Asia too dependent on Middle East oil

Asia too dependent on Middle East oil

SINGAPORE (Reuter): Robust oil demand in Asia over the next 10 years will lead to greater reliance on Middle East crude, putting the region in a more precarious situation than the United States or Europe, an energy analyst said.

Kang Wu, an analyst with Hawaii's East-West Center, said Asia- Pacific oil demand was expected to grow by an average 3.6 percent per year from 1994 to 2005, reaching 23.8 million barrels per day (bpd).

Speaking late on Tuesday, he told a Singapore refining conference sponsored by the Institute for International Research that by 2005, nearly 93 percent of all crude imports to the region would come from the Middle East unless alternative sources could be found.

Middle East oil producers, with their huge oil reserves, are about the only countries which can meet the insatiable growth in Asian demand, energy analysts say.

But the region is still fraught with political tension and greater dependence on them could increase supply and price risks.

This sharply contrasts with the United States, where Canada, South America and the North Sea will remain key suppliers for the U.S. market.

Despite a slowdown in Chinese oil consumption, regional oil demand remained strong during 1994, reaching 16.2 million bpd. By the turn of the century, the Asia-Pacific is expected to overtake the U.S. as the biggest oil user.

Import

With Asian oil production likely to stagnate or increase only slightly, much of the new demand will have to be met with imported oil.

"Imports will more than double from the current nine million barrels per day (bpd) to 19 million bpd by the year 2010," Cheng Hong Kok, president and chief executive officer of Singapore Petroleum Co., told the conference.

In 1993, 56 percent of the oil consumed in the region was imported, Wu said. By 1997 and 2000 import dependence would rise to 63 and 67 percent respectively, and 72 percent by 2005.

"The net import product requirement for oil products in 1997 would be 1.4 million bpd and would rise to two million bpd in 2000," Wu said.

At present, the Middle East supplies about 71 percent of the region's crude oil imports but Asia's dependence on Middle East oil will rise to 82 percent in 1997 and 87 percent by 2000.

Crude oil exports from many Asian countries would decline as demand continues to grow, Wu said.

In 1994, about 2.2 million bpd, or 32 percent of total Asian oil production, was exported, primarily to other Asian countries.

Less than 15 percent of the exported crude was destined for outside the region, mostly to the United States.

By 2000, available exports are projected to fall 50 percent to 1.1 million bpd and by the year 2005 to around 560,000 bpd.

"We expect Indonesia will import more oil than it exports later in the decade. By 2000, exporters will include Indonesia, China, Malaysia, Brunei, Vietnam and Papua New Guinea, but by 2005 we expect that only Vietnam, Brunei, Malaysia and PNG will still be exporting. Some oil may also be exported from Myanmar."