by Roffie Kurniawan
Jakarta — Energy cooperation among Southeast Asian countries is becoming increasingly urgent as regional energy demand is projected to grow by 4.2% annually through 2060, while geopolitical disruptions, ageing oil and gas fields and rising investment costs threaten the reliability and affordability of supplies.
The ASEAN Centre for Energy (ACE), in its ASEAN Energy Investment 2026 report published early this month, projects regional energy demand will reach about 2.047 billion tonnes of oil equivalent by 2060. Electricity consumption is growing even faster than overall energy demand, driven by industrial activity, air conditioning, transport electrification, digital infrastructure and expanding data-centre capacity.
These pressures took centre stage at the 51st ASEAN Council on Petroleum (ASCOPE) meeting in Bali, where around 300 representatives from 11 countries gathered on October 26–28 to discuss ways to strengthen regional energy security.
Pertamina President Director Simon Aloysius Mantiri said cooperation was essential to ensuring energy systems could meet current needs while supporting economic growth and future generations.
“The strength of our regional energy community does not lie in making every country the same, but in enabling each country to contribute its unique strengths and capabilities towards a common goal,” Simon said at ASCOPE’s meeting on Monday, October 26.
The discussions came amid disruption to global oil supplies in 2026, highlighting Southeast Asia’s exposure to international market shocks. The Middle East conflict and disruption around the Strait of Hormuz, a key route for global oil and gas shipments, have raised concerns about fuel availability, prices and the cost of securing supplies.
Pertamina Deputy President Director Oki Muraza said ASEAN countries needed to coordinate efforts to protect regional energy supplies. Discussions in Bali covered crude oil, gasoline, liquefied petroleum gas (LPG) and liquefied natural gas (LNG), including opportunities to source products from countries with surplus refining capacity.
The meeting also explored cooperation with China, Japan and South Korea through the ASEAN+3 framework.
Rising demand, greater import exposure
The scale of future demand presents a major challenge for ASEAN governments. As industrialisation, urbanisation and digital infrastructure expand, countries will need to secure additional electricity generation while upgrading transmission networks and maintaining affordable supplies.
The region remains heavily dependent on fossil fuels. According to ACE, coal and gas accounted for about 71% of ASEAN electricity generation in 2024, while renewables supplied approximately 28%. Renewables made up only 14.1% of total primary energy supply that year, well below the region’s target of 30% by 2030 under the ASEAN Plan of Action for Energy Cooperation 2026–2030.
Import dependence adds to the risk. Around 17% of ASEAN’s natural gas supply comes from the Middle East, and ACE expects the region to become a net gas importer in the coming years.
The 2026 supply disruption has also exposed the economic consequences of energy insecurity. ACE warned that higher fuel costs could increase pressure on public finances, particularly as governments seek to protect consumers and businesses from price shocks.
The report cited an estimated USD 40 billion in fossil-fuel support in the region before the disruption, with spending expected to rise. Such support can narrow governments’ fiscal room for investment in energy infrastructure, potentially delaying projects needed to meet future demand.
Renewable energy requires a regional approach
Expanding renewable energy is central to reducing exposure to imported fossil fuels, but the transition will require more than building solar and wind farms.
Solar and wind accounted for only about 4.5% of ASEAN electricity generation in 2023. The ASEAN Renewable Energy Long-Term Roadmap projects their share will rise to 19%–23% by 2030.
Achieving that increase would require the region to expand variable renewable generation roughly four- to fivefold within the decade, ACE said. This would demand substantial investment not only in generating capacity but also in electricity grids, battery storage, system flexibility and cross-border interconnections.
Regional cooperation could help countries make better use of different energy resources. The ASEAN Power Grid, for example, aims to strengthen electricity connections between national systems, creating opportunities to trade power across borders and improve supply flexibility.
Countries with surplus hydropower or renewable electricity could potentially supply neighbouring markets, while interconnected grids could help balance fluctuations in solar and wind generation. Greater regional integration could also reduce the need for each country to develop all the infrastructure required to meet its own peak demand independently.
However, achieving this will require agreement on cross-border electricity trading, investment responsibilities, technical standards and regulatory frameworks. Infrastructure development must also keep pace with rising demand.
Investment costs threaten the transition
Financing remains another major obstacle. ACE said the cost of capital for clean-energy projects in Southeast Asia was about twice that of advanced economies even before the 2026 disruption. Inflationary pressures stemming from higher energy prices could push interest rates higher, making projects more expensive.
Supply-chain constraints are also complicating development. Global lead times for transformers and other grid components have stretched to several years, delaying project commissioning and weakening investment returns.
ACE recommended that governments consider redirecting part of their fossil-fuel subsidies towards electricity grids, storage and energy efficiency. Such a shift could help expand infrastructure investment without requiring additional borrowing, while improving the ability of energy systems to manage demand and supply disruptions.
Alongside renewable energy, ASEAN must address the challenge of sustaining domestic oil and gas production. Many fields have operated for decades, requiring additional investment to maintain output, while new exploration is needed to identify future resources.
ASCOPE Secretary in Charge Henricus Herwin said countries across the region faced similar difficulties in maintaining the productivity and commercial viability of ageing oil and gas assets, attracting exploration investment and safely decommissioning facilities that have reached the end of their operating lives.
“By sharing evidence, data and experience within ASCOPE, we can help each member make better decisions about its assets and turn regional knowledge into tangible results,” Henricus said.
The forum’s Exploration and Production Task Force (EPTF) provides a platform for industry participants and regulators to exchange operational experience, discuss common problems and improve planning.
Pertamina also called for more attractive fiscal arrangements and incentives to encourage investment in upstream oil and gas, infrastructure and renewable energy.
The company highlighted Indonesia’s potential to produce more than 200 million standard cubic feet per day (mmscfd) of biomethane from liquid waste, offering an opportunity to develop lower-carbon energy while putting waste resources to productive use.
Turning cooperation into results
The challenge for ASCOPE and ASEAN governments is to translate regional dialogue into projects and arrangements that deliver measurable benefits.
This means improving coordination on emergency fuel supplies, attracting investment in oil and gas production, accelerating renewable energy development and expanding cross-border electricity infrastructure. It also requires stronger cooperation on energy efficiency, storage, technical expertise and financing.
Regional cooperation will not eliminate geopolitical risks or differences between national energy policies. But it could help countries diversify supply sources, share infrastructure costs and use regional resources more efficiently.
With energy demand projected to grow by 4.2% annually through 2060, ASEAN faces a widening gap between its energy ambitions and the investment needed to achieve them. Its ability to coordinate policies, financing and infrastructure development will increasingly determine whether the region can secure reliable and affordable energy while advancing its transition to a lower-carbon economy.
Banner photo: Image generated by OpenAI’s DALL·E via ChatGPT (2025)
