers take up amending the 28-year-old deregulation law – a measure that Garin said works well in good times but not in bad times.

“When the deregulation law passed, we disposed of everything, including the refinery. It’s all private now,” she said.

“Was that correct? Maybe that was a correct decision at the time. But times change, and I think we need to revisit having more of a national reserve and refinery,” she added.