Oil & Gas Sector.
Established sector with constrained development potential
Overview.
Oil and gas extraction continues to be a major revenue source and employer in several ASEAN economies, though it poses environmental and social risks and must navigate global energy transitions, climate commitments, and shifting livelihood expectations. The sector remains deeply embedded in national energy systems, shaping development pathways as countries balance energy security with sustainability goals and the need to diversify.
Across the region, dependence on hydrocarbons remains structurally significant, with oil and gas comprising a major share of national energy mixes while countries begin adopting circular economy practices, lower emission technologies, and policy measures to improve environmental performance. These shifts are occurring alongside rising fiscal pressures, the growing need for decommissioning aging offshore assets, and persistent capacity gaps that affect how countries manage extraction, transition planning, and long-term stewardship of marine and coastal environments.
Within this wider sustainability and governance landscape, the oil and gas sector intersects with offshore energy, shipping, CCUS, and marine environmental management because exploration, production, and transport infrastructure occupy shared marine space and depend on coordinated regulation and monitoring across coastal jurisdictions. These interdependencies link the sector to climate transition and circular economy pathways through emissions reduction, infrastructure repurposing, CO₂ utilisation, and long-term stewardship of offshore assets that influence ecosystems and community wellbeing.
Explore how Oil & Gas are positioned for each of the
Blue Economy Capitals.
Financial Capital.
Financial Capital.
In 2024, Southeast Asia’s oil and gas sector is witnessing substantial investment growth, propelled by escalating energy demand and strategic infrastructure development. Brunei Darussalam has pledged BND 20 billion (USD 14.6 billion) to deepwater exploration with the objective of sustaining 300 kboe/d output. Cambodia is transitioning towards cleaner energy by constructing an 800 MW LNG plant, replacing a coal project. Indonesia invested USD 15.6 billion in 2023 and aims to achieve 1 mbopd and 12 bscfd by 2030, necessitating USD 20 billion annually. Integrated carbon capture and storage (CCS) is being integrated into major projects such as the Masela Block. Malaysia recorded its highest Petroleum Supply Contract (PSC) awards since 2010 and anticipates increased deepwater activity in 2024. Myanmar, however, is subject to tightened U.S. sanctions on the Myanmar Oil and Gas Enterprise (MOGE), while the Philippines has reaffirmed its incentives and extended the Malampaya contract until 2039. Singapore plans a second LNG floating storage and regasification unit (FSRU) to meet growing gas demand. Additionally, Thailand is reinvesting substantial profits to boost production by 9% in 2024. Viet Nam’s new Petroleum Law introduces tax incentives to attract foreign investment, indicating a competitive regulatory environment across the region (ACE, 2024b).
The regional financing mechanism associated with oil and gas development, complementing the existing green financing scheme, facilitates sustainable development. Green financing is also implemented at the national level in accordance with the national strategy to reduce emission from fossil fuels and facilitate transition to a low-carbon economy. For example, the program “Supportive Innovative Mechanisms for Industrial Energy Efficiency Financing in Indonesia” is designed to accelerate low-carbon industrial development by overcoming barriers to energy efficiency adoption. Supported by the Korea Development Bank with USD 105 million in GCF funding and USD 142.7 million in co-financing, the program introduces a package of solutions that include financial de-risking mechanisms, new energy service business models, supportive regulatory frameworks, and technical assistance. By addressing challenges such as limited access to finance, regulatory gaps, and low stakeholder awareness, the program aims to reduce CO2 emissions by 3.1 million tons while building long-term capacity for energy conservation and sustainable industrial growth in Indonesia (ACE, 2022; Green Climate Fund [GCF], 2022).
Physical Capital.
Physical Capital.
The assessment of oil and gas infrastructure in the Southeast Asia centres on evaluating the region’s capacity to process and export hydrocarbons, with oil refineries and LNG terminals serving as primary indicators of this capability. These facilities not only reflect the level of industrial development but also influence regional energy security and global trade dynamics. Singapore has the highest oil refinery capacity in the region at 1,482 MBPD, while Indonesia leads in the number of refineries, with a total of nine. In ASEAN, 34 refineries with 5,252 MBPD combined capacity in total (ACE, 2024b). On LNG Terminal Capacity, new regasification and liquefaction plants expanded in 2023 as AMS explored natural gas use to replace coal and enhance energy security. Excluding Timor-Leste, the region has 57.76 Mtpa regasification capacity, with Thailand leading at 19, followed by Singapore and Indonesia (11 and 10.3, respectively). Indonesia, Malaysia, and Brunei Darussalam share 64.1 Mtpa liquefaction capacity.
In Indonesia, the 3.8 MTPA Tangguh LNG Train 3 commenced commercial operations in October 2023. Malaysia’s MISC agreed to convert the 137,500 m³ LNG carrier Puteri Delima Satu into an FSU for the Pengerang LNG Terminal in Johor, expected to start operating in the first half of 2025 under a 20-year contract. PetroVietnam Gas Corporation (PV Gas) inaugurated the Thi Vai LNG terminal in Viet Nam’s Cai Mep Industrial Zone in October 2023. Linseed Field Corporation’s LNG terminal in the Philippines began operations in April 2023 using the 137,500 m³ FSU Ish, supplying regasified LNG to San Miguel Corporation’s 1,200 MW Ilijan Power Plant, which resumed in May 2023. First Gen’s Interim Offshore LNG Terminal in Batangas, using the 162,400 m³ FSRU BW Batangas chartered for five years, started commissioning in September 2023. Following Singapore’s Deputy Prime Minister and Minister for Finance’s announcement in October 2023, SLNG plans to develop and manage Singapore’s second LNG terminal. They’re exploring the possibility of using an FSRU (ACE, 2024b).
Singapore’s LNG infrastructure, anchored by the SLNG Terminal on Jurong Island, has a regasification capacity of about 10 million tonnes per annum (MTPA) since 2013. As of September 2023, it had received around 430 LNG cargoes totalling 26.58 million tonnes, nearly 190 ships for storage and bunkering, and over 3,730 LNG truck loading operations. To enhance energy security, SLNG is developing a second terminal based on an FSRU concept, providing up to 5 MTPA of gas supply capacity, connected to Singapore’s pipeline grid via a new onshore pipeline. These facilities will enable Singapore to meet its natural gas demand entirely through LNG if required, reinforcing its role as a regional trading and bunkering hub (Singapore LNG, 2023).
Human Capital.
Human Capital.
Although there appears to be no discernible progress in the data pertaining to human capital development within the oil and gas sector, ASEAN’s regional energy strategies are increasingly concentrated on digital infrastructure, innovation ecosystems, and human capital development. Furthermore, they address other challenges such as demand growth, cybersecurity, and equitable access. Collectively, these endeavours will contribute to ensuring that energy systems remain agile, secure, and prepared for the future (ACE, 2025a).
Using the Carbon Neutrality Scenario (CNS), the decommissioning of fossil fuel plants will cause significant job losses (over 3.2 million by 2050) in the oil and gas sector, creating socioeconomic challenges in affected regions (ACE, 2024c). To ensure a just transition, renewable energy industries must expand to meet decarbonization goals and create stable, well-paying jobs in manufacturing, installation, maintenance, and research. This requires targeted reskilling programs, regional employment planning, and strong public-private partnerships. Integrating workforce strategies into energy policy can drive sustainable employment and economic resilience.
Social Capital.
Social Capital.
Governance of oil and gas sector as a part of regional energy security arrangements in Southeast Asia region is largely regulated and administered in multiple regional frameworks within ASEAN Economic Community. These include the ASEAN Economic Community Strategic Plan 2026-2030, the Framework for Circular Economy for the ASEAN Economic Community (AEC), the ASEAN Strategy for Carbon Neutrality (ASEAN, 2021, 2023, 2025,) and Methane Management Roadmap for Oil and Gas in ASEAN (ACE, 2025). Embracing the global energy transition initiatives, AMS endorsed several energy-focused initiatives introduced at COP29. Among others are the Global Energy Storage and Grids Pledge, the Green Energy Pledge, and the Hydrogen Declaration. Malaysia and Singapore have reiterated their commitment to these pledges, Indonesia has endorsed the Hydrogen Declaration, while the other AMS preferred to stay outside the agreements. This difference reflects divergence of national attitude toward energy transition and also indicates complexities of transiting to sustainable energy pathway, ensuring sufficient support and finding solutions to address climate pressures (ACE, 2025).
The ASEAN Plan of Action for Energy Cooperation (APAEC) is ASEAN’s strategic roadmap for a resilient and sustainable energy future. Implemented in two phases (2016–2020 and 2021–2025), it focuses on accelerating the ASEAN Power Grid (APG), enhancing oil and gas security through the Trans-ASEAN Gas Pipeline (TAGP) and LNG terminals, and promoting a common gas market. The ASEAN Plan of Action for Energy Cooperation (APAEC) also advances clean coal technologies and carbon capture, drives energy efficiency to achieve a 32% energy intensity reduction by 2025, and targets 23% renewable energy in Total Primary Energy Supply (TPES) and 35% in installed power capacity by 2025 through large-scale deployment and emerging technologies like hydrogen and fuel cells (ACE, 2015, 2021).
The new APAEC (2026-2030) marks a transition of ASEAN cooperation in oil and gas sector from the Trans-ASEAN Gas Pipeline (TAGP) to the Oil & Gas Cooperation and Security Strategy (OGCSS), shifting from a pipeline-centric approach to a comprehensive framework for connectivity, reliability, and sustainability (ACE, 2025). Building on TAGP’s achievements, OGCSS adds infrastructure planning tools, LNG bunkering, downstream integration, and low-carbon measures such as CCUS, decommissioning guidelines, and fiscal benchmarking. It also embeds climate action through the ASEAN Methane Leadership Program, positioning the region to meet rising energy demand while advancing decarbonisation.
Furthermore, OGCSS promotes green diversification via methane reduction, hydrogen, and CCUS, while fostering cross-sector collaboration with APG, renewable energy, and efficiency programs. To support this transition, companies should adopt a phased approach: short-term actions like IoT sensors and flare gas recovery; mid-term initiatives such as digital twins and hybrid renewables; and long-term strategies including CCUS deployment, green hydrogen, and blockchain for ESG transparency. Combined with workforce upskilling and policy harmonisation, these measures balance energy security with sustainability goals.
Natural Capital.
Natural Capital.
The oil and gas sector continues to dominate national revenue streams across Southeast Asia, particularly in hydrocarbon-dependent economies such as Brunei Darussalam, Indonesia, Malaysia, Thailand, and Timor-Leste. In 2022, ASEAN’s Total Primary Energy Supply (TPES) was 698.1 Mtoe, with fossil fuels making up 81.9% of the energy mix. The top contributors were oil and gas at 51.4% (or each at 31.7% and 19.7%, respectively), followed by coal at 30.5%, while renewables accounted for the remaining share (ASEAN Centre for Energy [ACE], 2024).
In 2023, ASEAN’s oil reserves experienced a modest increase of 1.25%, while natural gas reserves witnessed a slight decline of 0.94%. Oil production exhibited a slight decrease of 0.51%, while natural gas output demonstrated a notable growth of 0.84%. The region’s economic expansion propelled consumption upward, resulting in a 4.19% increase in oil usage and a 4.56% surge in natural gas consumption. Despite these developments, ASEAN remains heavily reliant on imports, sourcing 92% of its crude oil externally. Conversely, half of ASEAN countries engaged in natural gas exports, sending 81% of their production abroad. Simultaneously, infrastructure development initiatives yielded significant progress, adding 6.36 million metric tons per annum (Mtpa) of new regasification capacity and 3.89 Mtpa of liquefaction capacity. In parallel, national oil companies made substantial strides towards achieving net-zero emissions by implementing operational emission reduction measures, investing in renewable energy and electric mobility technologies, and collaborating internationally on clean energy initiatives (ACE, 2024b).
Southeast Asia’s offshore natural gas sector is a cornerstone of regional energy production, with major contributions from Brunei Darussalam, Indonesia, Malaysia, Myanmar, and Thailand. Brunei Darussalam’s economy relies heavily on offshore fields like Southwest Ampa and Champion, where gas is often co-produced with oil. Indonesia, a leading LNG exporter, is expanding infrastructure through projects such as Tangguh Train 3 and Abadi LNG, while promoting small-scale LNG for wider energy access. Malaysia’s output centres on offshore Sarawak, supplying the Bintulu Liquefaction Terminal (30 bcm/y). Myanmar’s production, historically driven by Yadana and Yetagun, now benefits from Shwe and Zawtika fields. Thailand operates extensive offshore facilities in the Gulf of Thailand and diversifies imports via pipelines from Myanmar and LNG from global suppliers. These offshore networks feed national pipelines connecting power plants, gas separation units, and industries (ACE, 2024c). However, Indonesia, Malaysia, and Thailand account for nearly 90% of regional methane emissions. Half of these emissions come from Indonesia (mainly Sumatra), with significant shares from Malaysia’s Peninsular, Sarawak, and Sabah assets, as well as Thailand’s Gulf operations. Combustion and flaring, especially in large offshore projects, remain key emission sources. (ACE, 2025).
To address the challenges, ASEAN is seeking a clear energy and decarbonisation solution as part of its carbon neutrality pledges. While coal remains dominant, accounting for over 40% of power generation, countries are exploring renewables, liquefied natural gas (LNG) as a transitional fuel, and emerging technologies such as hydrogen and carbon capture. However, affordability, regulatory uncertainty, and infrastructure gaps hinder progress. To meet targets, the region needs at least USD 367 billion in the next five years and stronger private sector participation. Actions taken include national energy transition frameworks, Just Energy Transition Partnerships with Indonesia and Viet Nam, and multilateral initiatives like the Indo-Pacific Economic Framework’s clean economy pillar. Success will depend on financing, technology transfer, and capacity building to accelerate renewable adoption and reduce reliance on coal (Fallin et al., 2023).
To advance the carbon neutrality agenda, proposed initiatives include developing ASEAN biofuel feedstock pathways to capture global market opportunities and assessing regional refining routes for crude palm oil and sustainable aviation fuel to strengthen international acceptance; harmonizing regional policies to support CCS/CCUS infrastructure, prioritizing hubs such as Singapore–Indonesia–Malaysia for cross-border CO₂ transport, and accelerating green value chain integration; and evaluating trade complementarities to foster ASEAN cooperation while providing policy support for green manufacturing to enhance competitiveness and sustainability (ASEAN, 2023). At the national level, ASEAN’s oil companies are leveraging existing infrastructure to promote renewable energy, exemplified by PetroVietnam’s focus on offshore wind power alongside oil and gas activities. In August 2023, PetroVietnam’s PTSC and Singapore’s Sembcorp Utilities secured a survey license and letter of intent for an offshore renewable energy project aimed at exporting clean electricity to Singapore (ACE, 2024).
Assessment of Capacity for Growth
Assessment of Capacity for Growth
Constrained
(low or no growth in production)
The expansion of the oil and gas sector within the ASEAN region is encountering considerable constraints due to both national and regional commitments aimed at achieving carbon neutrality. As global and domestic pressures to decarbonize increase, conventional growth models for fossil fuel industries are becoming increasingly untenable. Therefore, the integration of more sustainable practices into the oil and gas value chain represents a strategic route for ASEAN nations. By adopting cleaner technologies, enhancing operational efficiency, and investing in carbon mitigation measures, the sector can preserve its crucial role in supporting economic development while simultaneously minimizing the environmental externalities associated with non-renewable energy activities. This strategy not only aligns with long-term sustainability goals but also helps to ensure the region’s energy security and competitiveness in a rapidly transforming global energy landscape.
