The energy sector is of the utmost importance in driving the development of ASEAN economies and the AEC. It is crucial that ASEAN member states are able to guarantee energy security for the region as it can be expected that robust economic performances by each individual country and ASEAN as a whole will mean that consumption
of energy will increase quite significantly.
Given that each ASEAN member state has its own strength in terms of energy supply (with the exception of Singapore), ASEAN countries have been engaged in regional cooperation to develop their energy sector and to ensure energy security across the region to fully support the economic development and business activities. The reasons for this are elaborated by Nicolas (2009): (i) production of energy by one country may affect other countries as seen in the construction of dams for hydropower electricity in the Greater Mekong Sub-region (GMS); (ii) distribution of gas through pipelines across the region that may allow for more efficient distribution, lowering transmission costs and price for the consumers; and (iii) depletion of fossil fuel (non-renewable) and environmental impacts are better dealt with through regional cooperation and initiatives.