The Gas Panel was one of the most highly anticipated panel discussions at the Asia Pacific Energy Capital Assembly, 6 -7 June 2023.

The panel consisted of:

• Joel Riddle, CEO, Tamboran Resources
• Alan Heng, Group CEO, Pavilion Energy
• Ed Winter, Managing Director: Global Energy & Power Infrastructure, BlackRock
• Chikako Ishiguro, Senior Analyst, Energy Resources, Osaka Gas Co.
• Moderator – Paul Greening, Partner, Akin

Presenting a strong case for gas as a cleaner transition fuel, with the potential to drive the energy transition whilst providing safe & secure energy to Asia.

1. How high a priority is the role of gas on the roadmap to energy transition?

All panellists agreed that gas should be considered a high priority on Asia’s energy transition pathway. Gas provides that base & stability from which to transition to something cleaner, whilst producing far less CO2 than coal & oil when burned. For Asia to transition, gas can be that platform until other lower carbon sources come in to play.

This is especially true as the energy transition in Asia is already expected to proceed at a slower pace than in Europe & other regions, given the expected economic growth & increase in energy demand in the future. Asia, of course, has to clean up their existing energy sources, but at the same time, the increase in energy consumption must be from energy that can be secured in stable quantities with stable prices.

For gas to act as that bridge to a just energy transition, it must be available, reliable & affordable & as it stands, it isn’t for many Asian economies.

2. With gas prices skyrocketing in today’s highly competitive market, what action do you think needs to take place to secure affordable gas prices for the region?

The biggest lesson to learn from Europe since Russia’s invasion on Ukraine & the subsequent energy crisis, is to reduce the overdependence on a particular energy source to stabilise supply. Like many parts of the world, Asian gas prices are strongly influenced by European gas prices & gas price volatility will remain high if the turmoil in Europe continues.

That being said, the gas logistics & supply system is pretty robust. Gas continued to flow throughout Covid-19 and in recent months, gas has been redistributed & prices have somewhat stabilised which speaks to the strength of the industry. However, in order to not see that short spike in prices due to supply &/or demand shocks, Asia needs to prioritise and increase gas production so that domestic gas is available to the region.

However, there are only a finite number of options in terms of supply that is capable of producing the volumes of gas needed for export, but also with a regulatory framework that can support these high CAPEX, high risk projects.

3. Where do you see new gas infrastructure investment coming from? What challenges are deal makers within the industry facing?

Amongst the panel, gas is seen as one of the biggest decarbonisation strategies today & a critical component to Asia’s energy transition. New gas needs to come onto the market, but as long as there are adversarial policies, such as gas caps, safeguard mechanisms and additional taxation, that is not going to happen. New investment into gas should be understood by governments across the region & the financial sector as a necessary investment. The industry needs to educate its investors and the general population to fill this knowledge gap.

Even when the demand is there, there is little incentive for new gas projects and supply to come onto the market. Investors have a fiduciary duty to their shareholders & therefore need to deliver them risk adjusted returns. Capital cannot get comfortable with a regulatory environment that varies so much and so often and this regulatory uncertainty folds right into the ability to raise capital.

Once countries have committed to their decarbonisation, sustainability & net-zero targets, they need to develop a clear roadmap to the energy transition to ease investors ESG concerns. For example, since Singapore has established a carbon price, it is possible to put a price tag on different energy sources, which encourages Singapore’s energy industry to either decarbonise or find alternatives. In addition, developing reliable methane management and CCS infrastructure can advance the case for gas.

The biggest lesson to learn from Europe since Russia’s invasion on Ukraine & the subsequent energy crisis, is to reduce the overdependence on a particular energy source to stabilise supply. Like many parts of the world, Asian gas prices are strongly influenced by European gas prices & gas price volatility will remain high if the turmoil in Europe continues.

That being said, the gas logistics & supply system is pretty robust. Gas continued to flow throughout Covid-19 and in recent months, gas has been redistributed & prices have somewhat stabilised which speaks to the strength of the industry. However, in order to not see that short spike in prices due to supply &/or demand shocks, Asia needs to prioritise and increase gas production so that domestic gas is available to the region.

However, there are only a finite number of options in terms of supply that is capable of producing the volumes of gas needed for export, but also with a regulatory framework that can support these high CAPEX, high risk projects.

In summary, with the right policy settings, fiscal incentives and broader regulatory oversight that encourage new gas projects & supply, the industry will be able to lead Asia to a practical and just energy transition. An increased gas supply will be able to displace coal as Asia’s dominant energy source, therefore significantly cutting CO2 emissions whilst waiting for renewable energy sources mature.