MANILA (The Straits Times/ANN): Just six months ago, while South-East Asia was reeling from a fuel crisis triggered by the Middle East conflict, the idea that Asean member states would be able to band together to build a regional oil stockpile had seemed idealistic, to say the least.
At the grouping’s May summit, leaders agreed to conduct a feasibility study on building a regional oil stockpile, but several questions remained – chiefly, where should the reserves be sited and at what cost? Those familiar with the inner workings of Asean were not hopeful that these issues could be hammered out quickly.
Yet, here we are with a promising solution that looks like a nascent version of the region’s first oil-sharing system – a pleasant surprise for the consensus-based grouping that is often criticised for being slow-moving.
At the Asean Business and Investment Summit on Nov 13, the Philippines’ state-owned oil company PNOC Exploration Corporation signed separate letters of intent with two companies in Indonesia and Thailand for a pilot that would allow the Philippines to tap oil reserves in an emergency.
The pilot involves a “ticket” system, where the seller agrees to reserve an amount of oil for the buyer at a fee, so that the latter continues to have oil access even during a crisis. This is an arrangement already practised in Europe and between Japan and New Zealand.
In general, the governments of both countries would have agreed on a stockpile volume before their respective agencies – usually oil companies or related entities – sign a contract, the Tokyo-backed Economic Research Institute for Asean and East Asia (ERIA) said in a November report on oil stockpiling strategy. ERIA, which is based in Jakarta, had provided much of the strategic counsel behind the project.
Some critics may question why there are only three countries involved in an initiative that is meant to be regional. Rather than a show of disunity, analysts told The Straits Times the result turned out this way because the Philippines in particular was badly hit by the oil crisis, which fuelled its impetus to act quickly – while Thailand and Indonesia already had the capacity to offer.
ERIA and the Indonesian Business Council then facilitated discussions among stakeholders, including a high-level business roundtable in Singapore in July 2026.
A more constructive reading of this development is that smaller-scale projects can be more effective at building momentum and getting projects started – and this approach should perhaps be applied to Asean’s other challenges.
Joel Ng, senior fellow at the S. Rajaratnam School of International Studies, told ST that the approach taken by the trilateral group is akin to the “Asean minus X” or “two plus X” formula, where a smaller group of member states may proceed first while waiting for others to get on board.
This formula was mooted by Malaysia more than two decades ago in a bid to expedite liberalisation of intra-Asean trade in services, but the idea never quite caught on outside the economic domain.
Jennifer Schuch-Page, managing principal at US-headquartered The Asia Group, told ST that it is often easier to set up an innovative framework with fewer countries “and then later seek to add other countries into the mix who can offer additional complementarities”.
The trilateral oil-sharing project offers other useful takeaways. While countries may prefer a national stockpile from a security perspective, a regional stockpile is far more cost effective since there is no need for the receiving country to invest in additional infrastructure. This is an especially important consideration for smaller countries including Laos and Timor-Leste, which, according to a Nikkei report, are considering joining the trio.
An observer familiar with Brunei’s oil and gas industry told ST that there are similar discussions at the private sector level in the kingdom, noting that commercial arrangements can help projects move more quickly than if they were state-directed.
It may be too early to rejoice, but all this should offer a glimmer of hope for the updated ASEAN Petroleum Security Agreement (APSA), which leaders are pushing to fully ratify at the ongoing Asean Summit.
Critics of APSA often question its usefulness since it lacks a physical regional stockpile and energy sharing under the pact is on a voluntary or commercial basis.
But as the trilateral agreement shows, the key, as always, is ensuring that incentives are aligned. -- The Straits Times/ANN
