SINGAPORE - The approval of up to 19 new gas fields in South-east Asia by 2025 risks the region’s climate goals, a study says, but also underscores the challenge of meeting Asean’s growing needs for energy.
The report by Global Energy Monitor’s (GEM) Global Oil and Gas Extraction Tracker said the 19 fields have reached or are expected to reach final investment decisions between 2022 and 2025. Some have already been approved.
The fields have estimated recoverable gas reserves of more than 540 billion cubic metres, or more than the 2020 proven reserves of the entire European Union. About three-quarters of the new fields are in Malaysia and Vietnam, the report said.
“The proposed new gas exploration runs afoul of scientific consensus that no new oil and gas fields can be developed while keeping global heating below 1.5 deg C,” the report said, referring to a key temperature goal of the 2015 Paris Agreement in which nearly 200 nations agreed to limit global warming to 1.5 deg C above pre-industrial levels.
The potential lifespans of some proposed fields – including those in Brunei, Indonesia and Myanmar – extend beyond the 2050 net-zero targets set by six Asean members.
But while the development of fields risks higher greenhouse gas emissions, the region is also struggling to ratchet up green energy investment to meet the energy needs of its 660 million population.
According to the 7th Asean Energy Outlook published in 2022, the region’s energy demand growth is projected to be triple the 2020 level by 2050 in the absence of new policies to accelerate clean energy transition. Asean is already a net oil importer and is forecast to be a net gas importer this decade as existing gas fields are depleted. Analysts say the better bet is to ramp up green investment to cut growing fossil fuel import bills.
“There is no denying that energy demand is increasing across South-east Asia as populations increase, but the region must find sustainable ways to meet their energy needs,” said the report by GEM, a San Francisco-based non-governmental organisation that tracks fossil fuel and renewable energy projects worldwide.
Mr Beni Suryadi from the Asean Centre for Energy (ACE) said nations in the region face a dilemma between meeting their climate commitments and securing their domestic energy needs. He said that since 2016, natural gas production in Asean has been declining at a rate of 3.4 per cent a year, while gas demand will grow by almost 60 per cent from 2020 to 2030.
“It is therefore expected that Asean states will take measures to meet their natural gas demand and minimise the anticipated trade deficit in natural gas by investing in natural gas exploration and development,” Mr Beni, manager of power, fossil fuel, alternative energy and storage at ACE, told The Straits Times.
Foreign direct investment in renewable energy in Asean has more than doubled, rising from US$17.4 billion (S$23.4 billion) in 2020 to US$46.5 billion in 2022. But this is a fraction of the US$1.1 trillion needed to finance the region’s energy transition in the next decade, according to a 2023 report by Bain & Company, Temasek, GenZero and Amazon Web Services.
Mr Beni said gas investment was necessary to achieve the region’s energy transition goals, “as long as the newly built facilities only aim to fill the short-run gap to prevent our energy infrastructure from being locked in for the longer term”.
Others disagree.
“The billions of dollars being invested in oil and gas certainly represent a missed opportunity to spend the same funding on renewable and sustainable energy technologies. This will not only encourage further use of fossil fuels but also impede the deployment of green energy technologies due to a lack of funding,” said GEM report co-author Warda Ajaz, project manager of Asia Gas Tracker at GEM.
The International Energy Agency in 2022 mapped out a more sustainable policy pathway for the region in which subsidies for fossil fuels are phased out, growth in overall energy demand is tempered by improvements in efficiency, and clean energy technology deployment is boosted. This would lead to significantly lower oil and gas imports, noted co-author Scott Zimmerman, project manager of Global Oil and Gas Extraction Tracker at GEM.
“South-east Asian countries should be very cautious in expanding gas-consuming sectors given the region’s declining production and the foreseeable need to import LNG (liquefied natural gas),” said Mr Putra Adhiguna, who leads energy technology research in Asia for the Institute for Energy Economics and Financial Analysis, a US-based think-tank.
He added that some of the gas reserves in South-east Asia have a high carbon dioxide (CO2) content. The CO2 needs to be stripped out during processing and is usually released into the atmosphere. But some energy firms are looking to capture and store the CO2 deep underground as a way of reducing some of the climate impacts.
Malaysia’s Petronas is developing the Kasawari offshore gas field in Sarawak and in November 2022 approved a carbon capture and storage (CCS) project that is expected to reduce greenhouse gas emissions by 3.3 million tonnes annually, making it one of the largest offshore CCS projects in the world.
“Regulators need to ensure that strict performance benchmarks are in place for any carbon capture project plans,” said Mr Putra, adding that strong penalties should be imposed on projects that fail to deliver their promised CO2 capture and storage targets.
