Southeast Asia could become a net importer of fossil fuels in the next few years, raising the financial burden on governments and increasing carbon emissions in the region, the International Energy Agency (IEA) warned in a report.

This comes despite expectations of slower growth in the region’s energy demand as economies shift towards less energy-intensive manufacturing and services, and greater efficiency, the agency said in its annual Southeast Asia outlook.

Southeast Asia was already a net oil importer at 4 million barrels per day (bpd) in 2018, while strong growth in demand for natural gas has reduced the surplus of gas for export, the world’s energy watchdog said.

For coal, output from the region’s top producer, Indonesia, remained well above 400 million tonnes of coal equivalent last year but increases in domestic demand and exports to China and India could reduce its surplus, the IEA said.

"These trends point to Southeast Asia becoming a net importer of fossil fuels in the next few years," the agency said.

The region’s overall surplus of supply over demand at 120 million tonnes of oil equivalent (mtoe) in 2011 had been eroded to just above 30 mtoe in 2018, it said.

Growing reliance on imports also raises concerns about energy security, the IEA said. For example, the region’s overall dependence on oil imports is forecast to exceed 80 per cent in 2040, up from 65 per cent today.

With no change in policy, Southeast Asia’s energy demand is expected to grow by 60 per cent by 2040, accounting for 12 per cent of the rise in global energy use as its economy more than doubles, the IEA said. This was slower than the region’s 80 per cent growth since 2000.

Southeast Asia’s growth in electricity demand, at an average of 6 per cent per year, has been among the fastest in the world, the IEA said. Still, some 45 million people there still lack access to electricity. The region is well on the way to achieving universal access to electricity by 2030, it added.

Oil demand in Southeast Asia, home to nearly 10 per cent of the world’s population, would surpass 9 million barrels per day (bpd) by 2040, up from just above 6.5 mbpd now, the IEA said.

"Oil continues to dominate road transport demand, despite an increase in consumption of biofuels," the IEA said.

"Electrification of mobility, with the partial exception of two and three wheelers, makes only limited inroads. This pathway suggests little change in Southeast Asia from today’s congested roads and poor urban air quality."