No need for 90-day oil reserve: ex-energy minister
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The government's plan to increase the statutory oil reserve from the present 36 days of consumption to 90 days to deal with a possible energy crisis could unnecessarily burden the public, according to former energy minister Piyasvasti Amaranand.
He recently posted the comment on his Facebook page.
He said the public should keep a close watch on the plan, because of the expected high cost of storing oil and the cost of constructing depots. He is concerned that this cost might be passed to consumers.
Currently the government allows retailers to maintain the oil reserve, of which half is crude oil and half is finished oil products, to ensure national energy security. Therefore, in a possible worst-case scenario in which the country cannot procure any oil, it can be assured that it will have adequate oil reserves to be used for 36 days.
If a crisis prompts a 10-per-cent drop in the oil the country could procure, the supply would be sufficient for a year, taking into account the amount the country could still procure, plus the 36-day reserve amount.
Piyasvasti said, however, that the worst oil crisis on record saw a decline of global production of only 7 per cent, which lasted for three months, so he questioned why the country needs to extend the reserve period to 90 days. He doubted the plan to extend the reserve period would benefit anybody.
He also cited an article by Democrat MP Anik Amranand stating that to extend the reserve period to 90 days, the government would require land equivalent of 400 soccer fields in size, and would have to spend about Bt120 billion on the oil purchase. It would also face costs of maintaining oil inventories, depot rents and related interest totalling Bt14.367 billion per year. This would jack up the retail diesel and petrol price by 55 satang per litre.
Bangchak president Anusorn Sangnimnuan said he personally would prefer to see an extension to just 45 days to ensure national energy security, adding that Bangchak was ready to increase the oil reserve. He said 90 days would be too long, and would require heavy spending on oil depot fees and oil purchases. The government should carefully study what would be the most appropriate period for the reserve, he said.
Anusorn added that it seemed unnecessary to keep such a considerable amount of oil in reserve. If the country still has money, it can procure oil from anywhere, though at higher prices, he said.
In a related matter, Energy Ministry permanent secretary Norkun Sitthi-phong and his team flew to Japan on Sunday and will be there until Thursday studying strategic petroleum reserve strategy. The Department of Energy Business has been tasked to conduct a study on the matter and present the results to the ministry.
