Energy pact pursued by ASEAN amid fuel crisis due to Iran War

MANILA: A framework agreement on petroleum security is being pushed forward by the Association of Southeast Asian Nations (ASEAN), as the region struggles to scramble for adequate fuel supplies amid the oil crisis brought about by the conflict in the Middle East.

“APSA, or the Asean Petroleum Security Agreement, is being pursued to enable coordinated emergency fuel sharing and collective responses to supply disruption,” a Reuters report quoted the Philippines’ Trade Secretary Cristina Roque as saying on Thursday (April 30).

The Philippines is chairing ASEAN this year, hosting the 48th Leaders’ Summit on May 7 to 8.

The conflict, which began on Feb 28 when the United States and Israel started bombing Iran, resulted in the effective closure of the Strait of Hormuz, a chokepoint for 20% of the global energy supply. This has sent oil prices skyrocketing, and countries in Southeast Asia, heavily dependent on oil from the Middle East, have been among the most badly affected.

The Philippines, which relies on 98% of its oil from the region, declared a national emergency less than three weeks after the war started. Indonesia, Malaysia, Thailand, and Vietnam have also been affected by the Hormuz closure.

These countries have begun to look for other sources of oil, including Russia.

Underlining the vulnerability of the region, the United Nations Development Programme (UNDP) warned last month that the war may end up costing countries in the Asia-Pacific billions of dollars in losses. Moreover, nearly nine million people could also fall into poverty as a result of the war.

What APSA is for

According to the Philippines’ Trade Secretary, moving forward with ratifying the pact is meant to increase energy resilience and fuel sharing across Southeast Asia, and added that the country will make implementing a region-wide power grid for the purpose of energy sharing a priority.

ASEAN will also maintain open and predictable trade and steer clear of trade measures that are restrictive, which include bans on the export of essential goods during uncertain times.

Ms Roque added that the current trade agreement, including the free trade agreement with South Korea and China, will be strengthened and accelerated by ASEAN. Furthermore, food security and supply chain coordination will also be strengthened by the bloc, which would secure better access to food region-wide.

The energy supply for essential services during critical times, such as health care, hospitals, emergency systems and critical care facilities, will also be safeguarded by ASEAN member states. Also, support for micro, small, and medium enterprises will be intensified by ASEAN through better access to financing, which will help safeguard jobs during times of economic shock. /TISG 

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