Asean’s energy demand is expected to triple by 2050 from the 2020 levels. There is a need for collaboration among Asean countries to enhance energy security and diversify energy sources. To achieve a successful energy network between Asean countries requires full market liberalisation and a single pricing index. – 123rf.com image
Navigating collaborative strategies for energy security in the region.
DEPLETING gas reserves across Asia poses a significant threat to the region’s energy security.
As demand for electricity continues to rise, it becomes imperative for nations to explore collaborative solutions to ensure a stable and sustainable energy future.
In this context, the importance of cooperation within the Asean network and the need for price liberalisation emerge as crucial factors in addressing the impending challenges.
Cooperation within the Asean network becomes vital for mitigating the challenges posed by depleting gas reserves.
A unified approach can facilitate the sharing of resources, expertise, and infrastructure – ensuring a more resilient and interconnected energy landscape.
By working together, nations can overcome regulatory barriers, standardise pricing mechanisms, and establish a framework that fosters seamless cross-border energy trade.
The importance of price liberalisation cannot be overstated in the context of Asean’s energy cooperation.
Creating a liberalised market allows for more dynamic pricing mechanisms that reflect market realities – encouraging fair competition and fostering a more efficient allocation of resources. Price liberalisation also promotes transparency – attracting investments and facilitating the flow of gas across borders.
PETRONAS Gas Berhad managing director and CEO Abdul Aziz Othman highlights the gas infrastructure and utilities company’s commitment to greener energy solutions, such as complementing gas-based power generation with renewable sources like solar and mini-hydro.
PGB in the lead
In Malaysia, PETRONAS Gas Berhad (PGB) plays a crucial role as a leading gas infrastructure and utilities company, with Petroliam Nasional Berhad holding a majority stake.
Incorporated in 1983 and listed on the Main Board of Bursa Malaysia in 1995, PGB operates across four integrated business segments – gas processing, transportation, regasification, and utilities.
With over 40 years of expertise in gas and utilities infrastructure, the company which has amassed awards for investor relations, corporate social responsibility, excellent services, occupational safety, and health achievements ensures a safe and reliable supply of products and services across Malaysia and Singapore through strategically-located assets and robust operational performance.
It is further bolstered by its diversified portfolio in green initiatives and inclusion in the FTSE4Good Index Series – highlighting its commitment to environmental, social, and governance (ESG) standards.
In a recent interview held at the PETRONAS Twin Towers in Kuala Lumpur, PGB managing director and chief executive officer Abdul Aziz Othman shared the company’s growth and contributions to Malaysia’s energy landscape.
The interview covered various topics, including the Asean energy landscape, regional cooperation, challenges in gas network connectivity, and the importance of diversifying energy sources.
Aziz highlighted PGB’s role in gas processing and transportation – ensuring a reliable gas supply throughout Malaysia.
He pointed out the company’s growth from a single gas processing plant in the 1980s to the current six plants, and the development of a pipeline network connecting regions such as Singapore and Thailand.
Regarding the current energy mix, Aziz said: “Today, gas usage in power generation are about 40%, coal comprises over 50%, and the remaining 5-10% is from sources like hydro. This significant portion of the energy mix is supported by the infrastructure PGB has built.”
Anticipating a rise in electricity demand, he explained that PGB has built two regasification terminals to import liquefied natural gas (LNG) which complements PETRONAS’ domestic gas production.
“Going into the future, the demand for electricity will continue to increase, and what we have domestically will not be sufficient. So, that’s why we built two regasification terminals in Sungai Udang and in Pengerang,” he said.
Energy challenges
Asean is witnessing a significant surge in energy demand, expected to triple by 2050 from the 2020 levels.
The 7th Asean Energy Outlook 2020-2050 report reveals a substantial increase in the region’s total primary energy supply, reaching 654Mtoe in 2020 and projected to escalate to 2,647Mtoe by 2050.
According to the Asia Pacific Energy Research Centre, natural gas is anticipated to constitute 30% of the total primary energy supply by 2050. This surge is driven by a 186% increase in gas demand across South-East Asian economies, fuelled by climate goals and economic expansion.
On the importance of regional cooperation for the energy sector, Aziz said that when importing gas and LNG, securing diverse sources becomes crucial, with the goal of enhancing market dynamism through regional connections.
Malaysia’s strategic position, coupled with existing LNG terminals and cooperation with countries like Thailand, Singapore, and Indonesia, could facilitate access to multiple gas sources.
“With better cooperation in the region, the energy security would be improved compared to relying solely on a single source of supply,” Aziz said.
Right now, he said, each Asean country is focused on self-preservation, ensuring limited reserves are exclusively for their respective countries.
He explained that the current gas and energy cooperation within Asean faces challenges, primarily characterised by limited pipeline connections. While Malaysia is connected to Singapore and has joint development with Thailand and Vietnam, the overall regional connectivity remains sparse compared to the highly connected energy networks in Europe.
He emphasised the need for collaboration among Asean countries to enhance energy security and diversify energy sources in the region.
However, he acknowledged challenges in establishing a connected gas market were due to differences in living standards, regulations, and pricing mechanisms among countries. To achieve a successful network between Asean countries requires full market liberalisation and a single pricing index so that “gas can move freely between Asean countries,” he said.
He noted the difficulties in linking markets with different pricing mechanisms and advised governments to consider a more liberalised approach for the gas market and reflect the real cost.
He shared that the government has been promoting third party access to provide healthy competition among the industry players and to facilitate the shift towards market-based pricing for power and non-power sectors – ensuring reliable gas supply at competitive prices.
Aziz highlighted PGB’s commitment to greener energy solutions, such as the company’s efforts to complement gas-based power generation with renewable sources like solar and mini-hydro. In this aspect, PGB signed memorandum of understanding with Menteri Besar Terengganu (Incorporated) for a feasibility study related to building a mini hydro power plant in the state.
Aziz also addressed the European energy crisis, emphasising the similar need for diversification and not relying on a single source of energy; he reinforced the importance of having a balanced energy mix such as gas, LNG, coal, and hydro, to cushion the impact of supply disruptions.
