Indonesia proposes hosting ASEAN oil storage hub to boost regional reserves

Indonesia’s Energy Minister Bahlil Lahadalia said on Monday (May 11) that no agreement has been reached on the hub’s location but it hopes to partner with Malaysia, Brunei and the Philippines to advance the proposal.

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JAKARTA: Indonesia has proposed hosting an Association of Southeast Asian Nations (ASEAN) oil storage hub to boost reserves, as Southeast Asian leaders mull steps to strengthen energy security amid the ongoing Middle East conflict.

Indonesia’s Energy Minister Bahlil Lahadalia said on Monday (May 11) that no agreement has been reached on the hub’s location but it hopes to partner with other bloc members, Malaysia, Brunei and the Philippines to advance the proposal.

“We will build storage anywhere, but I proposed Indonesia,” Bahlil said, as quoted by state news agency Antara, and added that the regional oil hub would help supply Southeast Asian countries during disruptions.

“The idea of creating an ASEAN oil storage hub is a good one,” he added, as quoted by local media.

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His remarks were linked to Bahlil's visit to the Philippines last week with President Prabowo Subianto for the 48th ASEAN Summit in Cebu.

At the summit, ASEAN leaders proposed new ideas like a regional fuel stockpile and a standby mechanism for food security to cushion against the impacts of the Strait of Hormuz closure - and potentially similar incidents in the future that could strain crucial fuel and fertiliser supplies to the region.

They mulled a “mechanism” for a “reservoir” of different fuel products that could be shared among member states, Philippines President Ferdinand Marcos Jr told the media after the summit last Friday.

"The situation right now is very different for each country. Some countries have a surplus of a certain kind of fuel. Other people have a shortage, and we're trying to balance that out," said Marcos, who is the 2026 chair of the 11-member bloc.

"And when something like this happens - a war happens and a trade route like the Strait of Hormuz is closed with all the attendant effects - we have somewhere to immediately run to for emergency supply,” he added.

Regional cross-border electricity interconnectivity and energy diversification were also discussed at the summit.

Separately, Bahlil also announced plans for a domestic oil storage facility in a Sumatra special economic zone to raise its national reserves, adding that the Sumatra project would proceed even if Indonesia is not chosen to host the ASEAN hub.

Plans for the Sumatra project are still in the feasibility stage, he added. 

The ongoing war between Iran and the United States and Israel has entered its 11th week amid a fragile ceasefire and the continued closure of the Strait of Hormuz, which normally carries one-fifth of the world’s oil and gas supply.

Oil prices surged on Monday after US President Donald Trump said the ceasefire in Iran was on “life support” after Tehran’s response to the US’ proposal to end the war.

Earlier on Mar 4, Bahlil reportedly said that the energy ministry conducted a feasibility study for an oil strategic facility on Nipa Island among the Riau islands, and aims to begin construction this year, according to Indonesian energy news outlet Petromindo.com. 

Bahlil added that the storage development plan was reported to Prabowo, who advised that the plan be implemented as soon as possible, reported Petromindo.

“This is about survival. If we want energy security, we must address the core issues quickly so we do not remain dependent,” Bahlil was quoted as saying, adding that investors had already been secured, with funding coming from domestic and international sources, excluding the US.

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