How severe is the energy crisis? Asian countries are beginning to try "barter trade"

Caixin News April 1 (Editor: Xiaoxiang) With fighting in the Middle East flaring up and igniting a new round of energy crisis, competition among countries across Asia for alternative energy has also already heated up to a fever pitch. Against this backdrop of dire circumstances, many Asian economies have even begun a wave of fuel swaps……

Indonesian President Prabowo’s visit to Japan this week is widely seen by many in the outside world as part of Asia’s latest round of fuel-swap attempts, aiming to offset severe shortages triggered by the Middle East conflict. The Middle East is a key source of energy supply for the Asia-Pacific region.

For poorer countries, the situation is becoming desperate. The Philippines became the first country to announce a national energy emergency last month, Sri Lanka shortened the workweek to four days, and Myanmar restricts drivers from traveling on alternate days. The Southeast Asian region’s largest economy and the world’s fourth most populous country, Indonesia, has also announced a series of measures, including limiting fuel sales and urging people to work from home.

“Maintaining rational economic relations is crucial,” Indonesian President Prabowo said to Japanese business leaders on Monday in Tokyo after signing an agreement covering long-term oil and gas and geothermal power projects, “the Middle East’s geopolitical situation brings strategic uncertainty to our energy security.”

And SKK Migas, the head of the oil and gas regulator, Djoko Siswanto, said that a more direct initiative might be that Indonesia could reach an agreement with Japan to increase liquefied natural gas supply to Tokyo in exchange for liquefied petroleum gas—an essential cooking fuel.

Although the leaders of the two countries did not confirm such a swap agreement on Tuesday, at the meeting held that day, they both agreed to strengthen energy-security ties.

According to an internal Japanese government document seen by industry insiders, it also shows that INPEX, a major Japanese energy company, is discussing a similar barter deal with India—exchanging liquefied petroleum gas for naphtha and crude oil.

In addition, the document shows that Vietnam is also seeking Japan’s help in supplying energy, while on Monday the Philippines said it has received diesel from Japan.

Japan’s Minister of Economy, Trade and Industry emphasized the importance of maintaining fuel supply to Southeast Asian countries, because Japan has established supply-chain channels in these regions.

It is understood that Japan, which is short on resources, relies on the Middle East for about 95% of its oil and 11% of its liquefied natural gas imports, even though its own energy reserves rank among the top in the world.

Asia-Pacific economies chart their own paths

Energy analysts say that Australia, as a major energy producer and exporter, should give it influence in negotiations with Asian partners regarding the supply of soon-to-be-short aircraft fuel. Australia’s Foreign Minister Penny Wong this month said the government is reaching out to major suppliers such as China, Singapore, and South Korea.

This month, Vietnam’s aviation regulator urged authorities to seek additional aircraft-fuel supply from Brunei, India, Japan, and South Korea.

Hiroshi Hashimoto, a senior researcher at the Institute of Energy Economics, Japan, said that bilateral agreements with alternative suppliers should help ease shortages, but if fighting in the Middle East lasts longer, then coordinated efforts will be needed.

“If the crisis lasts a longer time, Asian countries may need to establish a multilateral framework to help one another and to engage in dialogue with alternative fuel sources.”

Worth noting is that after the United States issued a temporary sanctions exemption for Russia’s seaborne oil, Russia has also become a supply source that some Asian countries had not expected.

South Korea’s Ministry of Trade, Industry and Energy said that this week, South Korea—first time in years—imported Russian naphtha (a key raw material used to manufacture various plastics, from cars to electronics), and it is also seeking to ensure crude oil supply.

India has also increased its purchases of oil from Russia, while Bangladesh, Thailand, and Sri Lanka are also negotiating with Russia.

In addition, Pacific island nations such as New Zealand are keenly aware that as the fuel scramble becomes fiercer in the coming months, they may be more vulnerable to disruption. New Zealand Prime Minister Christopher Luxon recently made phone calls with leaders of Singapore, Malaysia, and South Korea—three key suppliers of New Zealand’s refined petroleum products—and also spoke by phone with the Chair of the European Commission.

Shane Jones, Deputy Minister of Energy of New Zealand, said he has also reached out to commodity traders and others to try to support fuel supply. “Unless you (set up) multiple alternative channels in advance, in two or three months in that frenzy, that crazy fuel search, our country is too small to even be noticed,” Jones added.

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责任编辑：郭建