Southeast Asia oil bill to reach $240B by 2035, says IEA

BANGKOK, Thailand – Southeast Asia’s huge appetite for energy will see its bill for imported oil surge to $240 billion by 2035, leaving nations exposed to price shocks, the International Energy Agency warned Wednesday, October 2.

The region will guzzle more than 5 million barrels of oil per day — double current levels of consumption — to fuel its breakneck economic growth, the IEA said.

Total energy demand is expected to increase by more than 80% over the same period, according to the agency.

The 10 members of the Association of Southeast Asian Nations will need to invest a total of around $1.7 trillion in energy-supply infrastructure between now and 2035, it predicted.

It forecast the region would become the world’s fourth-largest oil importer, after China, India and the European Union.

Read: Global recovery, China to pull oil demand in 2014

“Increasing reliance on oil imports will impose high costs on Southeast Asian economies and leave them more vulnerable to potential disruptions,” the IEA said.

Imported oil will cost the equivalent of 4% of GDP across the zone, with Thailand and Indonesia likely to see their bills triple to nearly $70 billion a year by 2035.

Divert to domestic resources

ASEAN nations are expected to slash exports of natural gas and coal as they divert abundant resources to burgeoning domestic demand for energy, in a region where roughly 134 million people lack access to electricity.

Nearly two-thirds of Cambodians do not have access to electricity, the report said, joining half of Myanmar’s population and around a quarter of Indonesians — some 66 million people.

“Coal is emerging as the fuel of choice because of its relative abundance and affordability in the region,” the study said, adding there is an “urgent need for more efficient coal-fired power plants”.

Resource-rich Indonesia will see its coal production surge by nearly 90% as it cements its place as the world’s top exporter of steam coal, the forecast said.

The IEA blamed $51 billion of fuel subsidies for cramping investment in renewable or more efficient energy sources while boosting smuggling, mainly of oil, to areas where prices are higher.

Typically introduced to help the poor, “they have resulted in serious market distortions while failing to meet their intended objectives,” according to the study. – Rappler.com