There is an abundance of opportunities for energy development and cooperation between ASEAN and Canada, and access to capital can unlock it.
On July 15th , the CABC & Osler, in partnership with the Government of Canada, hosted the Canada-ASEAN Energy Partnership webinar. Over 80 participants have tuned in to join the webinar which aimed to assess the current energy market and identify and understand the challenges and opportunities that exist for Canada and ASEAN to develop a more robust partnership in trading energy, technology, and ideas.
Cautious optimism was provided by our esteemed panelists from both sides of the Pacific (Ben Arnott, Societe Generale; Charlotte Raggett, Rockies LNG; Chris Season, ARC Financial; Craig Spurn, Osler).
For those of us in Canada, the focus continues to be on export routes and expanding Canada’s energy presence around the globe, with a specific target on ASEAN and Asia as both regions are seeing declining domestic supply combined with rapidly rising demand.
Across the Pacific in ASEAN, the perspective is much different where the capital providers are seeing more activity in the renewable space than traditional energy (upstream and coal) sectors. While the panel agreed that renewables are attracting interest from investors, that alone will not be able to meet the growing demand and investment in upstream or LNG regasification will be required.
Key Topics Discussed
Once in a lifetime opportunities in the upstream sector: The drop in demand caused by the COVID-19 pandemic has been well documented, and the industry will take some time to readjust and will ultimately only rebound as fast as the world’s economies do. However, the panel focused on the ‘once in a lifetime’ opportunities that currently exist in the upstream sector in both ASEAN and Canada. So why aren’t we seeing a flurry of M&A deals? Access to capital has handcuffed the companies who could take advantage of these opportunities. Incumbents and new entrants will have to find creative ways to fund development and acquisitions as the equity and debt markets readjust and refocus on upstream sector.
ESG is more important than ever: The rapidly emerging trend towards a greener future is front of mind for governments and consumers, putting sustainability and security of supply in the spotlight. The result, Canada is well-positioned to supply the world and is a step ahead when it comes to sustainability thanks to a robust regulatory environment. This is not just limited to providing physical molecules, but opportunity exists to export Canada’s technology and regulatory practices as well.
Is Hydrogen the White Knight? Unlikely in the short term, while there have been significant developments in the scalability of Hydrogen as an alternative fuel, the panel did not see it carving out a significant market share from the usual players; hydrocarbons and renewables. But don’t count Hydrogen out; often derived from oil and natural gas, Canada is also well positioned should demand emerge.
Over 30 participants joined the post-event open networking session to connect with the speakers and peers.
Where should investment go in Canada? To close things out, we asked each participant to identify their top investment opportunity in the Canadian energy market. The results were:
- Upstream: The valuations are simply too low to ignore, with ‘once in a lifetime’ opportunities to acquire quality assets.
- Midstream/Petrochemicals: Finding a new home for the molecules, either through new export routes or transforming oil or natural gas into a transportable derivative (e.g. converting natural gas to methanol.)
Finally, let’s not forget about ASEAN, where energy is needed to fuel a growing middle class which will equal the population of the United States by 2035. ASEAN presents many unique opportunities across all sectors of the energy industry and with energy security becoming a top priority many nations are finding more ways to encourage foreign investment.
In conclusion – The Energy Partnership between Canada and ASEAN can extend well beyond trading physical molecules of oil and natural gas. Sharing our technologies and regulatory practices can help in fueling one of the fastest growing economic regions on the planet.
Many thanks to the CABC, Osler, and the Government of Canada for their work in putting this event together. The Canada ASEAN Energy Partnership Webinar is part of the Canada–ASEAN Business Leaders Series which is a fully virtual programme to provide timely information from industry leaders and platform for exchange. The next session, Navigating the Changing Investment Landscape in Southeast Asia, will be held on August 4th and you can register here
A full recording of the Canada-ASEAN Energy Partnership Webinar is available here.