Client Newsflash

Oil and Gas: Indonesia Ratifies ASEAN Petroleum Security Agreement 2009

In January 2013, Indonesia ratified the 2009 ASEAN Petroleum Security Agreement (“APSA 2009”) through Presidential Regulation No. 7 of 2013. APSA 2009 is the successor agreement to the 1986 ASEAN Petroleumn  Security Agreement, which was enacted to provide collective assistance among member states in cases of critical petroleum shortage.

APSA 2009 will not enter into force until 30 days after the 10th ratification or acceptance instrument is submitted to ASEAN. All ASEAN members executed the agreement in 2009, but to date, only 7 members have ratified—Laos, Cambodia, and the Philippines have not submitted any instrument to ASEAN. The agreement stipulates a number of short, medium, and long-term measures member states are expected to take to enhance energy security and cooperation within the region. The most significant is a commitment to collectively supply up to 10% of a member’s petroleum needs in times of shortfall—on a voluntary, commercial basis. “Petroleum” as used in the agreement refers to “crude oils, products and natural gas in its natural condition.” Member states are not obligated to divert their petroleum supplies to help other members if doing so would cause hardship. Indonesia is currently a net importer of oil.

  • Strategic Mechanisms to Enhance Petroleum Security

Member states are expected to implement short, medium, and long-term strategies to enhance petroleum security, minimize exposure during emergency situations, and mitigate the impacts of critical petroleum shortages.

Short-term Measures for Member States in Distress

An ASEAN member state is “in Distress” when it gives notice to the ASEAN Council on Petroleum (ASCOPE) that it has faced a critical petroleum shortage (defined as a 10% shortfall of the Normal Domestic Requirement) for 30 consecutive days because of natural disaster, explosion of facilities, or war. Member states in Distress are expected to impose immediate limitations on energy consumption, which may include demand restraint, switching to alternative fuels, surge protection, and information sharing with other member states.

If demand limitations fail, the member state in Distress may request assistance under Coordinated Emergency Response Measures (“CERM”), in which the other member states will endeavor to provide, in aggregate, 10% of the Distressed state’s Normal Domestic Requirement on a voluntary, commercial basis. CERM is not a donation. It is a transactional diversion of member states’ petroleum supplies to states in need. Taking unfair advantage of the Distressed state’s vulnerability is prohibited.

Following the activation of CERM, the ASCOPE Secretariat will supervise the situation to determine whether the magnitude of the emergency has changed. Any ASEAN member state that gives assistance under CERM may at any time terminate its assistance if such assistance causes hardship for the state giving assistance.

Medium and Long term Measures

Member states are also expected to implement:

  • Cooperation on regional energy policy, trans-ASEAN gas pipeline (TAGP), ASEAN power grid (APG), regional energy policy and planning (REPP), coal, renewable energy, energy efficiency, and conservation
  • Exploration for new petroleum resources through voluntary joint ventures with other member states
  • Energy diversification (APG, TAGP, fuel switching); joint research, development, and demonstration of renewable energy projects; energy efficiency; and new energy technologies
  • Diversification of supply to reduce dependency on single sources
  • Deregulation and liberalization of oil and gas markets
  • Oil stockpiling
  • International Cooperation

To enhance ASEAN’s energy and petroleum security, APSA 2009 stipulates international cooperation with ASEAN dialogue partners and other relevant international organizations.
February 14, 2013

The foregoing material is the property of AKSET Law and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor should it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.

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