The Asian energy ministers’ meeting, the Fifth Asian Ministerial Energy Roundtable held on Thursday in Seoul and co-hosted by South Korea and Qatar, is a good occasion to look at the energy investment opportunities in Southeast Asia for the Gulf countries.
While the gathering of ministers and high-ranking officials in charge of energy resources from 21 countries and three international organisations was mainly about oil and gas trade and related pricing mechanisms, the talks also touched on other conventional energy resources, as well as renewables. According to the International Energy Agency, until 2035, energy investments in Asia-Pacific and the Middle East are estimated to be $12.3tn and $2.2tn respectively, together representing almost 40% of expected global investment in the sector – an enormous potential that cannot be ignored.
East and Southeast Asia will see the highest energy demand in the period as many developing countries in the region have made great steps towards industrialisation, and many countries will need external resources to meet their rising domestic demand for power. Building a sustainable co-operation between energy producers and consumers in the region is even more important because the countries are also facing a number of challenges, for example the consequences of the 2011 Fukushima nuclear disaster in Japan.
It can be said that Southeast Asia in the foreseeable future will still rely largely on oil and gas to meet its energy demand which will continue to be met from the Middle East. However, diversity in energy supply and an expanded energy mix will be important in the future for a number of reasons.
In fact, some Asean countries are already embarking on large non-oil energy projects, be it huge solar farms in Thailand, geothermal energy in Indonesia, hydropower in Laos or nuclear power in Vietnam. Brunei, the smallest country but the largest oil and gas producer of the Asean bloc, last week announced to introduce a new Feed-In-Tariff for solar power producers to incentivise alternative energy and also diversify its energy use.
For Gulf investors, even if they can rely on steady oil demand from the Asean, looking into other energy projects can be promising. Laos, for example, wants to build dozens of dams and hydropower plants to fulfil its vision to become the “Battery of Southeast Asia,” meaning the biggest power provider and exporter in the region.
So far, these multibillion projects have been left over almost entirely to Chinese and Thai investors. Indonesia is desperately looking for investors into geothermal energy exploration as government funds are not sufficient for the country, which is estimated to contain the world’s largest geothermal energy reserves with round 40% of total global potential located beneath its soil. The Philippines has among the greenest dreams of the Asean countries, envisioning 50% of power supply to derive strictly from renewable resources by 2030, with much of it coming from wind power.
Is it the time to invest into renewables in Souteast Asia? What other untapped opportunities do you see in Southeast Asia’s energy sector? Let us know through Twitter: @insideinvestor using hashtag #gulftimes.
*Our columnist Dr Arno Maierbrugger is Editor-in-Chief of www.investvine.com, a news portal owned by Inside Investor focusing on Southeast Asian economic topics as well as trade and investment relations between Asean and the GCC. The views expressed are his own.