Economic growth plus a demographic boom will drive crude oil and coal demand growth in Southeast Asia in the next two decades, the International Energy Agency said at an industry event in Singapore. The region, which at the moment uses about 4.7 million bpd, will need 6.6 million bpd by 2040, according to IEA’s forecasts.
The growth in demand will come mainly from the increase in cars on the roads of Southeast Asia. Despite the rise in EV adoption, the IEA says, petroleum fuels will continue to dominate Southeast Asian markets, satisfying 90 percent of transport-related energy demand.
“In 2040, there are about 4 million electric cars in a total passenger vehicle stock of 62 million, but electricity accounts for only 1 percent of transport energy demand,” Reuters quoted the agency as saying.
Overall energy demand in the region is seen to swell by 60 percent between 2017 and 2040. To satisfy it, Southeast Asian states will need to substantially increase their oil and coal imports, deepening an already worrying energy dependency.
Daily net imports of crude oil will hit 6.9 million bpd in 2040, according to the IEA, and will cost Southeast Asian economies some US$280 billion annually until that year. This will make oil the single biggest import commodity in the region. There seems to be no way around this growing dependency on oil, however, as demand for electricity booms in tune with growing populations.
By 2040, the IEA estimates, Southeast Asia will have installed power capacity of 565 GW, compared with 240 GW to date. Coal and renewables together will fuel 70 percent of the new capacity. Coal, however, will overtake gas as power generation fuel, accounting for 40 percent of the increase in power generation capacity. Although production from gas-fired plants will increase in absolute numbers, the share of gas in the energy mix of the region will decline as renewable capacity expands.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.