M. Jegathesan

M. Jegathesan Agence France-Presse Langkawi, Malaysia

Japan is willing to provide technical and financial aid to ASEAN countries to help them build oil stockpiles and ensure energy security for the region, a senior official said Wednesday.

Yasuo Tanabe, director of international affairs in Japan's ministry of economy, trade and industry, said the region was in need of emergency response mechanisms including oil stockpiles.

"At the time of the Iraqi crisis, there was a risk for serious concern about oil disruption. If oil supply from the Middle East is disrupted, there should be a substitute.

"So keeping stockpiles in our region and in each country is very critical for a stable supply of oil," he told reporters on the sidelines of an energy meeting bringing the 10-member Association of Southeast Asian Nations (ASEAN) together with Japan, China and South Korea.

Tanabe said Tokyo was prepared to provide soft loans and technical know-how for the construction of stockpile infrastructure, but not for the purchase of oil to build the stockpile.

ASEAN energy ministers will meet here Thursday to endorse plans for energy security in the region.

Japan floated the stockpiles proposal when top energy officials and experts from ASEAN, China, Japan and South Korea met in the Malaysian capital last month to map out a common strategy on energy security.

Oil from the unstable Middle East region accounts for some 90 percent of imports for Japan, while Asia relies on imported oil for more than two-thirds of its daily needs of more than 21 million barrels.

Tanabe said the Iraq crisis did not disrupt the economic activities of the region because countries like Saudi Arabia compensated for the shortfall, but there was no guarantee that a future crisis would not have a bigger impact.

He said ASEAN countries should have at least a mandatory 90- day stockpile in accordance with International Energy Agency recommendations.

Japan had a 170-day stockpile and South Korea had 100 days, while officials estimated most ASEAN countries had stockpiles of 35 to 40 days only.

Many ASEAN countries are opposed to large stockpiles, however, saying they would be expensive to maintain and could be potential targets for terrorist attacks.

The Philippines, however, is supportive of Japan's plan. Manila, which is an oil importer, indicated last year that the Subic complex, a former U.S. military base, could be a site for a regional stockpile.

One Southeast Asian official said the reason for the Philippines' support for Japan was obvious.

"Due to its geographical location, it is out of the ASEAN power grid and gas pipeline infrastructure programs to secure a stable power supply for the region," the official said.

Malaysia, on the other hand is an oil producer and says it is safer for the oil to remain in the ground rather than be stored in an expensive stockpile.

A draft document of the two-day ASEAN energy officials meeting on Monday and Tuesday, obtained by AFP, states that the 1986 ASEAN Petroleum Security Agreement would be replaced by a 2003 agreement.

A special meeting would be held in Malaysia in December to finalize the inputs from ASEAN countries on ways to ensure energy security, including the issue of stockpiles, which would be inked by the energy ministers in 2004.