Asian states must focus more on oil security

Asian states must focus more on oil security

KUALA LUMPUR (Reuter): Asian countries, where demand for
energy is soaring, need to pay more attention to the security of
their supplies, a senior International Energy Agency (IEA)
official said yesterday.

"Given the rapid oil consumption growth and high dependence on
Middle Eastern oil in Asian economies, the Agency believes that
security consciousness should be promoted and shared among Asian
economies to enhance global energy security," Tatsuo Matsuda told
an oil conference.

Matsuda, director of oil matters at the IEA, said oil demand
in East Asia was expected to increase around 4 percent a year and
would top 10 million barrels per day (bpd) by 2010.

China alone will need to import more than two million bpd of
oil in 2010, he said. China's customs data shows it imported
440,000 bpd in 1996.

"Countries in the region currently import around 40 percent of
their oil consumption. This figure is expected to grow to 65
percent in 2010, the bulk of it coming from the Middle East,"
Matsuda said.

Matsuda said energy security was not only about collective
action in an emergency and reducing dependence on oil through
conservation and finding alternative sources.

"Energy security is seen in a wider perspective as relating to
energy markets in general and as being closely linked to
environmental sensitivity," he said.

"Efficient markets, based on free and open trade, a secure
framework for investment and undistorted pricing are also
considered essential elements of energy security," he said.

Matsuda said the IEA was ready to support initiatives by Asian
economies in energy security.

Asia's big demand has created a "need for closer international
cooperation in the areas of information exchange and sharing of
experiences in various fields, including stockholding and
stockdraw policy," he said.

In a communique following a meeting in May, the IEA said
"spare crude oil production capacity in non-IEA countries is now
lower than before the Gulf crisis or during the 1980s".

"And there continues to be uncertainty over the extent to
which such capacity would be available in an emergency."

The IEA was founded in 1974 in response to the first oil
crisis with a resolve to be better prepared for any futures oil
shocks.

Analysts estimate current Asian refinery capacity at around 18
million barrels per day.