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These are the Economic Impacts of the estimated $26.3 Trillion oil and gas deposit in the Philippines
The Philippines’ hydrocarbon fuel self-sufficiency remains a pipe dream for the Government for decades. Though it’s not a question of where and how much the deposit is, it is a question of when it will be fully materialized. According to the Data gathered and reported by China’s Ministry of Geology and Mineral Resources, and also confirmed by the U.S. Geological Survey, the oil deposits in the Spratly Island alone could reach 17.1 billion barrels.
With the recent additional discovery of oil reserves in the Celebes Sea particularly within the administrative area of Sulu and the rest of the country. The value of hydrocarbon deposits in the country could be more than $26.3 trillion, more than the 13 billion barrels of oil deposits of Kuwait, one of the world’s top oil producers.
Once commercial production starts, granting that the surveys are accurate, it could potentially provide a significant portion of the Philippines’ Gross Domestic Product.
In comparison Indonesia, the region’s biggest oil producer with a production of about 743,000 barrels per day in 2020, contributed at least $140 billion annually, or about 12% of its economy.
If the Philippines can produce at least the same level or a bit higher than Indonesia, the country’s oil and gas industry can contribute at least $150 billion or more annually, to the country’s economy. Making the Philippines the second-biggest economy in the region, surpassing Thailand with a GDP nominal of $505.9 billion.
This will also enhance the competitive edge of the country in terms of Manufacturing goods. With a lower production cost, the Philippines can now compete with Vietnam and Indonesia, the region’s cheapest producer of goods. Making the country an ideal alternative location for Manufacturing Hubs in Asia. Those, increasing the overall direct foreign Investment in the country.
In addition, transportation costs and other basic commodity prices will be now more economical. With locally produced oil, means no more import cost, making petroleum products cheaper. In effect, transportation and other logistics will be cheaper, lowering the cost of basic commodities such as agricultural and other processed products.
When commodity prices are low, and even the household income remains unchanged, it means higher disposable income for that family. In other words, a household’s regular income would afford more amount of goods. With these, inflation in the country will remain low.
Currently, a 10% rise in oil prices could add 0.4 percentage points to Philippine inflation. To add, the Central Bank of the Philippines also sees the high oil prices to drive inflation as high as between 2% to 6%. This situation will be diluted when the Philippines will produce domestic petroleum products.
Overall, these will enhance the private domestic consumption of Filipinos which remains the main driver of the economy, accounting for 70% of the country’s economy.
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