Petron turns to Russian oil, secures 2.48 million barrels amid disruptions

PETRON CORP., the country’s sole oil refiner, said it has secured 2.48 million barrels of crude oil from Russia to boost its petroleum product inventory until June.

In a statement on Monday, Petron said it may consider buying Russian crude again if the fuel supply disruption persists and it cannot source sufficient crude from other suppliers to augment the country’s fuel supply.

The company said procuring Russian crude oil is not its usual practice and that the purchases were made “out of extreme necessity” as an “extraordinary energy measure amid supply chain disruptions.”

It said it turned to sourcing from one of the world’s top exporters “only after exhausting all commercially and operationally viable alternatives.”

Petron said it encountered shipping constraints for a previous two-million-barrel crude oil order following the closure of the Strait of Hormuz, a key global oil transit route, amid escalating tensions in the Middle East.

The company said the first shipment was unable to pass through the strait, while the second shipment was canceled due to heightened risks in the Strait of Hormuz and the Red Sea.

As the country’s largest downstream oil player and sole refiner, Petron said the disruption in a key shipping route constrained it to procure Russian crude to help secure domestic fuel supply.

Petron’s refinery in Bataan has a capacity of 180,000 barrels per day and supplies about a third of the country’s fuel demand.

“A refinery shutdown for failure to secure crude would lead to serious nationwide fuel shortages, sharp price spikes, panic buying, disruption to transportation and logistics, and broader economic dislocation-outcomes that would have had serious consequences for households, businesses, and critical public services in a country that is highly dependent on imported fuel,” the company said.

The company said it coordinated with the Department of Energy and the Department of Finance, which encouraged oil firms to secure alternative sources of crude oil and finished products.

Petron also said it received confirmation from the Bangko Sentral ng Pilipinas in a March 12 letter that there are no domestic legal prohibitions on importing Russian crude oil.

The Philippines has been seeking alternative fuel sources as supply from the Middle East, a major oil-producing region, faces disruptions due to the ongoing conflict involving Iran.

The United States has temporarily eased certain sanctions on Russian oil to help increase global supply amid disruptions in key shipping routes.

Russian Deputy Prime Minister Alexander Novak earlier instructed the energy ministry to draft a resolution banning gasoline exports from April 1 to July 31, Reuters reported, citing state-run TASS news agency.

The Philippines was placed under a state of national energy emergency starting March 24 in response to risks to the country’s energy supply.

Petron President and Chief Executive Officer Ramon S. Ang earlier renewed an offer to sell the company back to the government as the country deals with supply issues and rising fuel prices. — Sheldeen Joy Talavera