Rapidly growing populations and GDP, Southeast Asia has been in an energy crunch for 20 years. Countries in the region are taking steps in addressing the shortages, such as Indonesia coming up with programmes to resolve its insufficient electricity generation capacity and a lack of refining capacity which both lead to shortages of petrol and other liquid fuel shortages. The Philippines, on the other hand, has several liquefied natural gas (LNG) import projects rushed to the market to prevent the looming gas supply shortage caused by the considerable decline of the Malampaya gas field’s production. Different countries have distinct strategies, all are investing into the energy sector to catch up with rising demand, Ng said. She highlighted Singapore seeking to diversify its energy supply through a second LNG import terminal and securing its position as the energy trading hub for Asia through LNG bunkering to replace marine fuel oil for ships and potentially hydrogen.
Some countries have already established a platform for the required transition, such as Vietnam, whilst others have not been as forward-looking and may need to play catch up. However, the latter option is further complicated in certain instances due to unfavourable topography or limited sites available for commercial scale renewable energy. Governments are split between their desire to develop renewable energy and the need to grow their economies by providing cheap energy. Pragmatism seems to be the overriding policy, with Vietnam being a good example of how governments take a multi-source approach to energy supply to ensure its power needs. 2020 has been the worst year on record for upstream merger and acquisition in SEA. Whilst COVID-19 has made transactions more difficult, it is the lack of finance available for what is becoming a very limited pool of buyers that is dragging down the sector, with some good assets finding no bidders. Merger and acquisition activity for renewables has remained consistent, with deals continuing through pandemic lockdowns, despite at a slightly slower pace, and will only accelerate with the flight of capital towards transition energy.