16/04/26
SE Asian energy collaboration muted despite US-Iran war
Singapore, 16 April (Argus) — Collaboration between countries in southeast Asia,
a region highly dependent on imports of oil and gas, especially from the Middle
East, has remained limited in the weeks since the US-Iran war began, as
countries have mainly focused on individual energy security needs. Asia is the
biggest importer of Middle East oil , and the closure of the strait of Hormuz
following US strikes on Iran has cut off these fuel supplies, forcing Asian
governments to release strategic reserves, halt products exports, or scramble to
diversify energy sources. Despite its reliance on Middle East supplies,
southeast Asia has had limited say in the events around the closure and
subsequent blockade of the strait of Hormuz. Some countries like Malaysia and
Indonesia have had to resort to negotiations with Iran to allow their ships
through, while other countries like Singapore have stated they will not partake
in such negotiations as they are not in line with international law. But there
has also been a notable lack of a co-ordinated response or any multilateral
agreements among Association of Southeast Asian Nations (Asean) members to
address the energy security issues that have arisen in the past few weeks, until
recently. Asean ministers met on 13 April to discuss the evolving Middle East
conflict. The meeting encouraged member states to explore co-ordinated regional
responses where appropriate, strengthen supply chain connectivity, and ensure
reliable and secure access to raw materials and energy supplies, including
through the implementation of binding agreements, and through refraining from
unnecessary trade restrictions. The meeting also called for the mobilisation of
existing mechanisms such as the Asean Framework Agreement on Petroleum Security
(APSA), the Asean Power Grid, and the Trans-Asean Gas Pipeline. The Philippines
currently holds Asean chairmanship, and following the abovementioned meeting,
Philippine president Ferdinand Marcos on 15 April called for the
operationalisation of the APSA. The enhanced APSA was endorsed last October at
the Asean ministers' meeting in Malaysia, and it sets out the framework for
co-ordinated emergency responses, emergency supply sharing and joint oil
stockpiling, said Marcos. The APSA's co-ordinated emergency response mechanism
allows member states to supply up to 10pc of a distressed country's normal
requirements, on a voluntary and commercial basis. "Asia's oil supply chains are
deeply interconnected," Marcos said, adding that "a disruption that begins in
the strait of Hormuz ripples through Singapore, the Strait of Malacca, and
onward to Manila, Tokyo, Seoul, [and] Jakarta within days." "Our vulnerabilities
are shared, and therefore so must our responses be," he said. Putting national
needs first But developments in recent weeks have indicated that countries have
had to focus on their own energy security first, with southeast Asian nations
also increasingly engaging in discussions with countries outside of the region
to secure supplies. Indonesia for example, has indicated it is shifting some
crude oil imports from the Middle East to other countries including the US.
Indonesian president Prabowo Subianto also met with Russian president Vladimir
Putin on 13 April to discuss possible energy co-operation , where Russia could
potentially export oil to Indonesia. The Philippines last month declared an
energy emergency and its president had indicated that the country is also
considering securing supplies from Russia. Shortly after this, Philippine
refiner Petron confirmed it had secured 2.48mn bl of Russian crude . In an
incident that highlights the potential political sensitivities surrounding
shared fuel supply, Malaysia's state-owned oil company Petronas earlier this
week responded to reports that it had supplied diesel to the Philippines by
denying this took place, and stating that its first priority is ensuring
domestic supply. The country's prime minister Anwar Ibrahim also stepped in to
clarify that it was international firm Vitol that sold oil to the Philippines.
Malaysia has not given its oil to the Philippines, but it does help to
facilitate the movement of oil under foreign agreements, Anwar said on 13 April.
But one bright spark resulting from the fuel crisis is that there have been
developments in the renewables space as countries seek to diversify their energy
sources. Indonesia's president has ordered the construction of 100GW of solar
power within two years, and the electrification of all motorcycles, cars, trucks
and tractors. Meanwhile, the Philippines is fast-tracking 1.5GW of renewables
projects to speed up the delivery of additional power supply across the country.
More renewable power would also mean progress towards achieving the
aforementioned Asean power grid . The grid is a cross-border initiative aimed at
helping the region source and share electricity, given that southeast Asian
countries are very diverse in terms of power demand and supply, as well as
renewable energy potential. Asean members last year announced their target to
establish the grid by 2045, although cross-border power sharing arrangements
could be established sooner if countries accelerate their renewables
development. By Prethika Nair Send comments and request more information at
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