Natural Gas Boasts the Potential to Drive Greening of the ASEAN Region
The Gas Exporting Countries Forum (GECF), the global platform of the leading gas producing nations, organised a joint online workshop with the Economic Research Institute for ASEAN and East Asia (ERIA) on ‘The Role of Natural Gas Towards Greening Society in ASEAN and East Asia’ on 16th July 2020.
The discussion on one of the world’s most populous regions was held amidst changing energy demand patterns, particularly in the light of COVID-19, and explored the ASEAN’s ambition to propel its energy transition into clean energy systems using natural gas, while simultaneously addressing economic recovery, job creation, and climate mitigation.
The workshop featured high calibre speakers, including HE Arifin Tasrif, Minister of Energy and Mineral Resources, Indonesia, Prof Jun Arima, Professor of Graduate School of Public Policy, University of Tokyo, Japan, Mr Takeshi Soda, Director, Oil and Natural Gas Division, Agency for Natural Resources and Energy at the Ministry of Economy, Trade and Industry, Japan, Dr Twarath Sutabutr, Inspector General at the Ministry of Energy, Thailand, and Mr Shigeru Kimura, Special Advisor on Energy Affairs to the President of ERIA.
The GECF Secretary General HE Yury Sentyurin welcomed the audience and shared his delight with the participants on Malaysia becoming the first member from the ASEAN region to join the Forum, which now spans 20 members and four continents.
Highlighting the importance of cooperation amongst natural gas consumers and producers as a bedrock of gas market stability, HE Sentyurin also specified that the GECF strives for natural gas supply and demand security for the ASEAN and East Asia, which is in line with the unanimously supported 2019 Malabo Declaration at the outcome of the 5th GECF Summit. Headlined ‘Natural Gas: Energy for Sustainable Development’, the Declaration demonstrates the GECF Member Countries’ resolve to strengthen global energy security as reliable suppliers of natural gas to the world’s growing energy demand, he said.
Secretary General Sentyurin stated: “Our projections show that over the next three decades natural gas consumption in the ASEAN and East Asia region will more than double, rising from 736 billion cubic metres (bcm) in 2019 to around 1,500 bcm by 2050. Its share in the energy mix of this currently coal-led region is projected to grow from a modest 10% at present to over 15% by 2050.”
“However, we see even more potential for fuel substitution, especially in the power generation and transport sectors, provided that gas-based infrastructure affordability grows, and more favourable policy measures are implemented.”
Speaking about Indonesia, HE Tasrif referred to Indonesian President Joko Widodo’s pledge at the 21st COP Meeting and the Paris Agreement (both in 2015) to commit to reduce greenhouse gases in Indonesia by at least 29% by 2030, and using the clean attributes of natural gas to achieve that goal.
“Today, we are shifting from an oil dominion to gas dominion. We are trying our best to find more gas resources and find effective ways to transfer the resources to become proven reserves. In 2019, Indonesia’s total gas production was 6,138 mmscf (million standard cubic feet per day) which came from various sources, in Sumatra, Java, Papua. Moreover, the government is also developing gas supply to meet the ever-growing demand. We are also ensuring that upstream of gas activity is still effective for investors.”
According to the Minister, Indonesia is attaching priority to the use of natural gas by investing in programmes such as Gas Price for Industry, Conversion of Diesels to Natural Gas for Power Plant Use, Development of Gas Pipeline Infrastructure, and City Gas, to name a few.
“By optimising natural gas utilisation, Indonesia would have a future target that will enable natural gas to take 22% of its share in the energy mix by 2025 and 24% by 2050. Natural gas will become the future of clean energy together with renewable energy,” he said.
It is to be noted that the world’s largest island country, Indonesia, was one of the founding members of the GECF and has meaningfully contributed to the establishment and the positioning of the Forum as its long-standing ally. The Indonesia Minister used the platform of the GECF to invite all interested parties to take part in developing the Indonesian gas industry.
“With the increasing demand for energy and the urgent need to develop more green society we believe that the role of gas will be very crucial. We hope that the rise of natural gas’s role in fulfilling the increasing demand for energy will continue to create a sustainable energy market, especially in the ASEAN and East Asia region,” said HE Arifin.
Speaking about natural gas consumption in Japan and the country’s role in developing the LNG trade market worldwide, Mr Takeshi Soda said: “In order to enhance the volume of trade in this region, we have to enhance the flexibility of the trade, the most important of which is the relaxation of destination clause. We believe that this is an initiative that leads to win-win for both producers and consumers.”
“Since 2016, the Japanese government has aimed to establish a flexible and highly liquid energy market in Asia. A market where buyers can buy a stable, reasonable, and transparent prices at any time. It’s a market where sellers can also gain continuous and reasonable profit. This relationships creates more mutually beneficial partnerships, which leads to continuous investment in development (of the LNG trade),” he added, whilst inviting the participants to the annual LNG Producer-Consumer Conference 2020 as organised by METI on 12 October 2020.
Dr Twarath Sutabutr highlighted Thailand’s efforts in the main areas of LNG hub creation, LNG retailing, and LNG re-gasing facilities in destination countries.
“The hub policy of storage and re-exporting facility is much talked about in Singapore and Thailand. The policy would go along very well with Japan’s policy to have a flexible destination clause that could encourage more multiple points of LNG trading in the future. In Thailand, the PTTGL (PTT Global LNG Co) will start to do what we call the re-export cargo in the next quarter of 2020. We hope that the re-export facility will become a catalyst to LNG trading within the region,” said Dr Twarath.
In his remarks, Prof Jun Arima welcomed the estimates in ERIA’s energy outlook which forecasts an increase in gas demand by 2040 but cautioned against the existing market conditions and the cheap availability of coal in the region.
“ASEAN gas demand would double between now and 2040, but it could triple by 2030 if aggressive policies favouring cleaner fuels are put in place. At the same time, the existence of cheap and abundant coal resources cannot be simply dismissed. So, it is a tall order to overcome the cost differential between coal and natural gas. It is imperative for gas producing and consuming countries to work together for making natural gas more competitive and attractive option,” Prof Arima noted.
Echoing ERIA’s stance, Mr Shigeru Kimura explained ERIA’s latest available energy outlook which covers the business-as-usual and alternative-policy scenarios between 2015 and 2040.
“We notice that the production of natural gas in the region in 2015 is much higher than the input, giving rise to the export of natural gas from ASEAN. However, in 2040 production will remain the same and yet the import will significantly increase on the back of increase gas demand, which will be almost more than double the 2015 level,” he said whilst adding that despite several ASEAN countries showing export potential in 2015, only Malaysia and Brunei will keep their export position until 2040.
Mr Dmitry Sokolov, Head of Energy Economics and Forecasting Department at the GECF, also spoke on the occasion and talked about natural gas supply and demand worldwide as well as the GECF Global Gas Outlook 2050.