Despite the global momentum towards a net-zero future, as stirred during the 28^th United Nations Climate Change Conference of the Parties (COP28) in Dubai, citing the explicit mention of the “transition away from fossil fuels”, oil and gas, continue to dominate ASEAN’s energy mix, comprising 35% and 21% of the 2020 TPES- according to the 7^th ASEAN Energy Outlook (ACE, 2022). Even in ambitious renewable scenarios, oil and gas remain crucial to maintaining energy security, projected to contribute 63% and 48% respectively by 2050.

Natural gas: Aiding energy transition at the risk of energy security

Natural gas has its own special appeal. Due to the intermittent nature of variable renewable energy, lower GHG emissions and no non-carbon air pollutants of natural gas have gained the fuel being dubbed as the bridge fuel for energy transition.

Reliable as it may, total gas production in ASEAN continues to decline, posing risks to energy security. Based on the analysis from ASEAN Oil and Gas Updates 2023 (ACE, 2023), in 2022, the total gas production was 6.1% less compared to 2021. As soon as in 2025, the combined regional imports of natural gas are projected to already exceed their exports in 2025, causing the region to become a net importer of natural gas.

Therefore, while natural gas aids energy transition, its role poses an energy security risk due to increasing import dependency.

Heading Towards Common Gas Market through the TAGP: A far-reaching goal?

In a rare but plausible event of unexpected supply disruption that could threaten the gas supply of ASEAN countries, having a Common Gas Market (CGM) may improve the region’s natural gas supply security as it fosters interconnection networks and competition, expands the gas pool, lowers business costs, and enhances resource allocation efficiency- an advantage that the bilateral approach could not offer.

To facilitate CGM, ASEAN requires interconnected natural gas infrastructure known as the  Trans-ASEAN Gas Pipeline (TAGP), linking existing and planned physical and ‘virtual’ pipelines (LNG via Regasification Terminals (RGT). As of 2023, ASEAN has 13 pipelines spanning 3,631 km across six countries, with 13 RGTs in five nations, including two new ones in Indonesia and Thailand, boasting 60.3 Mtpa liquefaction capacity for LNG exports and 47.5 Mtpa RGT capacity for LNG imports.

Another fundamental prerequisite in moving towards CGM is cross-border (multilateral) collaboration/ cooperation, especially in working towards the adoption of a shared set of standards and regulations and the removal of barriers and/or tariffs. In fact, these cross-border complexities have been the main barrier to moving towards CGM.

“To epitomise, since the first physical pipeline was built in 1991 and until today, not much collaboration involving more than two (2) ASEAN countries has been observed.”

 

Until today, none of the pipelines has involved trade between more than two (2) countries, limiting their impact on energy security. Relying solely on bilateral cooperation poses challenges due to limited reach and vulnerability to shifting political dynamics, potentially jeopardising energy supply agreements.

In this regard, complex infrastructure projects like the TAGP in a diverse region will require the establishment of common concepts and CGM targets, which in turn requires a certain degree of cross-border collaboration and cooperation before deep-diving straight into any gas infrastructure development.

“If cross-border collaboration involving more than two (2) countries is left unattained, the question arises: Is achieving the ASEAN goal of a CGM a too-far-reach goal?”

 

MOU TAGP soon to be expired: A potential fresh start

The high-level commitment of ASEAN countries and broad cooperative framework to pursue the CGM through the TAGP is solidified through the Memorandum of Understanding (MOU) on the TAGP, which was signed by the 10 ASEAN Ministers and entered into force in 2004.

A plausible accountability of the lack of cross-border collaboration can perhaps be attributed to the MOU’s nature: non-legally binding and its relatively broad articles (recommendations) that do not promote nor specify a cross-border collaboration.

As the current MOU on TAGP is due to expire in May 2024, there is an opportunity to enhance greater cross-border collaboration that advances CGM. The first step can be done through refining the Objectives of the MOU. Under the existing MOU, the objective is limited to “Provide a broad framework for ASEAN countries to cooperate towards the realisation of the TAGP Project to help ensure greater regional energy security”. This objective should be extended to explicitly include collaborations covering cross-border and interconnecting developments for natural gas.

Moreover, the new MOU must have a dedicated article detailing what cross-border issues that the countries may want to collaborate on. For example, ASEAN countries may wish to collectively explore the implementation actions recommended by the Gas Advocacy White Paper 2018, or explore cross-border collaborations on potential business opportunities in relation to, including but not limited to, piped natural gas or LNG.

Taking a step further, the new MOU may want to eliminate wordings that encourage only individual work being done, as shown in the previous MOU wordings, e.g., Initiate individual/ joint studies; take individual/ collective studies- and suggest replacing with ‘multilateral’ directly, to encourage all ASEAN countries taking part in the studies or future initiatives.

As all MOU in ASEAN are non-legally binding- not excluding the TAGP MOU, other modalities need to be implemented to ensure relevance and adherence to the “new” MOU.

For starters, the degree of public perception and awareness of natural gas benefits may influence policymakers and industry players to further push natural gas forward. With the rise of the net-zero agenda favoring renewable energy and opposing fossil fuels, including natural gas, the awareness of balancing energy transition and security is vital for ASEAN’s CGM adoption.

Moreover, when drafting the new MOU, a TAGP Master plan document must be developed to not only map potential pipeline infrastructure, but also ASEAN natural gas market integration analysis and operational strategies that reflect the characteristics of all ASEAN countries to ease the cross-collaboration activities to achieve CGM.

To facilitate these above activities and documents on cross-border collaboration and CGM in the TAGP, the role and involvement of the ASEAN Centre for Energy, as the official regional energy think tank, must be increased, working hand-in-hand together with the ASEAN Council on Petroleum (ASCOPE).

In sum, revitalising the TAGP MOU will be a pivotal catalyst in driving a concerted effort for expansive cross-border cooperation to reach the goal of CGM. Only with more ASEAN countries collaborating together that a greater natural gas security will be fostered.