Asia's booming oil demand seen problematic

Asia's booming oil demand seen problematic

TOKYO (Reuter): Asia's booming demand for oil could cause major supply problems in the years to come, an influential Japanese business group says.

The Keizai Doyukai (Japan Association of Corporate Executives), which in May called for the establishment of an Asian oil body to combat the problem and manage energy relations with the Middle East, released a more detailed proposal yesterday of medium- to long-term oil storage facilities to be shared by APOED member countries, collaboration in oil refining and the collection of regional energy statistics.

"The basic supply and demand situation in Asia is really quite serious," said Ariyoshi Okumura, who conceived the plan.

"The Asia-Pacific region is consuming oil from outside the region at a rate of 10 million barrels per day (bpd). If you are a believer in linear extrapolation, we will need 20 million bpd by 2010," he said.

"While I find that projection questionable, it is a certainty that energy shortages in Asia will be a serious concern for our governments in the years to come," said Okumura, chairman of Keizai Doyukai's Committee on Middle East-Japan Relations.

The group's proposal calls for the formation of a Tokyo-based oil body that would operate under the auspices of the Asian Pacific Economic Cooperation (APEC).

Named the Asia-Pacific Organization for Energy Dialogue (APOED), the organization would provide Asian countries a forum with which to coordinate their energy needs.

"Many governments in Asia do not publish any kind of detailed energy statistics," Okumura said.

"In order to cope with any emergency supply disruptions, the Asia Pacific has to have significant stockpiles. Japan has a substantial stockpile, but we don't know anything about China, nor do we know and about the strategic reserves of Indonesia, South Korea, Singapore and Malaysia," he said.

Okumura says the proposal is currently being considered by APEC, adding: "APEC should be a very appropriate organization to provide an umbrella for this initiative."

He also added that more contact was needed with oil-producing countries.

"We have to broaden the base of human contact with the Middle East and Central Asia. That's the only way for Japan to have energy security, economic security," he added.

Okumura said he hoped to see the oil body set up within take three years.

"Five years is too long, one too short, because so many governments are involved," Okumura said.

The APOED proposal notes that Japan's target of reducing the oil portion of its energy needs to 50 percent by 2010 has become unrealistic because of delays in nuclear power development.