A number of techniques have been proposed to dampen the power system oscillations in the electric power systems. Flexible alternating current transmission system (FACTS) devices are becoming one of them. Among the FACTS family, the static synchronous compensator (STATCOM), a shunt connected FACTS device, has been widely used to provide smooth and rapid steady state, limit transient voltage, and improve the power system stability and performance by absorbing or injecting reactive power. However, the influence ability depends on its placement, control signal, and place of receiving-signal in the network. In order to satisfy these issues, this paper proposes a method for optimal setting and signal position of the STATCOM into the multi-machine power systems with the aim for damping the electromechanical oscillations. This method is developed from the energy approach based on Gramian matrices considering multiple tasks on the Lyapunov equation, in which the observability Gramian matrix is used to seek an optimal location for STATCOM placement. The another is the controllability one used to determine the best local input signal placement that is chosen as a feedback signal for the power oscillation damping (POD) of STATCOM. In addition, the Krylov-based model reduction method is introduced to shorten the calculation time. The proposed method has been verified on the IEEE 24-bus system by analyzing the small-signal stability to search several feasible placements, and then the transient stability is analyzed to compare and determine an optimal placement through testing various cases. The obtained result is also compared with other optimal method.