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The United States is set to announce a major fuel security deal for the Pacific region, RNZ Pacific understands.
Details are yet to be finalised, but RNZ Pacific understands the $US60 million ($NZ102 million) was discussed at a closed dialogue partners meeting at the Pacific Islands Forum (PIF) leaders' summit in Palau on Tuesday.
US Deputy Secretary of State Christopher Landau is in Koror for the annual meeting. His trip to Palau comes after a raft of engagements in the region this year as the Trump administration's point-person for the Pacific.
The US is one of PIF's founding Dialogue Partners, alongside Canada, France, Japan and the United Kingdom. The PIF has 21 partners, which comprise external countries and organisations that have formal relationships with PIF and support Pacific regional priorities through political engagement.
Landau made a funding announcement with New Zealand’s Foreign Minister Winston Peters and Cook Islands Prime Minister Mark Brown about a new port in Penrhyn atoll, the Cook Islands' northern-most island.
Penrhyn, or Tongareva, is a former US military base. The US has committed $US50m to the major port upgrade, while New Zealand is contributing $17.1 million. The two countries are co-funding the infrastructure project.
Peters said the idea of a new port for Tongareva was first discussed in April, when he met Landau and his boss, US Secretary of State Marco Rubio in Washington, DC.
A potential fuel security deal was also raised as part of those meetings, he said. And while the financial contribution for the Tongareva port upgrade has been finalised, the fuel security deal, which is set to be worth $US60 million, is subject to congressional approval.
The Pacific region is heavily reliant on diesel for power generation.
A recent study from the UNSW Institute for Climate Risk and Response identified about 80% of the region's energy relied on imported oil products. Collectively, it estimated Pacific Island countries spent $US6 billion each year on imported oil products.
It also found that Palau, which is hosting this years PIF leaders meeting, spent 13% of its GDP (gross domestic product) on importing oil products, compared to about 10% of GDP on health, and 3% on education.
Other Pacific nations spent similar proportions of their GDP on importing oil products, the study found.
As a result, the surge in diesel prices due to the Iran War has left many Pacific nations economically exposed. After the Strait of Hormuz closed, Tuvalu and the Marshall Islands announced emergency fuel conservation measures, while governments in Vanuatu, Cook Islands, Fiji, Federated States of Micronesia, Solomon Islands and Nauru passed national response measures.
Palau president Surangel Whipps Jr, who has now taken over as chair of the Forum troika, has been championing a push for the Pacific to be the first region in the world to be completely powered by renewable energy.
"The high cost of fuel, freight, and food shows how quickly events far from our shores and far from our reach affect every Pacific household, and our dependence on imported diesel fuels is an economic risk as well as a climate one," Whipps said in his opening ceremony address.
"The transition to renewable energy is therefore part of our sovereignty. It lowers our exposure and keeps more of our scarce resources working in our own economies."
Significant investment is critical to that transition. The UNSW study found to replace diesel generation with a renewable option, about $US650 million each year is needed for the region.
Peters said his ongoing work with the United States and other countries from outside the region was a big part of ensuring incoming investment into the Pacific.
In regard to the US, he said discussions began about six months around its potential role in investing in the region.
"We talked about them having a good, hard look at where they should be making investments and giving some substance to what they were saying… because they were having an investment conference in Honolulu to which not many Pacific Island countries went.
"And so we were looking around for some real initiatives, and here comes this one here [Tongareva port]."
The PIF leaders summit is in its second official day. The leaders' retreat, where leaders of the Forum's 18 members spend a day alone together, takes place on Thursday.
