“One of the challenges now is the withdrawal of major oil companies from the region. They have bluntly told us that its not that they can’t make a profit but the Pacific is just too small,” said Dr. Roman Grynberg, director of economic governance for the Pacific Islands Forum Secretariat.
“When you seeing oil companies leaving the region and government take over supply of oil, one of the important things to ask is how do we stop this? How do we get the private sector in?” he asked.
“The rising oil and commodity prices are not under our control. This is fueled largely by the increase in oil prices internationally,” he said.
In an attempt to assist member countries, the idea of bulk purchasing of oil was initially mooted by the smaller island states grouping of the Forum.
“If we purchase oil on our own as a small island nation, we make no difference but if the group as a whole with an eight million market, we can lower prices,” Grynberg said.
“The more we act together to buy in bulk, the chances are that prices may come down,” he added. “There isn’t much that can be immediately done to alleviate the impact, price rises from the international market.”
Forum trade ministers earlier this year authorized the study on creating a single market, starting with petroleum and pharmaceutical products.
“One of the reasons is that these two commodities have the greatest economic benefits for the region,” Grynberg said.
He expects the proposal for bulk procurement of oil to come before Pacific Forum Leaders next year.
“At the next Forum, there will have to be some hard questions. They must confront these questions — why the private sector rather than being the engine of growth, is leaving the region?” Grynberg said.
Forum member countries have begun dialogue on the how the regional mechanism will work before it is taken to the economic ministers meeting in Vanuatu at the end of the year.
