High storage costs push government to sell LPG stocks

Manila, Philippines – In the face of mounting storage expenses, the government is selling off its remaining stockpile of liquefied petroleum gas (LPG) acquired during a recent energy emergency. Energy Secretary Sharon Garin revealed that while they possess the LPG, they must also cover the costs of storing it. Garin explained that the longer the government retains the gas, the more it costs in terms of storage fees.

To mitigate these expenses, the government has begun unloading the LPG stocks before their storage costs become prohibitive.

Garin stated that the government's procurement of the LPG could result in prices as low as P60 per kilo. For instance, an 11-kilo cylinder of LPG might then cost around P660. In many cases, the state prefers to sell the LPG at a price below the market rate to quickly dispose of it. The Philippine National Oil Co. (PNOC), the state-owned entity responsible for procuring the LPG, acquired 21,000 metric tons in May.

This emergency supply was intended to maintain domestic fuel availability in the event of a shortage caused by geopolitical tensions in the Middle East.

PNOC has no immediate plans to purchase additional LPG, as they currently have sufficient buffer stocks. As of August 21, the country's LPG reserves were sufficient to last for 34.49 days, according to the latest Department of Energy data. Prior to the escalation of Middle Eastern conflicts, the Philippines typically obtained its household LPG from Asian suppliers.

However, these suppliers also depend on crude oil from countries affected by the Middle East crisis, leading local fuel retailers to seek alternative sources such as the United States, Canada, and Mexico. Garin noted that Filipino companies have become more resilient in sourcing fuel from multiple countries to diversify their risk.