US Expected to Announce $60 Million Pacific Fuel Security Deal

The United States is preparing a $60 million fuel security deal for the Pacific, with the announcement expected at the Pacific Islands Forum leaders’ summit in Palau. The details have not been finalised, and the funding will require approval from the US Congress.

The proposal emerged during a closed meeting of dialogue partners at the summit. US Deputy Secretary of State Christopher Landau is attending the annual gathering, after a series of regional engagements as the Trump administration’s point person for the Pacific.

Landau also joined New Zealand Foreign Minister Winston Peters and Cook Islands Prime Minister Mark Brown to announce funding for a new port at Penrhyn, or Tongareva, in the Cook Islands. The former US military base will receive a $50 million US contribution and $10 million from New Zealand for the upgrade. Peters said the port plan was first discussed in April during meetings with Landau and Secretary of State Marco Rubio in Washington.

Fuel costs have become a major pressure for Pacific island governments. The region relies heavily on diesel for electricity, while a study by the UNSW Institute for Climate Risk and Response found that about 80 percent of its energy depends on imported oil products. Pacific island countries collectively spend an estimated $6 billion a year on those imports.

Palau, which is hosting this year’s forum, spends 13 percent of its gross domestic product on imported oil products, compared with about 10 percent on health and 3 percent on education, according to the study. Higher diesel prices linked to the Iran War have left governments exposed. Tuvalu and the Marshall Islands introduced emergency conservation measures after the Strait of Hormuz closed, while several other Pacific nations adopted national responses.

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The idea of a new port for Tongareva was first discussed in April, when I met Landau and his boss, US Secretary of State Marco Rubio, in Washington DC.