The fallout from the ongoing Russia-Ukraine conflict is impacting Southeast Asia in terms of food and energy security, prices and supply chains. This is occurring at a time when Southeast Asia is already encountering supply-chain disruptions and inflationary pressures as a consequence of the pandemic. With the global economic forecast looking negative along with the fear of a global recession in the coming months, the Russia-Ukraine conflict would be high on the agenda at the ASEAN Summit. Cambodia as the current Chair of ASEAN has emphasised that peace, stability, and prosperity for the region is under immense strain as a result of many geo-political and socio-economic factors.[i] In this regard, the spill over effect of the Russia-Ukraine conflict bears a cause of concern especially for its energy security which is vital for the region’s growth and recovery efforts.
External Dimension impacting Energy Security in ASEAN
Southeast Asia would be one of the most dynamic and fastest growing regions in the coming decades. Being one of the most preferred investment destinations in the world, the ASEAN economy is expected to grow at over 5 percent to become the 4th largest economy by 2030.[ii] This also implies that the region’s energy demand is set to grown significantly. Southeast Asia, being a net energy importer, continues to be impacted by external factors such as global supply constraints, affordability issues, and geo-political tensions. It is important to note the impact of the COVID-19 pandemic, which had caused multiple shocks to the global economy and energy markets. For Southeast Asia, during this period there was a substantial decline in the demand for oil and gas mainly on account of the pandemic movement restrictions policy.[iii] In contrast to the disruptions caused during the pandemic in which the supply-side activity of oil and gas was not heavily impacted as the demand side, the ongoing Russia-Ukraine conflict is having the opposite effect.
As a consequence of the Russia-Ukraine conflict, in August this year, the European Union (EU) prohibited the import of coal from Russia. Moscow also decided to turn off gas supplies to certain European countries in September. The ongoing energy crisis in Europe is seen as alarming in Southeast Asia.[iv] While it is not expected to have a direct impact on Southeast Asia, there is an indirect impact of the crisis as it threatens region’s energy security. Western imposed sanctions and the cutting off supply by Russia to Europe have resulted in the search for alternative sources, which in turn will affect the energy supply and price levels globally.[v]
European countries have also turned to Southeast Asia’s coal and liquefied natural gas (LNG) producers to help offset the collapse of Russian supplies. Indonesia has exported 147,000 tons of coal to Italy so far in 2022 and is also in talks with other European countries. Indonesia’s coal exports in the first half of 2022 has increased by a fifth compared to the same period in 2021. Malaysia, the world’s fifth largest LNG exporter, has also reportedly seen an increase in exports to Europe. As both countries are key regional suppliers, the European countries turning to alternative energy suppliers have led to concerns amongst other Southeast Asian countries, which fear that they will be out priced and forced to rapidly expand state spending to afford the higher energy imports.[vi]
ASEAN’s Approach towards Energy Security
Energy demands have been on the rise since the 1980s on account of the region witnessing rapid economic as well as population growth. For instance, the primary energy consumption of Southeast Asian countries such as Indonesia has grown by 16 percent between 2010 and 2020. Although, Indonesia both imports and exports crude oil, it is a net importer as a result of growing domestic demand for petroleum products and crude oil, used mainly for electric power generation. In 2020, Saudi Arabia was the largest exporter of Indonesia’s crude oil followed by Malaysia, Nigeria, and Australia. As of January 2021, Indonesia is estimated to have approximately 2.5 billion barrels of proven crude oil reserves. However, its petroleum and other liquids’ production has been declining since most of the oil reserves are in mature fields that require enhanced oil recovery (EOR) techniques, which is beyond the technological scope of its domestic companies.[vii]
Therefore, ensuring energy security has been one of the priorities for the regional bloc since it is a key component in advancing the ASEAN Economic Community (AEC), which seeks an inclusive and dynamic regional economic integration.[viii] The first meeting of the ASEAN Ministers on Energy Cooperation was held in Bali, in 1981. The meeting identified ten substantive areas for cooperation including micro-hydro-power development, research, development and engineering, geothermal power development, nuclear power generation, establishment of an Electric Power Information Centre.[ix] On December 15, 1997, the ASEAN Vision 2020 was adopted and in order to implement the long-term vision, actions plans were drawn up. The Hanoi Plan of Action (HPA), 1998, was the first in a series of plans of action to help realise the goals of the ASEAN Vision 2020.[x] Under its broad pillars the HPA also called for efficient utilisation of natural energy resources in the region and the rational management of energy demand with due consideration of the environment. It further asked the Member States to institute the policy framework and implementation modalities by 2004 for the early realisation of the trans-ASEAN energy networks covering the ASEAN Power Grid and the Trans-ASEAN Gas Pipeline Projects.[xi]
The ASEAN Plan of Action for Energy Cooperation (APAEC) is a series of guiding documents to support the implementation of energy cooperation to advance regional integration and connectivity goals in ASEAN. The first cycle of the APAEC (1999-2004), supported the energy cooperation agenda of the HPA under the ASEAN Vision 2020. Under this six fundamental Programme Areas were identified, which were ASEAN Power Grid; Trans-ASEAN Gas Pipeline; Energy Efficiency and Conservation; New and Renewable Sources of Energy; Coal and Clean Coal Technologies; and Regional Energy Outlook, Energy Policy and Environmental Analysis.[xii] Further, the APAEC also serves as the platform for deeper cooperation both within ASEAN as well as with its Dialogue Partners towards enhancing energy security, accessibility, affordability, and sustainability within the framework of the AEC.
The current APAEC 2016-2025 is the fourth cycle that takes into account the impacts of the COVID-19 pandemic and the recent global economic and energy trends.[xiii]ASEAN also remains committed towards achieving its climate targets, which include net-zero commitment through its ambitious renewable energy goals.[xiv]APAEC Phase II, 2021-2025 focuses on seven key areas, namely ASEAN Power Grid (APG), Trans-ASEAN Gas Pipeline (TAGP), Coal and Clean Coal Technology (CCT), Energy Efficiency and Conservation (EE&C), Renewable Energy (RE), Regional Energy Policy and Planning (REPP), and Civilian Nuclear Energy (CNE). Therefore the APAEC Phase II aspires to attain enhanced energy transition and resilience towards a sustainable energy future. This would be achieved through new initiatives that include the incorporation of new and emerging energy technologies and digitalisation of the energy sector.[xv] The 40th ASEAN Ministers on Energy Meeting held on September 15, 2022, discussed the immediate challenge faced by the region as a net energy importer amidst global supply constraints.[xvi]
In the last two decades, most Southeast Asian countries have seen their economies double in size. With the growth being so rapid, it has outstripped the region’s ability to meet its energy demands. Further, Southeast Asian countries being dependent on imported fossil fuels, the disruption to the global energy market; causes the region to experience inflated oil, electricity, and transportation prices. The need for energy security amidst soaring energy prices due to external factors which includes the ongoing Russia-Ukraine conflict becomes perilous to the region’s growth trajectory. Although the region imports most of its oil from West Asia and Africa, market turbulence due to the ongoing conflict has also highlighted the energy security vulnerabilities of Southeast Asia. While ASEAN’s roadmap of transitioning the region to clean energy will provide long-term solution against future soaring oil and gas prices, in the short run, efforts need to be placed on increasing the stockpile of fossil fuels to guard against supply disruptions.
Despite Southeast Asia being relatively well-endowed with conventional energy resources, namely oil, gas and coal, it continues to be a net importer due to various gaps including infrastructure and technologies for exploration and extraction. The region is also relatively well-endowed with renewable energy sources particularly in hydro and solar as well as other types of renewable energy. Therefore, given the volatility being experienced in the global energy market, it could accelerate the transition towards developing a sustainable energy system to help secure demand, which in turn would support the region’s socio-economic recovery and growth.
*Dr. Temjenmeren Ao is a Research Fellow at ICWA, New Delhi.
Disclaimer: Views expressed are personal.
[i] “India-ASEAN Foreign Ministers Talk Ukraine War Impact; Prophet Remarks Row Discussed ‘Informally’”, The Wire, June 16, 2022,https://thewire.in/diplomacy/india-asean-foreign-ministers-talk-ukraine-war-impact-prophet-remarks-row-discussed-informally, Accessed on November 3, 2022.
[ii]“Innovation to Accelerate the Energy Transition in ASEAN”, ASEAN Centre for Energy, October 28, 2021, https://aseanenergy.org/event/siew-2021-innovation-to-accelerate-the-energy-transition-in-asean/, Accessed on November 3, 2022.
[iii]“ASEAN Plan of Action for Energy Cooperation (APAEC) 2016-2025: Phase II: 2021-2025”, ASEAN Centre For Energy, November 23, 2020, https://aseanenergy.sharepoint.com/PublicationLibrary/Forms/AllItems.aspx?id=%2FPublicationLibrary%2F2020%2FPublication%2FBooklet%20APAEC%20Phase%20II%20%28Final%29%2Epdf&parent=%2FPublicationLibrary%2F2020%2FPublication&p=true&ga=1, Accessed on November 3, 2022.
[iv]Muhammad Waffaa Kharisma, “A View from Southeast Asia: ASEAN, Indonesia, and the Ukraine War”, Italian Institute for International Political Studies, May 26, 2022, https://www.ispionline.it/en/pubblicazione/view-southeast-asia-asean-indonesia-and-ukraine-war-35058, Accessed on November 2, 2022
[v]Voon Miaw Ping, “ASEAN should accelerate actions to heighten energy security”, The Edge Markets, September 23, 2022, https://www.theedgemarkets.com/article/asean-should-accelerate-actions-heighten-energy-security, Accessed on November 2, 2022.
[vi]David Hutt, “How the EU’s new Energy plans impact Southeast Asia”, DW, September 27, 2022, https://www.dw.com/en/how-the-eus-new-energy-plans-impact-southeast-asia/a-63256213, Accessed on November 11, 2022.
[vii]“Country Analysis Executive Summary: Indonesia”, US Energy Information Administration, September 24, 2021, https://www.eia.gov/international/content/analysis/countries_long/Indonesia/indonesia.pdf, Accessed on November 4, 2022.
[viii]“ASEAN Plan of Action for Energy Cooperation (APAEC) 2016-2025: Phase II: 2021-2025”, ASEAN Centre For Energy, November 23, 2020, https://aseanenergy.sharepoint.com/PublicationLibrary/Forms/AllItems.aspx?id=%2FPublicationLibrary%2F2020%2FPublication%2FBooklet%20APAEC%20Phase%20II%20%28Final%29%2Epdf&parent=%2FPublicationLibrary%2F2020%2FPublication&p=true&ga=1, Accessed on November 3, 2022.
[ix] Bharti Chhibber, Regional Security and Regional Cooperation: A Comparative Study of ASEAN and SAARC, (New Century Publications: New Delhi, 2004), p. 245-246.
[x] “Hanoi Plan of Action”, ASEAN, June 19, 2012, https://asean.org/hanoi-plan-of-action/, Accessed on November 9, 2022.
[xi]Bharti Chhibber, Regional Security and Regional Cooperation: A Comparative Study of ASEAN and SAARC, (New Century Publications: New Delhi, 2004), p. 245-246.
[xii] “ASEAN Plan of Action for Energy Cooperation (APAEC) 2016-2025: Phase I: 2016-2020”, ASEAN Centre For Energy, 2015, https://asean.org/wp-content/uploads/2021/08/APAEC-2016-2025-Phase-I.pdf, Accessed on November 9, 2022.
[xiii]“ASEAN Plan of Action for Energy Cooperation (APAEC) 2016-2025: Phase II: 2021-2025”, ASEAN Centre For Energy, November 23, 2020, https://aseanenergy.sharepoint.com/PublicationLibrary/Forms/AllItems.aspx?id=%2FPublicationLibrary%2F2020%2FPublication%2FBooklet%20APAEC%20Phase%20II%20%28Final%29%2Epdf&parent=%2FPublicationLibrary%2F2020%2FPublication&p=true&ga=1, Accessed on November 3, 2022.
[xiv]“Renewable Energy Outlook for ASEAN: Toward a Regional Energy Transition”, ASEAN Centre for Energy and International Renewable Energy Agency, September 2022, https://www.irena.org/publications/2022/Sep/Renewable-Energy-Outlook-for-ASEAN-2nd-edition, Accessed on November 2, 2022.
[xv]“ASEAN Plan of Action for Energy Cooperation (APAEC) 2016-2025: Phase II: 2021-2025”, ASEAN Centre For Energy, November 23, 2020, https://aseanenergy.sharepoint.com/PublicationLibrary/Forms/AllItems.aspx?id=%2FPublicationLibrary%2F2020%2FPublication%2FBooklet%20APAEC%20Phase%20II%20%28Final%29%2Epdf&parent=%2FPublicationLibrary%2F2020%2FPublication&p=true&ga=1, Accessed on November 3, 2022.
[xvi]“Joint Ministerial Statement of the 40th ASEAN Ministers on Energy Meeting”, ASEAN, September 15, 2022, https://asean.org/wp-content/uploads/2022/09/40th-AMEM-JMS_Final_15-Sep-_cln.pdf, Accessed on November 3, 2022.