Indonesia’s oil hub pitch collides with Asean’s trust deficit

Indonesia has proposed hosting an Asean oil storage hub to reinforce the region’s emergency fuel reserves, as supply disruptions from the Middle East lay bare the region’s vulnerability to energy shocks. But analysts say the plan, while attractive in principle, is likely to be hampered by political distrust, uneven national priorities and the Association of Southeast Asian Nations’ record of rolling out regional mechanisms that are rarely tested under pressure. Indonesian Energy Minister Bahlil Lahadalia’s pitch – that Asean pool emergency reserves at a single hub, possibly in Sumatra, with Malaysia, Brunei and the Philippines as partners – carried the logic of an idea whose time had come. The US-Israel war on Iran that began in late February has severely restricted tanker traffic through the Strait of Hormuz, choking off roughly one-fifth of pre-conflict global oil and gas supplies, much of which had been bound for Asia. “The idea of creating an Asean oil storage hub is a good one,” Bahlil said at the 48th Asean Summit in Cebu on May 11, as quoted by state news agency Antara, adding that such a hub would help supply Southeast Asia during future disruptions. I don’t think Asean has the unity to pull this off Joshua Kurlantzick, a senior fellow for Southeast Asia and South Asia at the US-based Council on Foreign Relations think tank, pointed to examples of such hubs working elsewhere, such as France ’s cross-border energy arrangements with Italy and Germany and the strategic petroleum reserves that Japan and South Korea maintain on behalf of other countries including New Zealand.