Cooperation needed on Asian oil demand

Cooperation needed on Asian oil demand

BEIJING (Reuter): Explosive oil demand in Asia, particularly in China, must be met by cross-border cooperation and partnerships if the region is to avoid confrontation, former OPEC Secretary-General Subroto said yesterday.

"The key word in meeting the very serious energy issues in Asia, and particularly in China, is cooperation and partnership, not confrontation," Indonesia's Subroto, chairman of the Foundation of Indonesian Institute for Energy Economics, told a China petroleum conference.

"International and multilateral energy cooperation with China should not only be limited to increasing production, but should also include energy technology and conservation," he said.

Oil consumption in the Asia-Pacific had overtaken western Europe and by 1998, standing at 21.3 million barrels per day (bpd), it would exceed North America's 21.2 million bpd, Subroto said, adding that Asia-Pacific's consumption figure would rise to 23.5 million bpd by 2000.

China's refined oil products consumption alone would take up 4.2 million bpd in 2000 and 6.8 million bpd in 2010, he said.

Crude oil production in Asia was unlikely to see a significant increase, rising to only 7.0 million to 7.2 million bpd in 2000 from the current 6.76 million bpd, making the region a huge importer, Subroto said.

Asia's future oil deficit has intensified the search for new oil sources and the Spratly Islands cluster is viewed as a potential flashpoint.

The Spratlys, a group of possibly oil-rich isles, reefs and shoals in South China Sea, are claimed wholly or in part by China, the Philippines, Vietnam, Taiwan, Malaysia and Brunei.

Disputes between China, Vietnam and the Philippines have flared over the islands in recent months. In May, foreign ministers of China and the Philippines agreed to settle their disputes peacefully.

Speaking to Reuters later, Subroto said disputes over the Spratlys were a matter of concern, but added: "China is wise to agree to settle the issue with ASEAN (Association of Southeast Asian Nations) on a multilateral basis, not bilaterally."

Subroto told the conference that China's dependency on oil imports, forecast to rise to 47 percent of its consumption from just five percent in 1993, would bring about deeper alliances between China and the members of the Organization of Petroleum Exporting Countries (OPEC), particularly the Middle East.

"The most dynamic element will be the new linkage between China and the Persian Gulf, particularly with Iran and very likely, also with Iraq," Subroto said.

But he said the current low price of oil could impede new discoveries and investment in infrastructure like deep-sea ports and pipelines.

"While the abundance of potential energy resources is not in dispute, the present combination of high energy demand and low energy prices may, however, not be sustainable," he said.