Southeast Asia's growing appetite for oil, gas will be in spotlight: IEA's Birol

Southeast Asia's growing appetite for oil and gas will be in the spotlight in the foreseeable future, making it imperative to ensure the security of energy flows to the region amid growing geopolitical turmoil, Fatih Birol, executive director of the International Energy Agency said Oct. 21.

Birol, while speaking at the opening session of the Singapore International Energy Week, said more than 25% of the energy demand growth over the next 10 years would come from Southeast Asia, making it only the second-biggest growth center after India.

"The Southeast Asian region is very important in terms of oil and gas consumption and therefore their security, their prices are very important, because many countries' economies look at their oil and gas import bills and how they affect their economies. Security is very important. About two-thirds of the oil and gas in this region goes through the Malacca Strait, a very narrow strait," Birol said.

The region is also important in the energy transition, as it is home to several countries such as Vietnam, Malaysia and Thailand which are important manufacturers of solar panels, while the Philippines and Indonesia had critical minerals that are key to electric vehicle production, Birol added.

"The [Southeast Asia] region, from a clean energy transition point of view, is a very important one and the most dynamic one in the world," Birol said.

"Since the region smacks its weight in the global energy issues, it is the reason we thought we’ll focus on this very region," Birol added, while spelling out the reasons behind's IEA's decision to open an office in Singapore.

Home to around 685 million people, Southeast Asia represents 9% of the global population and accounts for 6% of global GDP. GDP per capita in Southeast Asia is well below the global average. Rising demand from key sectors, notably power, transport and industry, drove a 5% increase in energy demand in 2023, according to the IEA's World Energy Outlook for 2024.

Affordability and energy security are priority considerations as the region considers its energy future, together with the role of the energy sector in economic development and emissions reductions, the IEA report stated.

"Southeast Asia is only second to India in terms of its weight in the global energy sector," Birol said.

IEA launches regional office

The IEA and Singapore on Oct. 21 inaugurated the IEA Regional Cooperation Centre -- the IEA's first office outside its Paris headquarters in its 50-year history.

"The Centre will deepen and expand the IEA's longstanding collaboration with countries in Southeast Asia and beyond, as they navigate the significant energy opportunities and challenges ahead," a joint statement by Singapore's Ministry of Trade and Industry, the Energy Market Authority and IEA said.

Speaking at the center’s inauguration, Birol said Singapore was chosen as it sits in the heart of Southeast Asia, and it is a meeting point for international business activities and a regional hub for sustainable financing and innovation.

"Singapore represents a strategic location that one can have access to other Southeast Asian countries, policymakers and governments," Birol said.

The announcement of the new IEA office in Singapore comes as the city-state has been working with the IEA on regional energy initiatives through programs such as the Singapore-IEA Regional Training Hub, which was launched in 2016 when Singapore became an Association Country of the IEA.

However, conversations on Southeast Asia's importance to the IEA had started as early as 2009, said Birol, who was its chief economist then. He credited Singapore's Prime Minister Lawrence Wong, who was then the chief executive of Singapore’s Energy Market Authority, for having led such talks then.

Besides Singapore, the IEA has also been expanding collaborative efforts in Southeast Asia in recent years.

In 2021, the IEA and Indonesia jointly launched the IEA-Indonesia Energy Transition Alliance to support policy development to accelerate the country’s energy transition efforts, as well as mobilize high-level political engagement.

The IEA also worked with the ASEAN energy regulators network to develop multilateral power trade in the region in 2020.

The region’s first multilateral electricity trading project -- the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project -- commenced operations from June 2022, while a pilot to study cross-border power trade among Brunei Darussalam, Indonesia, Malaysia and the Philippines was announced in August last year.