Japan backs ASEAN push to diversify crude oil supply sources
Tokyo is preparing support for Southeast Asian energy security as Manila and other ASEAN capitals seek alternatives to Middle East crude amid supply-chain risks.
- Japan is actively assisting Southeast Asian (ASEAN) countries in diversifying their crude oil sources to protect regional and its own domestic supply chains from Middle East instability.
- To support this effort, Japan has launched a US$10 billion financial framework, known as POWERR Asia, to help stabilize energy supplies in the region.
- The push for diversification by ASEAN members, including the Philippines, Thailand, and Vietnam, is a direct response to energy shocks and a desire to reduce heavy dependence on Middle Eastern oil.
- High-level talks between Japanese and ASEAN leaders are being held to further coordinate a joint approach to securing more reliable energy supplies for Asia.
The Japanese government is moving to assist Southeast Asian countries in widening their sources of crude oil, aiming to keep petrochemical supply chains stable as tensions in the Middle East continue.
Energy shocks linked to the effective closure of the Strait of Hormuz have pushed crude-importing Southeast Asian nations to cut their dependence on Middle Eastern supplies.
The Philippines, which has relied on the Middle East for more than 90 per cent of its crude oil imports, declared a national energy emergency in March after crude prices surged.
Manila has recently begun buying crude oil from Russia, despite some countries reducing or stopping Russian imports under sanctions imposed after Moscow invaded Ukraine. It has also signalled readiness to pursue joint oil and gas exploration with China in the South China Sea, where the two countries have territorial disputes.
Philippine President Ferdinand Marcos Jr said in a recent interview: “I don't think that we will go back to the old system where the majority of the petroleum products that are coming out of the Strait of Hormuz are going to Asia.” He said he expected Asian countries to continue broadening their crude supply networks in the years ahead.
Other ASEAN members, including Thailand and Vietnam, are also trying to diversify crude procurement by increasing imports from the United States and African countries, as well as Russia.
At an ASEAN summit held in Cebu, the Philippines, earlier this month, leaders used a joint statement to reaffirm their commitment to diversifying crude oil sources and expanding regional energy trade. They also exchanged views on creating joint oil and gas reserves.
Japan, meanwhile, is concerned that disruption in Southeast Asia, a key petrochemical manufacturing hub, could affect domestic supply chains.
“Supporting supply chains in Asian countries will directly contribute to strengthening the Japanese economy,” Japanese Prime Minister Sanae Takaichi said, signalling Tokyo’s intention to support ASEAN.
In April, Japan announced a US$10 billion, or around 1.6 trillion yen, financial support framework to help stabilise energy supplies in Asian countries. Under the first phase of the POWERR Asia framework, a refinery in Vietnam procured crude oil from Congo.
Marcos is due to visit Japan as a state guest for four days from Tuesday (May 26) and will hold talks with Takaichi.
The Philippine leader said he and Takaichi would discuss how “we, as one, as Asia, can come together” to help one another and secure a safer, more secure and more reliable supply of various petroleum products.
[Copyright The Jiji Press, Ltd.]
