Energy companies race to Southeast Asia for gas to meet AI power demand

Energy companies are investing in gas exploration and production to meet the rising demand for power from a growing population and the proliferation of data centers in this region.

As countries pursue different paths of energy transition, European majors are pivoting back to conventional fuels that are more profitable. Southeast Asian governments also want to increase the affordability of local gas to improve economic growth and energy security.

Anwar Ibrahim, Malaysia's Prime Minister, said that Shell had committed to increase its investment in Malaysia to 9 billion ringgit (2.12 billion dollars) in the next two or three years at the Energy Asia Conference in Kuala Lumpur.

Shell CEO Wael Sawan said at the conference that gas production in Southeast Asia will drop by 20% between now and 2035.

The infrastructure is already gas-based, so LNG is the best option.

TotalEnergies, a French energy company, acquired additional stakes in Malaysian natural gas assets from Petronas on Monday. .

"This is the area where population is increasing," I would say. Patrick Pouyanne, CEO of the company, said: "This is where we'll need more energy."

Eni, the Italian gas giant, and Petronas have agreed to form a joint venture in order to develop assets for gas production in Indonesia and Malaysia. The deal is expected to be finalized by the end this year.

Takayuki Ueda, CEO of Inpex, said that the top Japanese explorer has returned to Malaysia, where he is exploring resources offshore Sarawak and Sabah in six blocks, as well as developing Indonesia's Abadi LNG Project.

He said that the demand for LNG (especially natural gas) will increase over a longer period of time, perhaps up to 2050.

He added that "given the current, highly uncertain and unpredictable geopolitical environment, we have adopted a strategy of local production for consumption locally."

ConocoPhillips CEO Ryan Lance has told local media the U.S. company plans to invest Sabah, after abandoning the WL4-00 Sarawak project.

Gas-fired power stations can provide stable power for data centres.

Tengku Muhammad Taufik Tengku Aziz, CEO of Petronas, said that the company is working hard to meet the surge in demand for power from data centres. This is expected to double by 2030 to 945 Terawatt Hours globally.

He said, "All of the energy systems we have at our disposal now work to meet this surge in demand."

S&P Global Vice Chairman Daniel Yergin stated that gas has a larger profile today than it had a few years ago.

He added that "countries will not be able generate the electricity needed for growth and data centres without an increased role for natural gas." Reporting by Florence Tan and Sudarshan Varadahan; editing by Kim Coghill

(source: Reuters)