Asean 2026: Europe’s 4 oil shock lessons
(First of two parts)
As the Philippines hosts the Association of Southeast Asian Nations (Asean) meetings in 2026, the region faces a world where energy can once again be weaponized, shipping lanes disrupted and prices pushed far beyond what households and businesses can withstand.
Europe experienced these challenges decades ago. Its journey from the oil shocks of the 1970s to the 1990s offers four hard-won lessons—on diversification, strategic reserves, policy coordination and central banking—that Asean, European Union’s dialogue partner, can adapt to meet the unique demands of the 21st century.
1. Diversify supply before crisis, not after
Europe’s initial problem in the 1970s was a heavy reliance on a single supplier for oil, the Middle East. Only after enduring two major energy crises did it take decisive steps to diversify through North Sea production, nuclear power, coal and later, gas pipelines from multiple sources. It also broadened its technologies and suppliers.
Asean now finds itself in a similar position of vulnerability. However, it can expand its current Asean energy security cooperation beyond its members’ strengths in liquefied natural gas (LNG) and gas (Malaysia, Indonesia, Brunei), coal (Indonesia), hydro and power trade (Lao PDR, Malaysia, Thailand) and refined products and trading (Singapore, Malaysia).
For governments and business leaders, the essential lessons are clear:
• Lock in diversified LNG and oil supply contracts across the US, Australia, Africa and the Gulf (even LPG from Russia).
• Accelerate renewables and regional power trade so that electricity, rather than imported fuel, becomes the primary energy carrier.
• Treat diversification as insurance, not as a climate luxury.
2. Build strategic reserves and shared buffers
Europe’s second major insight was that fragmented national stockpiles were insufficient. After the 1970s, strategic oil stocks and emergency-sharing rules were developed to enable coordinated releases. These helped in smoothing price spikes and allowed time for diplomatic and market adjustments (via the Paris-based International Energy Agency and the European Community mechanisms).
Asean has begun to move in this direction, but progress has been uneven. A modern adaptation of Europe’s approach would entail:
• An Asean Strategic Petroleum and LNG Reserve Network, with agreed rules for when and how stocks are released.
• Coinvestment in storage hubs in Malaysia, Singapore, Indonesia and potentially the Philippines, with established protocols for emergency access.
• Use of Islamic finance and sukuk to fund these facilities, leveraging Malaysia, Indonesia and Brunei as financial bridges to Gulf capital.
Strategic reserves should be seen not as a replacement for markets, but as a stabilizer when markets come under stress.
3. Coordinate policy across borders, not just within them
Europe’s experience demonstrated that uncoordinated national responses—export bans, unilateral subsidies, or ad hoc price controls—worsened regional shocks. Over time, the creation of an internal regional energy market, cross-border connectors and solidarity mechanisms turned energy into a shared infrastructure project rather than a zero-sum game.
For Asean, equivalent initiatives are already in progress: Asean Power Grid (APG), Trans Asean Gas Pipeline (TAGP) and efforts toward deeper Asean Energy Market Integration. The Philippine chairmanship in 2026 presents an opportunity to advance these efforts by:
• Setting time-bound targets for key APG and TAGP links, with transparent project pipelines.
• Harmonizing cross-border trading rules to enable energy to flow where and when it is most needed.
• Establishing a standing Energy Crisis Task Force under Asean, charged with running annual stress-tests and proposing joint responses.
Europe’s experience makes clear that regional coordination is not simply an agenda item—it is a vital tool for crisis management.
(To be continued)
This article reflects the personal opinion of the author and not the official stand of the Management Association of the Philippines or MAP. The author is cochair for governance of the MAP committee on ESG. He is also vice chair of ISA and Center for Excellence in Governance and former chair of Institute of Corporate Directors (ICD). Feedback at map@map.org.ph and rex@drilon.com.
