Trans-ASEAN Gas Pipeline: Gas network may remain a pipe dream

Benjamin K. Sovacool, The Straits Times 5 Jun 09;

PRACTICALLY everybody attending a conference on energy security in South-east Asia, studying regional energy policy, or evaluating Asean's energy plans over the past five years will have heard of the TAGP.

Short for the Trans-Asean Gas Pipeline network, the TAGP would connect the gas fields of the Andaman Sea, the Gulf of Thailand and the South China Sea (among others) through a system of pipelines to industrial and urban centres. The project, if completed, would involve at least $16 billion of investment and up to 5,100km of new interconnected pipelines, in addition to the $14.2 billion already invested to build 3,952km of bilateral pipelines.

Asean has promoted the TAGP on the grounds that it will catalyse economic development and enable natural gas-producing countries to earn foreign exchange, as well as reduce greenhouse gas emissions by encouraging the substitution of natural gas for coal and oil. TAGP supporters also argue that it could reduce the region's dependence on volatile energy imports, and improve energy security and regional cooperation.

But just how likely is it that the TAGP will be completed?

While many Asean member states such as Indonesia, Malaysia, the Philippines, Singapore and Thailand have years of experience in constructing and operating gas pipelines, these systems are mainly point-to-point. They send natural gas from its point of extraction directly to where it is used - often an industrial facility or power plant. Asean countries have very little technical experience operating an integrated system of pipelines from a number of interconnected sources with varying types of natural gas.

The size of natural gas reserves would be of paramount concern for anyone wishing to assess the profitability of such a pipeline system, but regional estimates of natural gas potential are highly uncertain. None of the four major surveys of gas reserves, for example, agrees on how much natural gas there actually is, with estimates differing by a factor of two for some countries.

A collection of legal challenges may also impede the rapid development of the TAGP. Cross-border natural gas pipelines require harmonisation of national legal and regulatory frameworks, as well as of gas pricing schedules. Many South-east Asian countries, however, are still working out the rules concerning natural gas transmission and distribution, while legislation concerning energy and the environment differs greatly in the region.

A drive towards protectionism in the energy sector and the securing of domestic supply may also hold up the creation of a TAGP network. Regional demand for energy has grown rapidly from 1990 to last year. Attitudes are shifting in South-east Asia towards domestic control of energy resources, not their exportation and trade.

For natural gas pipelines to be embraced socially, communities must have meaningful discussions about where the lines go. Yet in some parts of South-east Asia, such as Myanmar, no independent organisations exist to face state-owned oil and gas companies. There is no clear complaints mechanism, and there have been allegations of human rights abuses against some communities during pipeline construction.

Finally, natural gas pipelines can endanger species, habitats and ecosystems through land degradation; and there is the ever-present risk of spills and accidents as well as associated greenhouse gas emissions with the natural gas fuel cycle. Faulty joints, malfunctioning valves, operator errors and corrosion can induce frequent leaks and ruptures. From 1907 to 2007, natural gas pipelines accounted for 33 per cent of all major energy accidents worldwide.

Natural gas facilities also contribute indirectly to global warming by emitting significant amounts of methane during the production and transportation of the gas.

From all of the above, two conclusions can be reached: First, Asean's experience with the TAGP reminds us that large-scale infrastructure projects face immense technical and social challenges, and require extensive management of economic, political and environmental risks. These risks can never be fully mitigated, and they tend to be distributed unevenly among the disenfranchised and the poor.

Second, the TAGP implies that talking about regional energy cooperation is much easier than actually cultivating it. Powerful institutions and players within South-east Asia appear divided over whether natural gas should be used to satisfy domestic demand, or to acquire foreign capital through exports. Asean envisions the TAGP as a way to create a more industrialised and friendly community of nations, but different interests within the bloc may see it as a means to expand cross-border pipeline connections merely to support domestic needs.

These reasons may explain why, despite being talked about for almost 20 years, thousands of kilometres of pipe still need to be built and billions of dollars invested before the TAGP becomes a reality.

The writer is an assistant professor at the Lee Kuan Yew School of Public Policy.