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.