Southeast Asia is experiencing a significant rise in its demand for oil and gas, according to Fatih Birol, Executive Director of the International Energy Agency (IEA). This growth highlights the importance of securing energy flows in the region, especially during times of geopolitical turbulence. Birol emphasized this point during the opening session of the Singapore International Energy Week on October 21.
Growth in Energy Demand
Birol stated that more than 25% of the global energy demand growth over the next ten years will come from Southeast Asia, making this region the second-largest growth center after India. The region is home to approximately 685 million people, representing 9% of the global population and contributing 6% to global GDP. In 2023, energy demand increased by 5%, primarily driven by growth in the power, transport, and industrial sectors.
The majority of oil and gas imports in the region transit through the Strait of Malacca, a strategic and narrow passage. This situation makes the security of energy supplies crucial for local economies, which heavily depend on imports to meet their energy needs.
Energy Transition and Innovation
In addition to the demand for fossil fuels, Southeast Asia plays a key role in the global energy transition. Countries like Vietnam, Malaysia, and Thailand are significant manufacturers of solar panels, while the Philippines and Indonesia possess critical minerals essential for electric vehicle production. Birol highlighted that the region is one of the most dynamic in the world regarding the transition to clean energy.
This dynamism is supported by the inauguration of the IEA Regional Cooperation Centre in Singapore on October 21. This is the IEA’s first office outside its Paris headquarters in over fifty years. The center aims to deepen and expand the IEA’s collaboration with Southeast Asian countries, helping them navigate upcoming energy opportunities and challenges.
Enhanced Regional Collaboration
Singapore was chosen as the strategic location for the new center due to its position at the heart of Southeast Asia, serving as a meeting point for international business activities and a regional hub for sustainable financing and innovation. According to Birol, this location allows easy access to other countries in the region, policymakers, and governments.
Since 2016, Singapore has collaborated with the IEA through regional initiatives such as the Singapore-IEA Regional Training Hub. Furthermore, discussions about Southeast Asia’s importance to the IEA began as early as 2009, thanks in part to Singapore’s Prime Minister Lawrence Wong, who was then the Chief Executive of Singapore’s Energy Market Authority.
Joint Energy Initiatives
In 2021, the IEA and Indonesia launched the IEA-Indonesia Energy Transition Alliance to support policy development aimed at accelerating the country’s energy transition efforts and mobilizing high-level political engagement. Additionally, in 2020, the IEA collaborated with the ASEAN energy regulators network to develop multilateral electricity trade in the region.
The region’s first multilateral electricity trading project, the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project, began operations in June 2022. Moreover, a pilot project to study cross-border electricity trade among Brunei Darussalam, Indonesia, Malaysia, and the Philippines was announced last August.
Economic and Energy Perspectives
According to the IEA’s “World Energy Outlook 2024,” affordability and energy security are top priorities for the region’s energy future. The IEA also emphasizes the crucial role of the energy sector in economic development and emissions reductions. The region’s economic growth remains below the global average in terms of GDP per capita, highlighting the importance of effective management of energy imports to support development.
Southeast Asia’s position in the global energy sector is further strengthened by its production capabilities and initiatives in energy transition. These efforts are essential to meet the growing demand while supporting sustainability and emissions reduction goals.
