Japan Backs Oil Diversification in Southeast Asia

Manila, May 26 (Jiji Press)–The Japanese government plans to help Southeast Asian countries diversify their crude oil procurement sources, in order to stabilize petrochemical supply chains amid the ongoing Middle East tensions. Faced with recent energy shocks following the effective closure of the Strait of Hormuz, Southeast Asian nations, which depend heavily on imported crude oil, are working to reduce their reliance on Middle East oil. The Philippines has depended on the Middle East for more than 90 pct of its crude oil imports. In March, the Philippines declared a national energy emergency due to soaring crude oil prices. The Southeast Asian nation recently started importing crude oil from Russia, even while some countries have reduced or halted imports from Russia as part of sanctions following its invasion of Ukraine. The Philippines has also shown a willingness 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.” Marcos expressed expectations that Asian countries will further advance the diversification of their crude oil supply sources in the coming years. Other member states of the Association of Southeast Asian Nations, such as Thailand and Vietnam, are also seeking to diversify their procurement of crude oil by increasing imports from the United States and African countries, in addition to Russia. At an ASEAN summit in Cebu in the Philippines earlier this month, leaders reaffirmed in a joint statement their commitment to diversifying crude oil procurement sources and promoting energy trade in the region. They also exchanged views on the idea of establishing joint oil and gas reserves. Meanwhile, the Japanese government is wary of the potential impact on domestic supply chains if supply chains in Southeast Asia, a petrochemical manufacturing hub, are disrupted. “Supporting supply chains in Asian countries will directly contribute to strengthening the Japanese economy,” Japanese Prime Minister Sanae Takaichi said, indicating her intention to support ASEAN. In April, the Japanese government announced a framework to provide financial support of 10 billion dollars, or around 1.6 trillion yen, to help stabilize energy supplies in Asian countries. In the first phase of the POWERR Asia framework, a refinery in Vietnam procured crude oil from Congo. Marcos, who will visit Japan as a state guest for four days from Tuesday, will hold talks with Takaichi. The president said that he and Takaichi would discuss how “we, as one, as Asia, can come together” to assist one another and ensure a safer, more secure and more reliable supply of various petroleum products. END [Copyright The Jiji Press, Ltd.]