The global energy landscape is being violently reshaped by an unexpected force, with the artificial intelligence revolution triggering an unprecedented surge in electricity demand that is challenging the very foundations of the energy transition. At the landmark Energy Asia 2025 conference, top executives from PETRONAS and S&P Global declared that the world’s energy nexus has irrevocably shifted to Asia, a region now tasked with navigating a complex “polycrisis” while its own voice, long subdued, finally commands the world stage.
KUALA LUMPUR – In the heart of Southeast Asia’s economic engine, a stark new reality is dawning. The dialogue at the second edition of the Energy Asia 2025 conference was not dominated by the familiar narratives of oil prices or renewable energy targets alone, but by the voracious and escalating energy appetite of artificial intelligence. It’s a paradigm shift so profound that it is forcing a wholesale re-evaluation of energy security, investment strategies, and the realistic pace of decarbonization for decades to come.
The seismic nature of this change was laid bare by Ezran Mahadzir, CEO of PETRONAS LNG Ltd., and Dr. Daniel Yergin, the Pulitzer Prize-winning energy historian and Vice Chairman of S&P Global. Their insights revealed an industry grappling with a future that has arrived far sooner and with greater force than anyone had anticipated.
The AI Tsunami: A New Era of Power Demand
The most startling revelation from the conference was the sheer scale of the new demand wave. Ezran Mahadzir stunned attendees with a single, powerful statistic from the host nation. “The shift in demand, electricity demand, was going to move by about 6.5%,” he explained, wide-eyed. This explosive growth, he elaborated, is “obviously driven by not only industrialization, urbanization, but also now the next wave of the Industrial Revolution, which is going to be founded on AI.”
This isn’t a gradual increase; it’s a step-change. The data centers that power AI models are colossal consumers of electricity, requiring constant power 24/7 for processing and cooling. This new, inelastic demand layer is straining grids and rewriting forecasts globally.
Dr. Daniel Yergin confirmed this is a worldwide phenomenon. “AI is, first of all, it’s created an enormous demand for electricity that wasn’t there before,” he stated unequivocally. The immediate knock-on effect, he added, is “an increased demand for natural gas. I think that’s one of the most striking features of the last year, year and a half.” The industry is now in a “real rush now for data centers,” Yergin noted, with the primary constraint being the assurance of reliable power. This has ignited a new focus on the very building blocks of electrification, including a potential bottleneck he highlighted: ensuring a sufficient supply of copper to build out the required infrastructure.
A Voice for Asia: The Shifting Center of Gravity
This AI-driven demand shock is occurring within a broader geopolitical shift, a central theme of the Energy Asia 2025 conference itself. Dr. Yergin passionately articulated the conference’s raison d’être. “First of all, it was to make sure that there was a voice of Asia, which there was a strong sense that it was being left out of a lot of the conversations,” he said.
He provided a stark contrast to illustrate his point. “Over the last 20 years, electricity demand really hasn’t grown in Europe, and in this part of the world, it’s tripled. So it’s a different perspective, and that perspective was not being heard.” The conference aims to establish an “Asian framework for looking at energy issues, not just from a Northwest Europe perspective, which had kind of been dominant in the international discussion.”
This is more than a matter of perspective; it’s about acknowledging a different reality. As Ezran Mahadzir pointed out, Asia is home to 4.8 billion people, and a staggering “700 million people pursuing economic development.” This creates a moral and economic imperative that fundamentally differs from that of the developed West. “You can’t leave people behind,” he stressed.
Navigating the ‘Polycrisis’ with Resilience
The challenge is magnified by what PETRONAS internally terms a “polycrisis.” Ezran Mahadzir described this as a perfect storm: “a confluence of tougher reserves to monetize, higher CO2, further out offshore, sometimes working in disputed areas, with an uncertain demand outlook.” This operational reality is colliding with the need to decarbonize, creating immense pressure on energy producers.
The answer to this multifaceted crisis, both speakers agreed, lies in a single word: resilience. Dr. Yergin drew a powerful historical parallel, quoting one of his favorite lines from his seminal book, The Prize. He recounted how Winston Churchill, when shifting the British naval fleet from coal to oil before World War I, justified relying on Persian oil by stating, “Safety in oil lies variety and variety alone.”
“In other words, security is diversification,” Yergin explained. “And one of the fundamental ways that you can get resilience in an energy system is by having it diversified. And that was a message in 1912, and it’s a message in 2025.” This resilience must be built to withstand shocks from all corners—be they “political, the shocks could be weather,” or, as is now clear, sudden and massive surges in demand.
The Investment Imperative in a Fragmented World
Building this resilient, diversified, AI-ready energy system requires capital on an astronomical scale. Yet this need for investment is running headlong into a world that is, as Dr. Yergin noted, becoming more fragmented. Referencing another of his books, The Commanding Heights, which described a globalizing world, he observed, “we’re seeing a reversal of that right now, issues of kind of national identity, national politics are affecting these global supply chains.”
This fragmentation makes long-term, cross-border investments more perilous. Ezran Mahadzir issued a clear call for stability. “There needs to be a growing realization that energy investments cut through changes in government, shifts in policy, and capital is deployed to serve the needs of energy security of a longer time frame,” he argued.
The Eagle Forum, a high-level gathering within the conference, concluded that attracting this capital requires “demonstrable outcomes” from collaboration. The specific ask for regions like ASEAN is to make “policy making as well as policy enforcement more coherent and consistent to make projects that would address energy security in this region a little bit more investable.” The universal challenge of “cumbersome permitting,” as Yergin termed it, also remains a critical roadblock to development worldwide.
Malaysia at the Crossroads: A National Case Study
The host nation of Malaysia serves as a microcosm of the challenges and transitions playing out across Asia. With its electricity demand projected to surge by 6.5%, the country is actively preparing for a future where it will become a net energy importer.
“We already are actually preparing for this scenario,” Ezran Mahadzir confirmed. He revealed that plans are well underway to get a “third regasification terminal up and running.” This is a monumental shift for a nation that has long been a major LNG exporter. He projected that “within the next four or five years there’s going to be growing dependence on LNG importation” for Peninsular Malaysia, driven by the need to power its growing industrial base and the burgeoning data center industry.
This is happening alongside a major policy overhaul. The Malaysian government has announced a policy to halve its coal capacity and is moving towards rationalizing energy subsidies, which, as Mahadzir noted, “distort supply and demand.” Furthermore, the Finance Minister has indicated plans to introduce a carbon tax by 2026. This reflects a regional trend to “price in externalities,” a move that would make the economics of carbon capture and sequestration (CCS) more viable and force a more conscious assessment of carbon costs in all new projects.
Redefining the Energy Transition: A Pragmatic Balance
Ultimately, the AI boom forces a more pragmatic conversation about the energy transition. The narrative can no longer be a simple, linear path from fossil fuels to renewables. It must now account for a massive new source of fossil fuel demand in the form of natural gas to provide firm, reliable power for data centers.
Ezran Mahadzir firmly rejected the idea that meeting this demand must be destructive. “We don’t believe the fostering by some that the production of energy to meet these demands need to be destructive or disruptive,” he said, citing PETRONAS’s purpose “to enrich lives even as we build a sustainable future.” For PETRONAS, this means pursuing an “advantaged barrel”—oil and gas produced at low cost and with low emissions, using technology and innovation.
It is a delicate, complex balancing act. The world, and Asia in particular, must pursue economic development responsibly and equitably. As the dialogue at Energy Asia 2025 made clear, the targets and timetables for the transition are being re-examined through a lens of realism. As Dr. Yergin observed, after years of setting ambitious goals, people are now asking, “what is realistic, what is the timing, as opposed to what might have been thought to be the timing a few years ago.”
The AI revolution did not create the energy trilemma of security, affordability, and sustainability, but it has amplified it to an acute degree. The path forward, as charted in Kuala Lumpur, is not one of simple choices, but of managing complex trade-offs in a world more hungry for power than ever before.
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