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Amplifying ASEAN energy security through regional cooperation
ASEAN has been a net oil importer since 2005 and imports are projected to increase sevenfold in 2050 from the 2020 level.
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Supply-side: A gas station worker refuels a car on a Palembang-Jambi highway section in Tanjung Kerang area, Musi Banyuasin regency, South Sumatra, on Tuesday. State oil and gas company Pertamina says fuel and gas supplies were adequate for the southern part of Sumatra during the upcoming Idul Fitri mudik (exodus). (Antara/Nova Wahyudi)
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il and gas security issues are elevating globally, mainly caused by increasing geopolitical tension around the world. With the imposition of economic sanctions affecting some regions, the energy market has become tight, leading to a significant increase in oil and gas prices in 2022.
These price hikes had a significant impact on the global economy, contributing to a slowdown in gross domestic product growth, which dropped by almost half to 3.2 percent in 2022, according to the Organization for Economic Cooperation and Development outlook. Southeast Asia is not an exception, increasing energy prices caused by the crisis contributed to the inflation rate increase in the region from 2 percent in 2021 to 5.1 percent in 2022.
In March and April 2022, the International Energy Agency (IEA) activated coordinated emergency action to release emergency stocks of up to 120 million barrels of oil to the market from its members (the largest release in history) to respond to the energy supply instability around the world. However, despite this intervention, the energy market remains uncertain and is predicted to remain tight well into 2023.
A disruption in the global oil and gas supply chain could potentially undermine ASEAN’s economy in the long run as the region is still heavily reliant on oil and gas and is expected to rely more on imported supplies in the future. According to the Seventh ASEAN Energy Outlook (AEO7), oil and gas accounted for 56 percent of ASEAN Total Primer Energy Supply (TPES) in 2020 and will continue to have a significant share in the energy mix in the region by 2050.
ASEAN has been a net oil importer since 2005 and imports are projected to increase sevenfold in 2050 from the 2020 level. In addition, without any significant additional gas resources, the region is projected to become a net importer of natural gas by 2025. The production of both oil and gas have also been in decline for the last seven years.
In the ASEAN region, each country has a unique policy and strategy to secure the energy supply based on each country’s conditions. Stockpiling is one of the key strategies for ensuring energy supply. Energy stockpiling is an important aspect in providing a buffer against oil price volatility and supply disruptions, ensuring a stable supply of energy for the country.
Despite the fact that each ASEAN member state has its own energy security policy, such supply disruption might happen that cannot be anticipated alone within one country. In this case, cooperation with neighboring countries will play a pivotal role as a backup plan to respond to any supply emergency and mitigate greater economic damage.
