Asia needs new energy security architecture

MORE than halfway through 2026, and the West Asia crisis continues to expose fault lines in the global energy system. The International Energy Agency’s (IEA) August Oil Market Report underscores that the shock is far from over.

Asia has been hit far harder than other regions. Japan’s dependence on West Asian crude oil before the conflict was 94 per cent. For the Philippines, Vietnam, Thailand, and South Korea, the figures were 97, 87, 74, and 69 per cent respectively.

India imports about 60 per cent of its liquefied petroleum gas consumption, with 90 per cent of that coming through the Strait of Hormuz.

In 2024, 84 per cent of crude oil and 83 per cent of liquefied natural gas moving through the Strait went to Asian markets.

The geography of vulnerability is overwhelmingly Asian. Yet the current global energy security system – of which the IEA is a central pillar – was designed for a different era and a different crisis.

Out of 32 IEA members, only three are from Asia. European members have been more cautious about releasing emergency reserves, viewing the crisis as primarily Asian.

Meanwhile, many Asian countries lack the resources to develop their own reserves. India’s oil reserves cover only nine to 10 days of net imports, with another 64 days from operational refinery stocks, according to analysis from the Council on Energy, Environment and Water.

Reserve levels in Vietnam, Indonesia, Cambodia and Laos stand at 65, 25, 30 and 40 days respectively; several others in the region have no government reserve system at all.

Liquefied natural gas (LNG) vulnerabilities are equally stark. Asia’s dependence on LNG through the Strait was 27 per cent in 2025, compared to Europe’s 9 per cent.

For Pakistan, Bangladesh, India, Singapore and Taiwan, the figures were 99, 60, 59, 46 and 34 per cent respectively. LNG reserves are limited to a few weeks due to boil-off losses during storage and a lack of underground gas storage capacity.

Shortages of liquefied petroleum gas (LPG) in India and of gasoline and diesel in the Philippines and Vietnam have resulted in panic buying and long queues at service stations.

This is an Asian energy crisis, and it demands an Asian response.

Fortunately, the foundations are being laid. In July 2026, Indian Prime Minister Narendra Modi and Japanese Prime Minister Sanae Takaichi agreed to a new partnership on energy resilience, focusing on strategic petroleum reserves and resilient supply chains.

Japan’s POWERR Asia Initiative, announced in April 2026, pledged 1.5 trillion yen (US$10 billion) to help Asian countries purchase expensive energy and build emergency oil reserves.

At the Asia Zero Emission Community (Azec) Plus Online Summit that month, a broader vision began to take shape.

India, for its part, has been addressing the crisis through a mixed approach – boosting domestic LPG production and diverting industrial gas towards LPG manufacturing, resulting in 54,000 metric tonnes of LPG within a week.

The government rolled out piped natural gas connections for over 1.1 million households in a short period, stabilising domestic demand, while avoiding any fuel rationing. State-owned oil marketing companies incurred losses of around US$7.8 billion to shield consumers and farmers from global price spikes.

Leveraging diplomacy, India has expanded its energy sources from 25 countries to around 40. Today, 70 per cent of its crude imports come from routes outside the Strait of Hormuz – an example other Asian countries could follow.

The Asean Power Grid: a critical piece of the puzzle

Any Asian energy security architecture must also address electricity resilience. This is where the Asean Power Grid (APG) becomes essential.

In October 2025, Asean energy ministers endorsed an Enhanced APG Memorandum of Understanding and launched the APG Financing Initiative – a US$10 billion commitment from the Asian Development Bank (ADB) and World Bank.

Eight interconnection projects are already underway across Laos, Thailand, Cambodia, Vietnam, Malaysia, Singapore, Indonesia, and Brunei. The Laos-Thailand-Malaysia-Singapore Power Integration Project is now in its second phase, with multilateral, multidirectional power trading underway and supply to Singapore doubling to 200 megawatts.

The APG represents exactly the kind of regional energy cooperation of the willing that Asia needs, but it remains a work in progress.

Azec, with its 11 member countries including Japan, Australia and most Asean nations, provides a broader Asian political framework.

A broader Asian governance architecture could bring the APG’s infrastructure and the Azec’s framework together. This can then coordinate financing, standardise regulations, and ensure that the benefits of regional power integration flow to those who need them most.

Building Asia’s new energy security architecture

We propose a new architecture with four features.

First, decision-making must be led by Asian countries. The IEA’s advanced-economy bias cannot serve Asia’s needs. Azec, expanded to include India and other partners, could become the platform for this leadership.

Second, it should have a support mechanism to help Asian countries build emergency oil reserves through financing and technical assistance. Japan’s POWERR Asia Initiative has started this work; it must be scaled and institutionalised.

Third, similar support could be rendered for LPG and LNG resilience, including strengthening LNG receiving capacity and storage tanks. The APG’s success in electricity should inspire comparable efforts for gas.

Fourth, it should develop a system to facilitate mutual support in supplying needed energy and oil products among Asian members during crises. In short, a regional solidarity mechanism.

India and Japan are natural partners to lead this effort. Japan brings advanced capital and technology; India brings scale, a supportive regulatory environment, and deep experience in leading international initiatives. India is already the energy lifeline for Nepal and Bhutan, anchoring regional power integration.

Together, India and Japan can help move Asian energy security from a collection of national responses towards a genuine regional system.

Asia has been a rule-taker in the energy conversation for too long. That must change. The APG shows what is possible when countries cooperate on physical infrastructure. Azec shows what is possible when countries cooperate on policy.

What we need now is the architecture to connect them and the leadership to build it.

Tatsuya Terazawa is chairman and chief executive officer of the Institute of Energy Economics, Japan, and Dr Arunabha Ghosh is founder and former chief executive officer of the Council on Energy, Environment and Water. Views expressed here are personal.