APPEC: New refineries, oil reserves alone no fix for ASEAN supply security

Building more refineries or accumulating additional oil stocks will not, by themselves, protect Southeast Asia from supply disruptions unless the capacity is supported by feedstock flexibility, logistics, and regional coordination, executives said at APPEC 2026 on Sept. 9.

"If that capacity doesn't have resilience, it's a no-go for energy security because you're back to square one again," Han Lih Kwong, senior general manager at Aster Chemicals and Energy Pte Ltd, said at the conference in Singapore.

The comments came amid a discussion on whether additional ASEAN refining capacity could reduce the region's growing dependence on imported products or merely shift its exposure toward imported crude.

Han said the issue should not be treated as a binary decision over whether to build refineries. New capacity would need to process crudes from different regions and be supported by marine infrastructure, storage, and blending capabilities.

Shamir Salahudin, managing director of the Petroleum Authority of Brunei Darussalam, said the disruption in the Strait of Hormuz showed that energy security had to encompass the entire supply chain.

"We can't just focus on one part of the chain," Salahudin said. "It's got to look at everything, all the way from the upstream volumes right down to the refined products."

That includes ensuring that suitable crude or gas is available, vessels and other logistics can transport it, and refineries and plants are technically able to process the supply, he noted.

Reserve design

The executives also questioned whether constructing additional storage tanks was sufficient to create a resilient ASEAN oil reserve.

Han said policymakers first needed to define whether reserves should hold crude or refined products, where they should be located, what demand they would serve, and whether they should provide 90 days, 200 days, or another duration of protection.

While Aster has invested in additional storage, increasing available crude storage capacity at Pulau Bukom by more than 1.3 million barrels, Han noted that company-level investments could form only one part of a broader regional response. "Not one country, not one company, not one industry can do it. It's collective."

Salahudin highlighted that policymakers should examine whether alternative supply arrangements and infrastructure could provide resilience without relying entirely on larger inventories.

Public-private framework

Han said leaving the development of regional reserves entirely to market forces might not produce the required energy-security outcome, particularly where commercial returns were insufficient to justify contingency infrastructure.

Salahudin said governments should establish the policy and regulatory environment, but allow commercial companies to structure and execute the underlying arrangements.

"The governments need to provide the ecosystem, the frameworks for the commercial discussion to happen," he said.

Connecting ASEAN's broader energy infrastructure could require tens of billions in investment, Salahudin said. He added that governments might have to participate because some infrastructure also served national-security objectives, although commercial entities were better placed to develop and operate projects.

Regional integration will form a significant part of the agenda when the ASEAN Council on Petroleum and Energy meets in October, according to Salahudin.

"If we don't use this event as a catalyst to move it, then we've lost an opportunity," he said.