Security of energy seen as essential for ASEAN

Member states of the Association of Southeast Asian Nations must improve cooperation not only in oil stockpiling but also in emergency response to strengthen energy security, experts told a forum in Jakarta on Friday.

Recent disruptions to global energy supplies underscored the importance of preparedness and regional cooperation, said Takayuki Yamanaka, chief operating officer of the Economic Research Institute for ASEAN and East Asia, or ERIA, an international organization headquartered in Jakarta.

Speaking at the 2nd East Asia Media Caucus hosted by ERIA, Yamanaka also highlighted the potential of green growth and digital transformation to strengthen ASEAN's competitiveness and regional integration.

Under the theme "Promoting ASEAN Energy Security and Advancing Green Growth", the event brought together researchers and journalists from across Asia.

ERIA's modeling estimates the annualized cost of holding additional oil reserves across ASEAN would be $2.19 billion under a cooperative approach, compared with $2.80 billion under a nationally led approach.

For the same volume of additional reserves, the estimated cost would be approximately 22 percent lower under the cooperative approach.

In a panel discussion, Han Phoumin, senior energy economist at ERIA, said having stocks does not equal having emergency access, as reserves are only useful when fuel can reach where it is needed during an emergency.

"Voluntary pilots would allow governments and operators to test those arrangements before a disruption," Phoumin said, noting that existing arrangements such as the ASEAN Petroleum Security Agreement can also offer relevant context for emergency coordination among member states.

Noting Southeast Asia's energy imports could rise to $245 billion by 2035 from $80 billion in 2024, Sri Konsep Harum Wicaksono, head of the ASEAN Council on Petroleum and Energy Secretary-In-Charge Office, said it is important to enhance energy security and resilience because a supply crisis can easily become an economic crisis when there is not sufficient flexibility.

Source of supply

Before the US-Iran war, the Middle East supplied about 60 percent of ASEAN's crude oil imports and a third of its gas, according to the International Energy Agency.

While over 80 percent of ASEAN's refining capacity is concentrated in countries such as Indonesia, Thailand, Singapore, and Malaysia, Wicaksono noted the challenges of forming cross-border deals amid different regulations in each country and stressed the importance of government coordination and private sector involvement before an emergency.

Speaking to China Daily, Wicaksono said China, as a major oil producer and a leader in renewable energy, can play a key role in ASEAN's energy security. He said his institution is also seeking Chinese partners to cooperate in the energy sector, including in technology and capacity-building.

Yudiandra Yuwono, senior energy system modeler of the ASEAN Centre for Energy, said oil prices might not get cheaper than they are today and the shock in the Strait of Hormuz "will not be the last one, and it might even get more frequent".

Noting that ASEAN countries are working to promote an energy transition and that developing renewable energy has become more important, Yuwono said renewable energy can also be geographically sensitive, and integrating toward a regional energy-security architecture can offer more options to partners.