Philippines explores emergency oil access in Indonesia, Thailand

The Philippines has signed preliminary agreements with partners in Indonesia and Thailand to explore access to emergency oil supplies as it seeks to strengthen energy security amid disruptions linked to the war on Iran.

State-run oil and gas exploration firm PNOC-EC signed separate letters of intent with Indonesia's Interport Mandiri Utama and the Shell Company of Thailand Limited on Saturday during the ASEAN Business and Investment Summit in Manila.

The projects will involve the Economic Research Institute for ASEAN and East Asia (ERIA) and the Indonesian Business Council as knowledge partners.

The cooperation will examine oil ticketing mechanisms, including the possible use of existing storage facilities in Indonesia and Thailand to support the Philippines' oil supply security and emergency preparedness.

Under an oil ticketing arrangement, a participating country or entity pays for the right to access oil stored in another country during an emergency. The system could reduce the need to build new storage facilities or purchase additional stocks upfront.

Such arrangements have been adopted in the European Union and elsewhere but would be a first for ASEAN.

The Philippines has been under a state of national energy emergency since March, after the war on Iran disrupted global energy supplies and pushed up domestic fuel prices.

The country imports 98 per cent of its oil from the Gulf, leaving it exposed to supply disruptions in the region.

President Ferdinand Marcos Jr has called for a regional study on joint oil stockpiling as Southeast Asian countries face growing risks from geopolitical uncertainty and their dependence on imported oil.

Many countries in the region rely heavily on Middle Eastern crude imports and have limited fuel reserves.

The Philippines, which is chairing ASEAN this year, has been leading discussions on diversifying energy sources and strengthening regional cooperation to secure supplies.

Manila is also considering the proposed Philippine Strategic Petroleum Reserve Act, which would establish the country's first state-owned oil reserve to improve energy resilience and protect consumers from global supply shocks.

Energy lawyer and University of the Philippines professor Noel M Baga said establishing domestic storage facilities and refineries should be a priority.

He said the proposed reserve would hold at least 60 days of fuel supply and the legislation would also provide for the establishment of more oil refineries.

Baga argued that adequate domestic storage and refining capacity would help the Philippines reduce its dependence on imported oil and strengthen energy security.

sks