Legal basis and coverage
- The guidelines are issued pursuant to Executive Order No. 134 dated 14 October 2002.
- The guidelines are issued pursuant to Republic Act No. 7638, the “Act Creating the Department of Energy”.
- The guidelines are issued pursuant to Republic Act No. 8479, the “Downstream Oil Industry Deregulation Act of 1998.”
- The guidelines apply to the downstream petroleum sector in the Philippines.
Policy objective and purpose
- The guidelines are adopted to ensure a continuous, adequate and stable supply of Petroleum Crude Oil and Products where domestic and international events threaten or restrict supply to the Philippines.
- The Secretary of Energy uses the guidelines to address supply disruptions caused by circumstances such as, but not limited to, terrorist attacks and armed conflict in the Middle East and other regions from which the Philippines draws or transits petroleum supply, including similar events under Section 4 and Section 7.
Scope, entities covered, and terms defined
- The guidelines apply to all Oil Companies and Bulk Suppliers engaged in any activity of the Downstream Oil Industry in the Philippines under Section 2.
- Bureau means the Energy Industry Administration Bureau of the DOE or its successor under Section 3.
- Bulk plant/terminal/depot refers to an intermediate distribution facility where delivery of petroleum products is undertaken by tank trucks, tankers/barges, pipes and other modes in large quantities under Section 3.
- Bulk Supplier refers to any Person engaged in sale of petroleum products in bulk sourced through direct importation under Section 3.
- Days Supply means the equivalent number of days of in-country stocks of petroleum crude oil and products based on the average daily sales or liftings for the past six (6) months under Section 3.
- Downstream Oil Industry covers importing, exporting, re-exporting, shipping, transporting, processing, refining, storing, distributing, marketing and/or selling crude oil and specified petroleum products under Section 3.
- Minimum Inventory Level means the minimum level of supply to be stored by oil companies and bulk suppliers in their bulk plants, terminals or depots, and stocks in-transit within the country under Section 3.
- Petroleum includes the naturally occurring mixture of hydrogen and carbon with impurities, including mineral oil, petroleum gas, hydrogen gas, bitumen, asphalt, mineral wax and similar substances, excluding coal, peat, bituminous shale and/or other stratified mineral fuel deposits under Section 3.
- Petroleum Products are products formed in refining crude petroleum through specified processes, including primary stocks from the refinery (including LPG, naphtha, gasolines, solvents, kerosene, aviation fuels, diesel oils, fuel oils, waxes and petrolatums, asphalts, bitumens, coke and refinery sludges, and refinery fractions not processed into chemically-defined pure/commonly pure compounds), with the condition that the resultant product contains not less than fifty percent (50.0%) by weight of such petroleum products under Section 3.
- Oil Company refers to any Person who refines/manufactures/processes and/or imports/exports and stores, distributes and sells petroleum products under Section 3.
- Person includes any natural or judicial person engaged in any or a combination of activities in the downstream oil industry under Section 3.
- Crude Oil means oil in its natural state before refining/treatment and excludes water, bottoms, sediments and foreign substances under Section 3.
- Liquefied Petroleum Gas or LPG means commercial propane gas or commercial butane gas or a mixture of the two gases with properties conforming to BPS specifications under Section 3.
- Refiner means any person who locally refines petroleum through distillation, conversion and treatment under Section 3.
Minimum inventory requirement—when and how triggered
- The Secretary of Energy shall require oil companies and bulk suppliers to maintain a minimum inventory when domestic and international events may threaten or restrict supply to the Philippines under Section 4.
- The minimum inventory requirement is triggered only upon a determination by the Secretary of Energy that circumstances enumerated in Section 4 exist under Section 7.
- The requirement continues until the Secretary of Energy determines that the circumstance/s warranting application no longer exists under Section 7.
- Oil companies and bulk suppliers receive written notification of the commencement and termination of the minimum inventory level requirement under Section 7.
Minimum inventory levels and inclusions
- Oil Companies (except Refiners) and Bulk Suppliers must maintain a minimum inventory equivalent to fifteen (15) Days Supply of Petroleum Products, excluding LPG, under Section 5.
- LPG for oil companies (except refiners) and bulk suppliers must be maintained at seven (7) Days Supply under Section 5.
- Refiners must maintain a minimum inventory equivalent to thirty (30) Days Supply consisting of Petroleum Crude Oil and refined Petroleum Products under Section 5.
- Required minimum inventories include petroleum crude oil and product stock on shore and en route to stockpoints within the country under Section 5.
- Required minimum inventories exclude importations still in-transit to the country during the period specified in Section 7 of the guidelines under Section 5.
Product mix and priority stocking
- The type and mix of petroleum products to be stocked may vary for each oil company and bulk supplier under Section 6, subject to priority rules.
- Priority must be given to stockpiling diesel and gasoline used in the transport sector under Section 6.
- Priority must be given to stockpiling LPG for household consumption under Section 6.
- Priority must be given to stockpiling fuel oil for power generation under Section 6.
Monitoring, reporting, and inventory checks
- Oil companies and bulk suppliers must submit to the Bureau weekly reports prepared under oath under Section 8.
- Weekly reports must be submitted to ensure full compliance with Executive Order No. 134 and the guidelines and to allow DOE effective monitoring under Section 8.
- Weekly reports must cover inventory on a per crude and per product basis, including actual and projected importations and local purchases under Section 8.
- Oil companies and bulk suppliers must include such other matters required for compliance as the Secretary of Energy specifies for the duration of compliance under Section 8.
- The Bureau must conduct periodic inventory checks on storage facilities, bulk plants, terminals or depots, and oil companies and bulk suppliers must cooperate to reconcile actual submissions under Section 8.
Penalties and consequences of non-compliance
- Failure to comply with the guidelines constitutes a violation of Section 12 of Republic Act No. 8479, in relation to Section 15 of Republic Act No. 8479, and Section 5(c) of Republic Act No. 7638 under Section 9.
- Violations are punishable in accordance with Republic Act No. 8479 and Republic Act No. 7638 provisions referenced in Section 9.
Implementing timeline and publication
- The guidelines are effective only upon complete publication in a newspaper of general circulation under Section 10.
- The circular was adopted on January 20, 2003 under the adoption line at the end of the circular.