integration
The overall gap between energy production and demand in the ESCAP Asia-Pacific region is projected to widen significantly in the upcoming decades. Given the relative abundance and high variance in distribution of natural resources in the region, transborder gas and electricity trade have the most potential for further development to help meet the demand.
The Central Asia-China gas pipeline, commissioned in 2009 to deliver natural gas from Turkmenistan to China through Uzbekistan and Kazakhstan, has significantly altered the composition of imports for one of the largest importers in the region; in 2009 China imported
all of its gas in liquefied form, but three years later gas from Turkmenistan accounted for over half of its gas imports. Continuing its search for supply diversification, China signed an agreement to purchase natural gas from Russia through a Power of Siberia pipeline, to be commissioned in 2018 (Breaking Energy, 2015).
Despite the rapid development of LNG capabilities in the past five years, many countries in the region have revived plans for an integrated pipeline network, mainly due to volatility and inefficiencies of global LNG markets (Corbeau, 2014). The Trans-ASEAN Gas Pipeline (TAGP), which aims to connect and develop existing pipeline connections and connect gas reserves in the Gulf of Thailand, Indonesia, Myanmar and the Philippines to the rest of the region, has faced numerous technical and regulatory obstacles. Indonesia’s East Natuna gas field has been difficult to develop and different national regulatory and pricing systems proved difficult to harmonize. Nevertheless, promising steps have been taken towards elimination of domestic subsidies and liberalization of energy markets, as several countries took advantage of low global oil prices and, once completed, TAGP has the potential to play a vital role in providing diversity and flexibility of gas supplies, fostering regional energy access and security.
Construction of the Turkmenistan Afghanistan Pakistan India (TAPI) Natural Gas Pipeline is a high priority under CAREC 2020, and, once completed, will export up to 33 billion cubic metres (bcm) of natural gas per year through an approximately 1,800-kilometre pipeline.
The project has faced delays but it broke ground in mid-December 2015, representing an important step towards regional integration, increased energy security and stronger market integration through energy trade.
One of the most promising projects in the region hopes to utilize the abundant hydropower resources of Kyrgyzstan and Tajikistan, both of which have surplus electricity production during the summer, and transfer electricity to Afghanistan and Pakistan, both of which suffer chronic shortages. The Central Asian-South Asian (CASA) - 1000 project, for which a Power Purchasing Agreement (PPA) was signed in April 2015, will provide up to 1,300 MW of clean electricity to systemically undersupplied regions and allow the producing and transit countries to raise revenues that can in turn be used to boost local social and economic development.10 Although, like many other infrastructure projects in the region, CASA 1000 has faced questions about the security situation in the region, it is a promising example of efficient utilization of existing clean energy capacities through transboundary grid integration.
In the power sector, a new vision has been put forth by China’s largest grid operator, which is promoting increased connectivity and power trade, moving far beyond bilateral or even multilateral trade to global energy interconnection through ultra-high voltage transmission and smart grid technologies.
10 More information on CASA-1000 can be found at: http://www.casa-1000.org/
Sample Policy and Programme Approaches from the Region
AFGHANISTAN, BHUTAN, INDIA, MALDIVES, NEPAL, PAKISTAN, SRI LANKA: SAARC Framework Agreement for Energy Cooperation , 2014
This agreement enables SAARC member State transmission planning agencies to plan the cross-border grid interconnections through bilateral/trilateral/mutual agreements between or among the concerned States based on the needs for trade in the foreseeable future, through studies and sharing technical information required for the same. Member States may enable the respective transmission agencies to build, own, operate and maintain the associated transmission system of cross-border interconnection falling within respective national boundaries and/or to interconnect at mutually agreed locations.
ARMENIA, KAZAKHSTAN, KYRGYZSTAN, RUSSIAN FEDERATION: Concept of the Common Power Market of the Eurasian Economic Community, 2015
The policy is directed at the effective function of the common power market of the Eurasian Economic Community. Power trade is explicitly recognized as a means of enhancing economic integration within the Union. The Concept thereby envisages the development of a Programme on the Establishment of the Common Power Market.
CHINA: Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road, 2015
The document promotes cooperation in the connectivity of energy infrastructure, working in concert to ensure the security of oil and gas pipelines and other transport routes, building cross-border power supply networks and power transmission routes, and cooperating in regional power grid upgrading and transformation.
INDIA, NEPAL: Agreement on Electric Power Trade, Cross-Border Transmission Interconnection and Grid Connectivity, 2014
An agreement to mutually work out a coordinated procedure for secure and reliable operation of the national grids interconnected through cross-border transmission interconnection(s) and to prepare scheduling, dispatch, energy accounting, settlement and procedures for cross-border power trade and unscheduled interchange.