Oil supply crunch seen for Asia due to rising energy demands

Oil supply crunch seen for Asia due to rising energy demands

MANILA (AFP): Asia's insatiable energy demands could put pressure on oil supply in the region, senior southeast Asian petroleum executives said here yesterday, although Brunei predicted that prices were likely to remain soft.

"Unless the growth in China and Vietnam is stagnated, which is unlikely, the Singapore refineries will ... be able to operate at high capacities," Tan Boon Teik, chairman of the Singapore National Oil Co. told a regional meeting here.

Azizan Zainal Abidin, president of the Malaysian oil firm Petroliam Nasional Bhd. (Petronas), said the robust pace of economic growth in the region should cause energy demands to escalate.

"China and India will probably emerge as major consumers of energy, making the Asian region the most rapidly expanding market for petroleum products," Azizan said.

"While this development would result in pressure on supply in the Asia-Pacific, it would also evoke greater attention to this region from oil-producing countries located outside the region," he added.

The president of Indonesian state oil firm Pertamina, Faisal Abda'oe, said Jakarta, which is a member of the Organization of Petroleum Exporting Countries (OPEC), saw a rise in domestic oil demand.

He said this would "reduce the volume of exportable surplus" under its 1.5 million barrels a day (bpd) quota.

Jakarta is implementing diversification to reduce the country's oil dependency in order to maintain constant volume of exportable surplus, he added.

Tan said China's fast-paced growth "has created a voracious appetite for oil imports," leading to a 56 percent increase to 7.12 million tons in the first six months to June.

He said Beijing was trying to curtail imports by periodic bans and quota restrictions, coupled with attempts to boost domestic sales and control smuggling.

Capacities

Increases in refinery capacities in Malaysia, Indonesia and Thailand should cater to growth in domestic demand, but a planned 49 percent hike in South Korea's refining capacity to 2.5 million bpd by 1996 is "a worrying factor," Tan said.

China and Vietnam would be Seoul's likely market targets, and if Singapore's exports to the Far East were affected, Singapore's crude oil imports "could be drastically reduced," he said.

"The West will most likely be affected unless they resort to dumping of their production."

Mohammad Alimin Abd. Wahab, a board member of the Brunei Shell Petroleum Co. Sendirian Bhd. (BSP), said "there is still too much oil floating around the world for the moment."

Prospects for price stability "remains elusive and uncertain" due to non-coordinated positions of OPEC member and non-member countries, he said, while consumers lack confidence and probably "suspicious."

Japan has built up "enormous stockpiles," running to "millions of barrels at any time," he added.

The Brunei official said this would probably lead to a "general slowdown" in investments in upstream development, "absorbing over time the excessive supply until some semblance of parity is established in the run-up attempt to meet the power and products needs of the growing economies of the world."

He said the weakening dollar "has brought a significant drop in the national economy" which was not compensated by growth in the non-petroleum sectors.