Scribd
Upload
86 views

Competition For Energy Security: A Challenge To Regional Cooperation

Growing energy demand in Asia, particularly in China and India, is outpacing supply and increasing competition for resources. This is raising concerns that tight supplies could constrain economic growth. China is diversifying its energy sources through domestic development of natural gas and overseas investments. However, competition for resources is also intensifying between countries like China and Japan. While there is potential for both cooperation and conflict over energy security in Asia, desperate need may also drive unprecedented regional cooperation.

Uploaded by

Energy dealers
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
86 views

Competition For Energy Security: A Challenge To Regional Cooperation

Growing energy demand in Asia, particularly in China and India, is outpacing supply and increasing competition for resources. This is raising concerns that tight supplies could constrain economic growth. China is diversifying its energy sources through domestic development of natural gas and overseas investments. However, competition for resources is also intensifying between countries like China and Japan. While there is potential for both cooperation and conflict over energy security in Asia, desperate need may also drive unprecedented regional cooperation.

Uploaded by

Energy dealers
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 8

Competition for Energy Security:

A Challenge to Regional Cooperation

2004. 11. 27

[email protected]

Korea Institute for International Economic Policy


Won-Ho Kim, Director, Center for Regional Economic Studies

Contents
. Growing economy, Growing consumption of Energy

. Raising Gap between Demand and Supply of Oil

. Energy-consuming Structure

. Alternatives to Short Supply of Oil

. Petrodiplomacy

. Regional Cooperation and/or Competition

1
I. Growing economy, Growing consumption of Energy

Asia has become a principal driver in world energy market,


largely due to China’s remarkable growth in demand
1. Energy importers in Asia
□ China
- Accounts for 12.1% of the world’s energy consumption,
while the US reaches 24%
- China’s rising oil demand and import is a significant
factor in world oil markets

□ Japan
- Depended on external sources to keep its economy
running
- 2nd largest energy importer after the US
3

I. Growing economy, Growing consumption of Energy

□ Northeast Asia
- World’s fifth oil importer and second largest LNG importer
after Japan
- Depends on oil for 55% of its energy consumption

□ South Asia
- Contains more than one-fifth of the world’s population
- Experiencing rapid energy demand growth

□ India
- Coal meets more than half of India’s energy demand and
oil makes up 30% of its energy portfolio
- Imports 73% of its oil

2
I. Growing economy, Growing consumption of Energy

□ Thailand
- Energy consumption is growing rapidly as a result of
strong economic growth in this country

2. Energy Exporters in Asia


□ Bangladesh
- Large potential natural gas reserves as world energy
markets

□ Brunei
- Large liquefied natural gas producer (third largest in Asia)
- Located close to vital sea lanes through the South China
Sea linking the Indian and Pacific Oceans
5

I. Growing economy, Growing consumption of Energy

□ Indonesia
- OPEC membership and substantial, but declining, oil
production
- World's largest liquefied natural gas (LNG) exporter

□ Malaysia
- 75 trillion cubic feet of natural gas reserves
- Net oil exports of almost 300,000 barrels per day

□ Vietnam
- Potential to become a regional oil and natural gas
supplier

3
II. Raising Gap between Demand and Supply of Oil

As the gap b/t consumption and production levels in Asia


expands, concerned that tight supplies and consequent
high prices may constrain economic growth

□ China
- Demand for oil will nearly double by 2020
- Chinese annual growth of oil demand reaches 4.6%
(2.5 times the world average of 1.9%)
- China’s demand for oil will continue to grow at 5% or more

□ India
- Needs to triple its power generation by 2025 to feed
fast-growing technology and manufacturing industries
- Shorter on energy resources than China
7

III. Energy-consuming Structure


□ Industrial Structure of China
- “Factory of the world”
- A Fast growing economy requires more energy
- China’s modernization drive has produced a
manufacturing structure that requires huge increases in
energy consumption
- Oriented toward industries that are primarily energy-driven
- Heavy industrial structure is the tremendous waste of
energy
- China uses three times or more as much energy as the
global average to generate every $1 of GDP,

4
III. Energy-consuming Structure
□ Consumption Pattern of China
- Policies for energy efficiency and energy
conservation, but weak in implementation
- The transport sector is an extreme example of inefficient
energy usage
- Household electrical appliances are all growing at an
unprecedented rate

□ Conservation
- China must curb its demand for more energy and focus
on conservation
- Push for cooperation between China and other major
powers to explore energy and secure the oil supply
- Easing China’s energy crisis through non-traditional
means
9

IV. Alternatives to Short Supply of Oil


□ Diversification
- Most of China’s power is generated by coal
- Large deposit of natural gas, yet it makes up only 2% of
its energy supply, far below the world average of 23%

□ Overseas Supply
- The Chinese government seems to have adapted and
combined all the approaches in its overall energy strategy
- China’s approach to security of energy supply is based
on “uncertain” international energy markets and a
preference for self-reliance

10

5
IV. Alternatives to Short Supply of Oil

- Key element of official strategy


• Build political relations with a wide range of oil exporting
nations
• Construct pipelines from oil fields in neighboring countries

- China has signed billions of dollars in deals around the


world in energy purchasing and pipeline building
- Chinese companies have stepped up their investment
abroad to acquire direct control or partial rights in some of
the world potential petroleum fields

11

V. Petrodiplomacy
20% of China’s oil and gas come from Africa and 40% from
the Middle East

□ Middle East
- Middle East still remains as the traditional and vast oil
tank where most of the world’s remaining oil lies
- China’s new plan to enhance energy cooperation with
6 Gulp countries through Gulf Cooperation Council (GCC)

□ Africa
- China is attracted to the relatively under-exploited
petroleum resources in Africa
- China has already signed deals to import oil from Nigeria,
Gabon, Equatorial Guinea, Cameroon and Angola
12

6
V. Petrodiplomacy
□ Russia

- As China, Japan and South Korea scramble to meet their


energy needs, the largely undeveloped resources of
neighboring Siberia have become the prize

13

VI. Regional Cooperation and/or Competition


□ Asia’s Undeclared Oil War
- Between China and Japan, a diplomatic battle over
access to the big oil field in Siberia has broken out
- The region’s energy thirst is so intense, so is their quest
for energy security
- Potential consequences of rising energy competition in
Asia vary, ranging from dire predictions of conflict
to scenarios for unprecedented regional cooperation

□ China-Japan Conflicts
- Diplomatic battle over access to the natural gas field in
Chungxiao
- Japan, depends on imported oil, is lobbying
Moscow for a 2,300-mile pipeline from Siberia to the
Pacific port of Nakhodka
14

7
VI. Regional Cooperation and/or Competition
- China settled a long-standing border dispute with
Moscow and promised some $12 billion in business
investment in Russia

□ India-Pakistan Cooperation
- Agreed to negotiate on energy cooperation with Pakistan,
indicating the possibility
of unprecedented regional cooperation

□ Desperate Regional Cooperation

- Energy importers in Asia rely on oil subsidies, import tariff


reductions, oil consumption regulation as short-term
measures
- Concerns about inflation, economic slowdown, and
fiscal constraints
15

Thank you

16

You might also like