Indonesia has pitched a bold plan to host a regional ASEAN oil storage hub as a buffer against Middle East energy supply shocks, but the proposal has encountered immediate headwinds: deep-seated political distrust within the bloc, divergent national priorities, and ASEAN’s long track record of shelving collective emergency mechanisms.
The proposal, introduced by Indonesian Energy Minister Bahlil Lahadalia at the 48th ASEAN Summit in Cebu on May 11, calls for pooling emergency fuel reserves at a single facility on Sumatra, with Malaysia, Brunei and the Philippines as partners. The timing coincides with the US-Israel military campaign against Iran, which has disrupted tanker traffic through the Strait of Hormuz — cutting off roughly one-fifth of global oil and gas supplies bound for Asia.
Sumatra sits astride the Strait of Malacca, where more than a quarter of globally traded goods and up to 40% of the world’s seaborne crude pass. From a geographic standpoint, Indonesia’s candidacy is strong.
Yet political reality is murkier. Joshua Kurlantzick, senior fellow at the Council on Foreign Relations, noted that while cross-border energy cooperation works elsewhere — citing France’s arrangements with Italy and Germany, and strategic reserves maintained by Japan and South Korea on behalf of allies like New Zealand — ASEAN lacks the unity to replicate such models. The bloc’s ASEAN Petroleum Security Agreement, expanded last October to cover LNG, has never been triggered — not even during the current crisis.
ASEAN’s other dormant facility, the Chiang Mai Initiative born from the 1997 Asian financial crisis, has similarly never been activated. The stigma of IMF bailouts imposed on Thailand and Indonesia never fully dissipated.
Where might the hub instead go? Kurlantzick pointed to Malaysia, which emerged from its ASEAN chairmanship with heightened credibility. Energy expert Elbinsar Purba of ISEAS made a case for Singapore, which already commands world-class storage, refining, financial services and legal certainty.
But convincing eleven ASEAN governments to cede sovereignty over oil remains daunting. Ramkishen S. Rajan of NUS noted that energy security is easy to endorse in principle; the harder questions involve contribution obligations, release conditions, shortage priorities and whether those follow pre-agreed rules or real-time political bargaining.
ASEAN energy leaders say it’s time to move beyond declarations, but meaningful progress on a capital-intensive oil hub remains years away. Indonesia is pressing ahead with its own Sumatran facility regardless. The question is whether Jakarta can build the regional consensus needed, or whether the proposal will linger in principle alone.