ASEAN REGIONAL FORUM SEMINAR ON ENERGY SECURITY
Crowne Plaza Hotel,Brussels,Belgium
5-6 October 2006
Opening Addressby Mr KhooChin Hean,
Co-Chair of Seminar and Head of Singapore Delegation
______
HE Esko Tapio Hamilo, Ambassador and Fellow Co-Chair
Distinguished Delegates
Ladies and Gentlemen
1On behalf of my delegation, I thank our hosts for the fine arrangements that have been made for this first ASEAN Regional Forum Seminar on Energy Security. We appreciate the warm welcome accorded to us.My congratulations also to the European Union (EU) for its verytimely initiative to organise a seminar on energy security.
2Singapore is pleased to co-chair this event because we recognise that energy security has become a high priority for many governments. The subject is discussed in increasing number of regional and international fora, and also among world leaders. The growing significance of energy security is driven largely by the tight supply of fuel, which had caused oil price to rise from just US$27 to between US$60-70 in less than two years. With global demand for oil expected to increase by 50% between now and 2030, some analysts see oil prices rising further to edge past the US$100 threshold. According to Goldman Sachs' Chief Economist, oil prices could even hit US$105, if global crude production, running at about 85 mbd, is disrupted by just "a couple of million barrels". This may sound unbelievable, but so too was the notion a couple of years ago that oil would cost US$60-70 a barrel!
3Today's high oil prices are the consequence of a confluence of factors, which include strong demand growth coming from China and India, limited spare production capacity, inadequate refining capacity worldwide, supply disruptions caused by natural disasters, and concerns about peak oil production. In addition, speculation driven by terrorism, the fluid situation in Iraq, and tension in the Middle East, have supported an uptrend in prices. Since the world has an increasingly narrow spare capacity, roughly 85 mbd in world production against 83 mbd oil demand, any political or social upheaval in any of the major oil producing countries could trigger an energy crisis.
4Are these problems a temporary blip or are they here to stay? Notwithstanding the uncertainty we need to plan ahead. But energy infrastructure are heavy investments to be amortised over long periods of time. Uncertainties can render energy investments risky propositions. On the other hand, not investing when energy is needed is not an option. The question then is how riskscan be reduced in an environment that is today fraught with uncertainties. There are options. But not all options are available to all countries and there are no perfect solutions.
5To hedge against anypossible energy shortfall, countries have sought to diversify the types of energy. Gas and coal remain the most viable alternatives to oil.But other options have emerged,including renewable energy sources like wind, solar power and bio-fuels.High oil prices have also triggered renewed interest in nuclear energy which has returned to the energy agenda of EU members and the US after decades of scepticism in the aftermath of the Chernobyl accident. China is building a series of nuclear power plants, and others in Asia are seriously weighing the nuclear option. But short of a radical transformation in global energy consumption patterns, and in the absence of spectacular technological breakthrough, energy alternatives will not totally displace fossil fuels.
6There is also a growing convergence in international opinion that energy security now encompasses a broader agenda that includes not only energy diversification but also energy cooperation, energy conservation, environmental preservation, and the development of alternative and renewable sources of energy - all of which have become important in view of the growing competition for energy resources, high energy prices and climate change. Whatever the approach, it is clear that nations must now adopt a holistic approach to guaranteeing their energy security in an increasingly interdependent world. This interdependence also opens opportunities for greater regional and international cooperation on difficult energy issues.
7It is therefore timely and appropriate that the ARF countries should come together to discuss our individual and collective responses to the energy challenges that we face. It is particularly significant that within the ARF, we have the world's largest energy consumers - the US, China, Japan, South Korea, India - and also major oil and gas producers like Russia, Australia, Canada, Malaysia and Brunei. In two key ARF countries - China and India - we see the most rapid growth in energy demand,at about 4% per year. The ARF footprint also covers major transit routes like the Straits of Malacca and the SingaporeStraits, through which half of the world's oil is shipped. Regional cooperation within the ARF on energy issues therefore makes good sense.
8I am confident that the Seminar today and tomorrow will allow ARF countries to have a frank discussion on the strengths and weaknesses of various approaches to enhancing energy security, and to learn from each other's experiences. Our response to the challenges posed by rising energy demand without a corresponding increase in productioncannot be a static one. May I urge all ARF countries to take the opportunity of this Seminar to share your best practices, identify the areas which require capacity building, and be forthcoming with your ideas on regional collaborations and innovative ways to enhance energy security.
9I wish everyone a fruitful and rewarding time at this Seminar, and an enjoyable stay in Brussels.
. . . . .