Asia must speed up its economic liberalization to woo energy investment and ensure sufficient and affordable long-term supplies in a turbulent world market, oil experts said at a key regional conference here yesterday.
Asia's appetite for energy is expected to soar in line with its economic growth, but experts warned at the Asia Oil and Gas Conference that current high oil prices and the region's heavy reliance on oil imports could impede growth.
"Asia's soaring growth is straining the energy bridge ... around the globe, experts are worried that Asia's soaring tiger could come in for a hard landing because of energy supply concerns," Dave O'Reilly, chief executive of US oil major ChevronTexaco, said.
The region must develop a strong investment climate by accelerating its progress towards opening up markets, building adequate infrastructure and ensuring the sanctity of contracts and better cooperation from national oil companies (NOCs), he said.
O'Reilly said that according to the International Energy Agency, Asia was expected account for up 40 percent of growth in world oil demand between now and 2025, and must seek to tap its own enormous oil resources.
He noted that China, Indonesia and Malaysia ranked among the world's top 25 oil producers. Together with Australia and Brunei, they account for more than 36 billion barrels in proved reserves.
"Governments need to unwind the spools of red tape, regulations and antiquated policies that have choked off power development" and to ensure predictability in terms of supply, delivery and trading to help overcome volatility in global oil prices, he added.
Malaysian Prime Minister Abdullah Ahmad Badawi, in his keynote address read by his deputy Najib Razak, said Asia's energy demand was expected to soar in line with its projected economic growth of six percent a year by 2010, double the world's average growth rate.
Last year, Asia imported 64 percent of its oil needs with demand reaching 22 million barrels a day and this is expected to grow at an average annual rate of 3.2 percent, nearly three times higher than that of industrialising nations, he said.
"Driven by strong demand from China, oil consumption in developing Asia is projected to reach 32 million barrels per day by 2025, more than double the region's total consumption in 2001," he said.
Gas is becoming an important alternative, with annual average demand expected to increase by an average 3.5 percent to reach 151 trillion cubic feet by 2025, he said.
"What Asia needs is a secure, reliable and affordable supply of energy," he said, calling for investment in new hydrobcarbon reserves. These were mostly located in remote areas and deep water as traditional sources were depleted.
Singapore Institute of International Affairs secretary Eric Teo Chu Cheow said restricted trading regimes due to tight control by NOCs and geopolitical risks were hampering investment in the region.
"There is no capital investment in Indonesia for instance because of strategic issues. The greatest dilemma for Asia is to create a balance between national interests and opening up to lure investors in terms of production," he told reporters.
Despite a pledge by OPEC to raise production, Teo said continued instability in the Middle East would "keep prices high for some time" and warned this could provoke a slowdown in the global economy in the second half of 2005.
"The US$40 a barrel range will continue for some time. I don't see that coming down," he said.
Robin West, chairman of US-based consultancy group PFC Energy, said violence in the Middle East had created growing interest in energy projects in Asia, especially China, but the region must first deregulate its markers.
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