Asia Pacific Review Trans-Asian pipe Building The Trans-ASEAN Gas Pipeline (TAGP) project envisages the creation of a trans-national pipeline network linking ASEAN’s major gas production and utilisation centres. Once realised the TAGP will have the potential of linking almost 80% of the ASEAN region’s total gas the Trans- reserves and will embody a far-reaching expression of the region’s energy interdependence and long-standing interest in the co- ordination of energy activities. There is still much to do however in Asean gas order to realise the dream, not least in establishing a solid legal and regulatory basis upon which the TAGP could operate in the best interests of all those who would derive benefit from such a network. pipeline By Peter Roberts and Alex Cull, Jones Day, Hong Kong. � ASEAN’S ENERGY POLICIES (ii) The ASEAN plan of action for Energy Co- ASEAN, the Association of South East Asian Nations, operation 1999-2004 (Bangkok, 1999) - The Bangkok is a ten-state co-operative framework intended to Plan was adopted by the Seventeenth ASEAN promote greater regional development through Ministers of Energy Meeting and identifies six mutual assistance. Originally founded in 1967 by programme areas to be focused on in order to Indonesia, Malaysia, the Philippines, Singapore and implement the Hanoi Plan, including the development Thailand, the membership of ASEAN has since of the TAGP as part of an integrated ASEAN energy doubled to include Brunei (1984),Vietnam (1995), grid.The Bangkok Plan provides for the establishment Laos (1997), Myanmar (1997) and Cambodia (1999). of the ASEAN Council on Petroleum (ASCOPE) TAGP Task Force to formulate a masterplan for the ASEAN promotes various regional policies in the most likely scenario for the short term development furtherance of the economic, social and political of the TAGP following the successful completion of a interests of its members.An integral part of ASEAN’ s conceptual project feasibility study and the resolution regional economic co-operation focuses on the energy of relevant institutional, legal, financial, commercial and sector where it is ASEAN’ s declared intention to technical issues. ensure greater security and sustainability of regional energy supplies through diversification, development (iii) The ASEAN Memorandum of Understanding on and conservation of resources, the efficient use of the TAGP (Bali, 2002) - The Bali Memorandum was energy and the wider application of environmentally adopted at the Twentieth ASEAN Ministers of Energy sound technologies. Meeting and sets out a co-operative framework within which ASEAN member states agree to study the ASEAN’ s energy policies are founded upon a regulatory and institutional frameworks for the combination of various accords, policy declarations cross-border supply , transportation and distribution and summit undertakings. Critical amongst these for of gas throughout ASEAN. the realisation of the TAGP are: (i) The 1998 Hanoi plan of action - The Hanoi � THE ASEAN ENERGY PERSPECTIVE Plan was adopted at the Sixth ASEAN Summit and calls for member states to implement initiatives A consideration of the demographic and geophysical to ensure security and sustainability of energy aspects of ASEAN reveals three essential features: supply , efficient utilisation of regional energy resources and the rational management of energy (i) Energy demand - ASEAN represents more than demand. In particular the Hanoi Plan calls for 500m people, spread between 10 countries over an area the institution of a policy framework and of approximately 4.5m sq km.While the 1997 Asian implementation modalities by 2004 for the economic crisis and the global economic slowdown early realisation of the TAGP . since 2001 has hampered the region’ s economic and 15 Asia Pacific Review July 2003
Trans-Asian pipe Asia Pacific Review � MATCHINGREGIONALENERGYDEMAND& SUPPLY energy demand growth the underlying factors which propelled Asia’ s miracle growth in the 1990s - greater When considering the centres of energy demand and industrialisation, increased urban migration into highly supply across Asia one thing becomes apparent - there concentrated areas of population, an expanding middle is rarely a happy coincidence of population and class and increasing consumer disposable incomes – are resources and it is usually necessary to transport energy still largely intact. resources to where they are most needed. These characteristics present an inherent demand for Coal, which at the present time comprises approximately energy which should continue to grow as the global 11% of power generation feedstock in ASEAN, is economy recovers and regional industries regain lost typically transported by ship. Crude oil, refined into ground.This potential is recognised for example in a products such as fuel oil, presently constitutes predicted 60% growth in demand for energy within approximately 54% of power generation feedstock ASEAN for the period to 2010. in ASEAN and is also typically transported by ship. Demand for gas in particular will increase due to Gas, which now comprises approximately 27% of the improving cost-competitiveness and greater ASEAN’ s power generation feedstock mix, may be recognition of the ecological benefits of gas-fuelled transported by ship as LNG. LNG projects have high power generation, increasing emphasis on regional capital expenditure requirements in the construction of petrochemical production and the ongoing expensive gas liquefaction and regasification terminals development of essential gas transportation and specialist LNG ships, although from a project infrastructure. development perspective they raise potentially simpler legal, regulatory and administrative issues than (ii) Energy supply - ASEAN covers a region rich in cross-border pipelines as they tend to be bilateral energy resources, with aggregate proven reserves of arrangements with limited land use requirements. around 27bn barrels of oil and 350tr cu ft of gas, particularly in the major supply areas of Indonesia, LNG tends to be more cost-effective than pipelines only Malaysia, Brunei,Vietnam and Thailand. However, where longer distances or especially difficult terrain is demand for energy in many member states will involved.An LNG project will have a large initial capital outstrip domestic supply capabilities and the import requirement but its overall cost will not significantly of energy will be common across the region. Domestic increase over greater distances, whereas pipeline costs imbalances will need to be satisfied by a combination increase linearly as pipeline distances increase. of intra-regional energy transportation supplemented through extra-regional imports, primarily from the Short distance pipelines should therefore be the most Middle East. cost-effective form of gas transportation within ASEAN. This would explain why , of all the cross-border energy (iii) Interconnection – The relative proximity of the trades within ASEAN, the only proposed LNG trades are demand concentrations and the prospective sources for a recently announced LNG regasification terminal to of supply within ASEAN, when viewed in light of be built in the Philippines which may source LNG from regional pockets of supply shortage, together suggest Indonesia, Brunei or Malaysia.All other LNG trades an inherent justification for the creation of a regional involving an ASEAN member country are exports of energy network. Commentators on the Asian energy LNG to purchasers outside ASEAN. scene are, when faced with a map of the region which demonstrates the centres of demand and supply , Increased pipeline infrastructure will also enable the seemingly incapable of resisting the urge to ‘join the development of gas fields located near pipeline routes dots’with a series of interconnected pipeline systems, which may otherwise be uneconomical to develop in transporting gas in particular from where it is to where their own right.This development will in turn be used it needs to be. to increase the extent by which regional demand for gas can be met by regional supply . The first two features are empirically quantifiable components and establish the demand and the supply sides of the energy equation which are required before a � THE TRANS-ASEAN GAS PIPELINE PROJECT successful energy network can be established.The third is different. It is not an objective reality but rather it is a The first cross-border gas pipeline in ASEAN exports vision that combines geopolitical, economic and cultural gas from Malaysia to Singapore and was commissioned conjecture, and thus is the basic hypothesis of in 1991. Since then several regional gas pipelines have connecting supply to demand through a single regional been completed and several more are in the process of interconnector suggested by the promoters of the TAGP . design and construction or are envisaged: 16 Asia Pacific Review July 2003
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