Australian PM’s diesel diplomacy tour calms fears at home

SYDNEY – For the past two weeks, Australian Prime Minister Anthony Albanese has travelled across South-east Asia with a simple message for regional leaders: Canberra will offer stable flows of gas and food in return for steady supplies of fuel and fertiliser.

His so-called “diesel diplomacy” tour, which covered Singapore, Brunei and Malaysia, has been well received and resulted in joint commitments to ensure energy security.

But while the visits strengthen Australia’s ties with the region, experts say the main message has been for Mr Albanese’s domestic audience.

The trips are aimed at providing reassurance that Australia, which is heavily reliant on fuel and fertiliser imports, will have steady supplies as tensions in the Middle East continue.

Associate Professor Flavio Macau, a supply chain expert at Edith Cowan University, told The Straits Times that Australia does not currently have a shortage of petrol but had a problem with panic buying, which led to hundreds of petrol stations running out of diesel or petrol.

He said Australia’s recent agreements with regional countries helped reassure farmers and others reliant on diesel and fertilisers that Asian suppliers were committed to providing steady supplies.

“It helps to go to these Asian countries – it provides reassurance,” he said.

“This kind of trip is saying that this fuel is definitely headed to Australia and helps to provide assurance to people. Then demand goes back to normal and panic buying is less likely to happen,” he added.

Mr Albanese’s latest stop was Malaysia on April 16, where he met his Malaysian counterpart Anwar Ibrahim, who promised that state-owned oil and gas company Petronas will look to provide Australia with any excess fuel supplies.

Australia supplies 95 per cent of Malaysia’s imported liquefied natural gas (LNG), while Malaysia accounts for about 13 per cent of Australia’s refined fuel imports and 10 per cent of its imports of urea fertiliser.

“We have obtained an assurance from Petronas that once the domestic requirements are met, there is clearly some excess,” Datuk Seri Anwar told reporters.

“We have given an assurance that the priority will be to Australia… We import gas, LNG from Australia, and they have assured us of this supply,” he said.

Noted Professor Nafis Alam, head of the School of Business at Monash University Malaysia: “For both countries, the visit reinforces a model of ‘strategic interdependence’, where energy, food and industrial supply chains are treated as national security priorities, positioning the bilateral relationship as a stabilising anchor in an increasingly fragmented Indo-Pacific economic landscape.”

Australia is one of the world’s three major exporters of LNG – along with the United States and Qatar – and is a major supplier in Asia, where countries have become concerned about the disruption to exports from Qatar due to the closure of the Strait of Hormuz and Iranian attacks on Qatari gas infrastructure.

But Australia relies heavily on the region for supplies of petroleum, which is used for petrol, diesel and jet fuel. More than 80 per cent of Australia’s petroleum imports come from Asia, with 29 per cent from South Korea and 20 per cent from Singapore.

Mr Albanese’s meetings with his counterparts in Singapore, Brunei and Malaysia have all resulted in firm declarations of a mutual commitment to cooperate on boosting regional energy security.

Dr Lurion De Mello, a finance lecturer at Macquarie University, was sceptical about the need for the trip, saying that Singapore, Brunei and Malaysia were already reliable suppliers.

“There is no need to fly to the region to get more fuel,” he told The Straits Times. “These countries are already stable suppliers.”

During his travels, Mr Albanese has been quick to remind the region that Australia has long been a reliable supplier of food and resources to the region.

Sitting alongside Mr Anwar on April 16, Mr Albanese noted that Malaysia relies on Australian farmers for almost 60 per cent of its wheat and 75 per cent of its lamb and beef.

“Our neighbours know that providing fuel and fertiliser to Australia helps put food on the table in this region,” he said. “We rely on each other for fuels, including crude petroleum and natural gas.”

Analysts have noted, however, that Australia has little or no capacity to offer any additional supplies of LNG as it has little scope to expand its production capacity.

“I don’t think Australia can suddenly produce extra LNG. The infrastructure isn’t there. We can’t just click our fingers and have more infrastructure,” said Dr De Mello.

Australia has also been looking to ensure that it receives steady supplies of urea, even as there has been disruption to shipments from the Middle East, which typically accounts for 65 per cent of Australia’s supplies.

Before arriving in Malaysia, Mr Albanese spent two days in Brunei, becoming the first Australian leader to make a bilateral visit to the country. There was little doubt about the reason for the visit.

Brunei supplies 11 per cent of Australia’s urea imports and 9 per cent of its diesel imports. Australia, for its part, is the largest trading partner of Brunei, which imports most of its food and is a large buyer of Australian meat and livestock.

During his visit, Mr Albanese met Brunei’s leader, Sultan Hassanal Bolkiah, and they agreed to avoid unjustified import and export restrictions and to “consult each other on any disruptions”.

This visit followed a separate trip to Singapore, during which Mr Albanese and Singapore Prime Minister Lawrence Wong committed to make “maximum efforts to meet each other’s energy security needs in the context of the acute energy crisis currently affecting global markets”.

It was not surprising that Mr Albanese began his diesel diplomacy tour in Singapore, which is a major refined petroleum supplier but also has possibly the closest ties to Australia among the South-east Asian countries. Mr Albanese and PM Wong have met several times and refer to each other as friends.

Mr Albanese evidently felt that the trip was a success as he quickly returned to the region the following week.

Prof Macau said that while Mr Albanese’s travels were primarily to send a message to Australians, these would also help shore up Canberra’s ties with countries in the region, which would help it to withstand the current and future crises.

“It is important to show that Australia is an active player in this part of the world,” he said. “Doing nothing would mean we are isolating ourselves. It is good to stretch our muscles and say we want to be part of the game.”