Asian economies want talks with Opec as part of a strategy to improve regional energy security and combat rising oil demand and high prices, officials from the Asian Pacific Economic Cooperation (Apec) group said yesterday.
In a statement after a one-day meeting, Apec said it welcomed recent efforts by oil producers to increase supplies after prices shot to 21-year highs above $42 a barrel for US crude, stoking fears about the impact on economic growth.
“We recognise, however, that a variety of factors influence global markets, and in that context we commit our own efforts to enhance energy security,” the statement said.
It called for contingency plans against possible supply disruptions from geopolitical instability, natural disasters, piracy on sea lanes and sabotage attacks. It said power plants, port facilities, transmission hubs and other parts of Asia’s energy infrastructure were also vulnerable to disruption.
Vincent Perez, Philippine energy secretary and host of the talks, said a proposal was floated for a dialogue with the Organisation of the Petroleum Exporting Countries, which controls half of world crude exports.
Indonesia, a member of both Apec and Opec, may offer to host an Opec meeting in Asia. “That is something that Indonesia is going to consider,” Perez said.
Apec groups Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malay-sia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, Taiwan, Thailand, United States and Vietnam.
Opec already has regular contacts with consuming nations through the International Energy Agency (IEA) and the International Energy Forum (IEF).
Perez said other measures to shore up energy security included preparing for supply disruptions, improving energy efficiency and working with the private sector for financing, as well as boosting use of alternatives to oil such as liquefied natural gas and renewable energy sources.
The Asia Pacific Energy Research Centre (APERC) expects Apec energy demand to climb 2.2 per cent a year between 1999 and 2020, growing faster than in the rest of the world.
The region would need $3.4 trillion to $4.4 trillion in new infrastructure to support a projection for economic growth at 3.5 percent annually to 2020.
“Concern for energy security is looming large in Apec,” said Masaharu Fujitomi, APERC president. “Rising energy prices may cause growth in Apec countries to stall, due to high oil import dependency and an inflexible energy supply structure.”
Oil demand in the region, at 2.1 per cent growth per annum, would outpace increased production in Apec, which it forecast at just 0.5 per cent per year.
The centre said oil-import dependency among Apec’s 21 members would rise to 55 per cent in 2020 from 36 per cent in 1999.
Apec Asian economies will be especially vulnerable to oil supply disruptions as their dependency on oil imports grows to about 80 per cent of consumption by 2020, it said.
Yonghun Jung, vice president at APERC, said the estimate for investment required was conservative.
“We didn’t include new technology costs or social costs associated with constructing new infrastructure and that cost could be very high.”