Malaysian PM urges "energy diplomacy" in Asia to beat high prices

Kuala Lumpur (Platts)--13Jun2005

Energy diplomacy is a viable strategic option for the Asian countries to
tackle the new world order of high oil prices, Malaysian Prime Minister
Abdullah Badawi said Monday, delivering the inaugural address at the 10th Asia
Oil and Gas Conference in Kuala Lumpur. 

Sustained high oil prices are likely to become a reality as long as
oil-producing countries cannot keep pace with global demand, Badawi said. Asia
currently consumes 24-mil b/d and demand is estimated to grow to 33-mil b/d by
2020, or 30% of the world's total consumption, he noted. Asia will account for
most of the future growth in world oil demand, he added. The race to secure
resources among national oil companies and private oil companies will become
more intense and competitive, Badawi said. "In this new world order, a viable
option is political commitment to cooperate," the prime minister said, adding
that "energy diplomay is the key".

For oil-importing countries, energy diplomacy within the region could reduce
reliance on external resources. Import-dependent nations like South Korea and
Japan will rely less on stockpiling for energy security, which could remove
critical pressure points in price levels, Badawi said. "In the future we will
see Southeast Asia and South China become an interesting theater of energy
diplomacy considering that many competing countries believe in [the potential
of] the South China Sea." For oil-exporting countries, more technological
collaboration and joint investments would ensure long-term supply, he said.
"Asian national oil companies need vertical integration, production sharing
ventures to secure energy resouces and long-term supply," Badawi said. Energy
diplomacy would also minimize disputes over oil and gas fields in overlapping
areas, he added. Indonesia and Malaysia in February this year locked horns
over two oil and gas blocks in the Sulawesi Sea, to which both countries lay
claim. After a bout of gunboat diplomacy, the two have entered negotiations.

This story was originally published in Platts Global Alert 
http://globalalert.platts.com

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