Asia to battle for $200b energy investment
Asia to battle for $200b energy investment
Tanya Pang, Reuters, Tokyo
Asia will need some $200 billion in the next 10-15 years to
build enough gas and power infrastructure to underpin fast
growing regional economies, the head of an Asia Pacific research
group said on Monday.
But competition for investment will be tough with other
regions and industries, and governments will have to be proactive
in deregulation and liberalization to attract capital resources.
"Investment is by far the biggest issue for Asia and it is
going to be difficult to get domestically and internationally.
There is no guarantee energy investment is the most profitable
and there is plenty of competition from sectors such as
information technology and communications," said Tatsuo Masuda,
president of the Asia Pacific Energy Research Center (APERC).
"Most important will be to deregulate and liberalize if we are
going to get the private sector to come in, and to have legal and
regulatory transparency. A level playing field for all involved
is also critical," Masuda told Reuters in an interview.
He said harmonization of regulations for cross-border projects
also was imperative.
APERC, which comprises members of the Asia Pacific Economic
Cooperation (APEC), is an affiliate of the Institute of Energy
Economics of Japan.
Masuda estimated that $100 billion would be needed for
liquefied natural gas (LNG) terminals and pipelines to sate a
tripling in demand for natural gas in Asia in the next 20 years.
Asia-Pacific, excluding the Indian sub-continent, consumed
roughly 190 million tones of gas in 2000.
"North America has 520,000 kilometers of gas pipeline
networks, Europe has 220,000 km, but there are virtually none in
Asia where gas demand is expected to rise faster than anywhere
else," he said.
Investment in power projects should be at least $50 billion on
a 15 year horizon, but would largely depend on demand growth.
Masuda, who spent five years with the Paris-based
International Energy Agency until 2001, reckoned an economy
achieving seven percent growth in energy supply would need to
double existing energy infrastructure every 10 years.
"Our job is to alert political leaders of the need to open up
and deregulate this sector to attract much-needed investment," he
said.
Transport and then industry are expected to drive oil demand
in Asia by an annual rate of 3.7 percent to 28 million barrels
per day (bpd) by 2020 with the region becoming increasingly
reliant on the Middle East and swing supplier West Africa.
Only two countries -- Japan and South Korea -- have strategic
oil reserves based on IEA parameters of 90 days of consumption.
Masuda said any severe supply disruption that caused IEA
nations to release strategic stocks would attract "free riding"
by other Asian countries.
"But the long-term danger is that the proportion of IEA demand
versus world demand is shrinking and as those (strategic) stocks
are based on consumption, total strategic stocks will shrink,"
Masuda said.
He added that the Sept. 11 attacks in the United States had
triggered some serious thinking on strategic supplies and China
appeared to be considering possible inventories.
Two of the region's biggest producers, Indonesia and Malaysia,
will cease to export in about 2012 and 2016, respectively.
He said the Association of South East Asian Nations (ASEAN)
were discussing at government level modifications to the ASEAN
Petroleum Security Agreement signed in 1986 and ratified in 1988.
"They are talking about how to cope with the new security
situation and looking at holding stocks. But so far it is unclear
whether the discussions are about own stocks or joint," Masuda
said, adding that ASEAN energy ministers are due to meet in early
June to discuss the revisions.