The Iran war pushes ASEAN to increase its focus on energy security plans

Southeast Asian energy ministers meeting in Manila this week face the prospect of a prolonged war in the Middle East that has exposed the vulnerabilities of their region stemming from its dependence on energy imports.

As the US-Israeli war with Iran continues, the urgent need for the Association of Southeast Asian Nations (ASEAN) to implement its proposed energy security plans and reduce its exposure to price shocks resulting from attacks on infrastructure and shipping routes in the Middle East increases.

ASEAN countries import more than half of their crude oil needs for their refineries from the Middle East, amid a rise in record global oil prices to about $100 per barrel. This conflict has increased concerns about energy security risks on a broader scale, as Chinese refineries have suspended exports of petroleum products for the month of October.

Against this backdrop, during their meeting in Manila, energy ministers are expected to review the region's fuel security measures launched after emergency talks earlier this year, including efforts to put into effect coordinated emergency responses under the ASEAN Framework Agreement on Petroleum Security.

The agenda also includes long-term initiatives, including the ASEAN energy grid and the deployment of renewable energy.

Philippine Energy Undersecretary Felix Fuentebla said, according to Reuters, on October 1: “What the crisis has brought is a greater focus on durability,” adding that energy security has shifted from a technical issue to a priority for ministers and leaders of ASEAN countries.

Decreased profits

High prices increase costs for families in the region and negatively affect the income of workers in the transportation sector.

The ASEAN Energy Center warned, in a policy paper, that a severe disruption to Middle East supplies could endanger quantities of oil equivalent to about 28 percent of final oil consumption in ASEAN. This underscores the need for stronger regional arrangements for oil security.

Energy Secretary Sharon Garin said that the Philippines, which remains under a national energy emergency, is exploring regional fuel storage arrangements and could host future storage projects.

But analysts warned that such measures are unlikely to affect the current crisis.

Ministers are also expected to discuss ways to reduce long-term dependence on imported fuel. Renewable energy, electric vehicles and energy efficiency are expected to receive significant attention.

Estimates from the International Energy Agency indicate that Southeast Asia's energy import bill could rise from more than $80 billion in 2024 to about $245 billion by 2035 if no structural change is made.

The International Energy Agency said that expanding the use of electricity, including electric vehicles and biofuels, will help reduce demand for oil and reduce exposure to fluctuations in fuel imports, while cross-border lines within the ASEAN energy grid, which would integrate the region's electrical grid, will require an investment of $27 billion by 2040.