Energy ties across the Indian Ocean

In a fragmenting global order, energy interdependence is being reshaped. While advanced energy technologies and value chains have long created new commercial ties, the shift is increasingly strategic. As the reliability of traditional energy and trade corridors —anchored in major markets— is thrown into doubt by American transactionalism, stalled Chinese development, Russian aggression, and European weakness, countries are diversifying their partnerships to enhance security, flexibility, and long-term resilience. This includes turning to closer neighbors and elevating formerly secondary relationships. One of the most notable developments in this landscape is the growing energy and infrastructure connectivity among the Gulf Cooperation Council (GCC), South Asia, and ASEAN countries.

New energy connections

Rather than forming around a single dominant project or pipeline, these connections are emerging through a broad web of strategic investments, cross-border infrastructure, and growing policy alignment. The result is a more horizontal axis of interdependence and energy trade spanning the Arabian Sea and Indian Ocean —what our recent work at the Atlantic Council terms the “ASIO” region.

The forces behind this realignment are structural. The ASIO region’s deepening economic ties, growing populations, and sustained energy demand —alongside the pressures of the energy transition— are driving increased trade and investment in the energy sector. At the same time, today’s geopolitical and trade dynamics are pushing many countries to reduce reliance on legacy Western or Chinese value chains, avoid binary alignments, and instead prioritize intra-regional cooperation. Economic complementarity and shared interests are reviving longstanding trade relationships with new strategic purpose.

Countries with sovereign wealth and energy to export are investing heavily in infrastructure to support both fossil fuel trade and the clean energy transition. The UAE is emerging as a major cross-regional investor and project sponsor. Masdar has taken stakes in leading Indian clean energy firms and committed to major projects in Malaysia, while ADNOC is building out logistics infrastructure in India, Indonesia, and other Southeast Asian markets.

Oman is positioning itself as a hub for energy transition investment and logistics, leveraging its strategic location, port assets, and hydrogen ambitions to strengthen ties with India and Southeast Asia. Aramco has invested tens of billions in Indian and Malaysian refining capacity, while Saudi Arabia is expanding its bilateral relationships and commercial footprint through capital partnerships via the Public Investment Fund (PIF).
Sovereign wealth funds such as the Qatar Investment Authority and Abu Dhabi Investment Authority are also channeling capital into Indian infrastructure, ASEAN renewables, and regional digital platforms. These moves reflect a broader Gulf strategy to leverage their own economic transformations and “vision” programs to chart an independent course and take a leadership role in emerging energy technologies and markets.

India and South-East Asia

In parallel, India has become an increasingly active player in developing infrastructure for both upstream energy procurement and downstream export of energy technologies. Indian public and private firms have expanded their footprint in the Gulf —not only through LNG import deals but also via joint ventures in refining, hydrogen, and renewables. New Delhi has also worked to strengthen institutional ties with ASEAN countries, participating in multilateral forums such as the India-ASEAN Energy Dialogue and engaging in regional power interconnection initiatives. Geographically, India is well positioned to serve as a bridge between GCC and ASEAN energy grids, enabling load balancing across time zones and advancing deeper interregional integration.

In Southeast Asia, governments are making concrete progress toward regional grid integration. The region’s leadership in utility-scale solar and battery storage is increasingly supported by clean energy investments from Gulf firms like Masdar and ACWA Power. These efforts complement significant downstream oil investments and LNG supply deals with Gulf producers.

With electricity demand rising rapidly —driven by economic growth and favorable demographics— countries such as Indonesia, Malaysia, and Vietnam are leading global orders for both gas turbines and renewable technologies. Expansion in generation capacity, grid investment, interconnections, and growing demand from data centers are creating the foundation for broader energy connectivity. The International Energy Agency projects a five-fold increase in electricity trade between Southeast and South Asia by 2030.

Singapore has played a leading role in driving regional momentum, backing ASEAN grid integration through policy leadership and strategic investment. By leveraging its capital reserves, it is pursuing a hedging strategy to manage growing geopolitical uncertainty while anchoring itself as a regional energy hub.
 

A basis for strategic alignment

One of the defining features of energy dynamics in the broader ASIO region is the alignment of new commercial relationships with deeper diplomatic coordination. Infrastructure partnerships are increasingly supported by sovereign wealth funds and national development strategies that view energy interconnection as a geopolitical priority. This trend is visible in the Gulf states’ eastward investment strategies, ASEAN’s focus on regional energy security, and India’s efforts to assert regional strategic leadership through energy diplomacy and integration.

This evolving regional integration also raises key questions about how these blocs will align technical standards, manage geopolitical risks, and ensure that energy transition pathways remain both inclusive and secure. Between 2020 and 2025, countries across the ASIO region signed a wave of bilateral Comprehensive Economic Partnership Agreements, while regional multilateral efforts gained momentum —even as global multilateralism has struggled. India and ASEAN formalized a strategic partnership in October 2024, and in May 2025, the second GCC-ASEAN Summit convened in Kuala Lumpur, presenting what the Asia Times described as “a civilized vision in a fractured world.”

If these countries can succeed in scaling infrastructure, aligning regulation, and building trust, the ASIO region may serve as a blueprint for regional cooperation. Energy infrastructure is not only a channel for economic exchange but also a foundation for strategic alignment in the 21st century.