Why ASEAN has yet to step on the gas in regional energy cooperation

BANGKOK - The Middle East crisis has created an impetus for ASEAN states to step up cooperation in energy, as they grapple with soaring fuel prices and concerns about supply shortages.

However, while there is an ASEAN emergency petroleum sharing pact, this has never been activated and analysts say considerable challenges to energy cooperation remain.

On April 13, Singapore’s Foreign Minister Vivian Balakrishnan called for progress on the pact named the ASEAN Petroleum Security Agreement (APSA), at a virtual meeting of the grouping’s foreign ministers.

Similarly, on April 15, Philippine President Ferdinand Marcos Jr called for the immediate activation and testing of the pact, and said his country could serve as host or co-chair of the first APSA emergency simulation exercise.

First inked in 1986, upgraded in 2009 and renewed in October 2025, APSA allows a member state to sell crude oil and petroleum supplies at a commercial rate to another under certain conditions. One condition, for example, is when a member state faces an energy shortage of at least 10 per cent of its national domestic requirement.

But APSA has never been activated.

Dr Ruengsak Thitiratsakul, adviser to the Petroleum and Energy Institute of Thailand, calls the pact a “paper initiative” that does not work because it is voluntary.

To enable APSA to work effectively, Dr Ruengsak believes that it also has to go beyond fellow ASEAN members selling and sharing petroleum supplies among themselves.

He suggests that nations elevate the agreement by banding together to negotiate and secure oil from other producers such as Africa and Russia as a bloc, for bargaining power.

Dr Shobhakar Dhakal, a professor at the Asian Institute of Technology’s Faculty of Climate Change and Sustainability, based in Thailand, concurs that APSA is ineffective for a key reason that “it is legally not binding; it is just a cooperative, volunteer mechanism”.

Another reason he cited is that most ASEAN states are net importers of oil and would prioritise protecting domestic supplies at a time of crisis. “No nation would feel comfortable sharing oil during a crisis, which is likely to raise domestic oil prices and thus trigger political backlash.”

He cited the example of Indonesia. Since the country moved from being a net oil exporter to a net oil importer, it has become “less willing to commit oil to others, given that oil is subsidised domestically and thus politically sensitive”.

A recent report by the ASEAN Centre for Energy pointed out that oil remains the largest energy source for ASEAN, accounting for about 42 per cent of total energy consumption.

ASEAN Power Grid

The ASEAN Power Grid (APG) is another initiative that regional countries are hoping to adopt more quickly. The aim is to link all the ASEAN members in a single integrated grid, providing electricity trade to meet the power demands of the South-east Asian region by 2045.

“We have been talking about an ASEAN Power Grid for two decades, as far as I can remember,” Dr Balakrishnan said at the ASEAN meeting. “I wish we had done it and achieved that earlier. I wish we had invested in renewable energy, geothermal, solar and all the other potential that renewable energy has for South-east Asia.

“If all those investments had been made earlier, if our ASEAN Power Grid were functioning today, if we had overcome all the obstacles, political and commercial, which have stood in our way for two decades, I think ASEAN would have been in a much stronger position,” he added.

“Let’s get a move on the ASEAN Power Grid,” he urged.

A memorandum of understanding on the ASEAN Power Grid was signed in 2007 and implemented in 2009, starting out as a bilateral power connection before branching out to sub-regional interconnections that involve Singapore, Malaysia, Thailand and Laos. The flagship Laos-Thailand-Malaysia-Singapore Power Integration Project has been operational since 2022.

Dr Supawan Saelim, South-east Asia energy policy project lead at Agora Energiewende, a German think-tank, said “accelerating renewables and electrification, supported by modernised grids and greater flexibility at the national level, will strengthen resilience against future shocks”.

Coordinated policies across ASEAN “will be key to building a secure, flexible and low-carbon energy system, particularly for Indochina countries that can benefit from closer integration and shared resources”, she added.

Unfortunately, the APG in its current form now already poses challenges for regional countries.

The Petroleum and Energy Institute of Thailand’s Dr Ruengsak said infrastructure is the biggest hurdle to achieving a fully integrated APG.

“Because if you want to run (the grid) all the way to the Philippines or Indonesia, it might be difficult. But among those countries that have the connection, you should come up with a good framework to trade first, and that will be the case study for other countries to consider whether they should join or to be able to participate in this,” he said.

On April 7, the Asian Development Bank (ADB) launched the Regional Connectivity Fund for Energy in South-east Asia, with an initial funding of US$25 million (S$31.9 million), to advance the development of the ASEAN Power Grid.

ADB president Masato Kanda said the “launch of this project preparation fund is a decisive step towards accelerating high-quality ASEAN Power Grid investments and turning regional ambition into action”.

However, initiatives like the ASEAN Power Grid or APSA have not received unanimous attention from all ASEAN member states, because Dr Ruengsak believes some countries do not need them.

“They will always be the ‘giver’, so there is no benefit to accelerate those projects,” he added.

Dr Ruengsak urged ASEAN to revise its risk analysis on energy disruptions to effect quicker response measures, noting that member states held a meeting only around two weeks after the Iran conflict broke out.

He said: “They need some kind of revolution. They have been so slow.”