By Eric Teo Chu Cheow

The pressing need for energy security may be the issue that finally gives the 16-member East Asia Summit (EAS) a raison d'etre.

At last month's EAS held in Cebu, in the Philippines, leaders from 16 East Asian nations (the 10 ASEAN countries along with China, Japan, South Korea, India, Australia and New Zealand) issued an energy security declaration.

This was the first meeting since the EAS founding meeting in Kuala Lumpur in December 2005.

Energy was not the only agenda item. An agreement to study a pan-Asian trade agreement was signed. The 16-nation trading bloc would cover half the world's population, including Asian giants China and India. The summit also discussed terrorism and the nuclear issue on the Korean Peninsula.

The energy security declaration is a first step towards addressing mutual concerns and identifying areas for cooperation. The areas include:

Intensified energy conservation programs;

The expansion of renewable energy systems;

Biofuel production;

Nuclear energy production with stringent safeguards (for interested parties).

The summit leaders agreed to explore establishing strategic oil stockpiles as a buffer to oil-price shocks and called for policies to mitigate greenhouse emissions, although no precise targets were set.

They called for more investments from the bigger Asian partners to help the ASEAN region's energy infrastructure. This could include investments in the proposed ASEAN Power Grid and the Trans-ASEAN Gas Pipeline. Japanese Prime Minister Shinzo Abe pledged a US$2 billion package to aid Asian nations in developing energy-saving technology to help reduce their oil dependency.

The overall objective is to lessen the region's heavy dependence on fossil fuels as key to continuing economic growth.

Singapore Prime Minister Lee Hsien Loong, the incoming EAS chair, proposed having a group of energy experts study these issues and present their findings at the November summit in Singapore. Lee also proposed an energy ministers' meeting in Singapore during the year for wide-ranging talks on energy security.

The EAS declaration reiterated that fossil fuels would "continue to underpin our economies and will be an enduring reality in our lifetimes". But it also made clear that energy cooperation, in the words of summit host Philippine President Gloria Macapagal-Arroyo, was a "priority area" for Asia.

Prime Minister Lee made the point that, with a region heavily dependent on fossil fuel imports, cooperation in searching for new areas of energy would also help remove a "potential source of competition and conflict in the region".

The energy security declaration was a good first step forward for the region's ongoing prosperity. But it remains to be seen how the Singapore Summit will concretize the declaration and its raft of measures and ideas.

Singapore can be expected to push the issue forward during its chairmanship of ASEAN and the EAS, given its own profound geo-political and geo-economic interests in energy.

More importantly, the stakes of ensuring energy security are high for all the ASEAN economies. The countries are grappling with ensuring resources, production and markets, reducing the budgetary burdens of subsidies, and attracting investment. Their stakes are diverse, with no common ASEAN energy policy in sight.

The chair, Singapore, is heavily reliant on imported fossil fuels for its economic growth and continued prosperity. Energy security is an overriding concern in its economic policy, as it fears intensifying competition for gas and oil in the region, notably between the big Asian giants, and its impact on oil prices.

Indonesia desperately needs to develop its gas fields, as its oil investments have largely declined in the last few years. Since 2003, the country has become a net importer of oil. In October 2005, Indonesia finally took the bold and politically sensitive step of reducing its hefty energy subsidies.

Removing energy subsidies has proven to be a major challenge for almost all the ASEAN nations. They are faced with trying to ease constraints on their budgets while adjusting energy and electricity prices to market prices to prevent waste, while not increasing social inequalities.

As Malaysia and Thailand develop their natural gas resources, they have removed energy subsidies despite popular unhappiness. Both countries are also looking into hydro-electricity and biofuels to diversify their energy production and consumption.

The Philippines is developing new gas fields in Malampaya and west Palawan in its central zone, mostly in partnership with Malaysia's oil conglomerate Petronas.

Laos is concentrating on developing its hydro-electric potential, but it lacks the financial means to build grids to carry electricity to potential buyers Thailand and Vietnam.

Myanmar is hoping to attract more Asian investments in its oil and gas resources, as it tries to break out of the increasing isolation imposed by the West. China, India, Japan and South Korea would be of crucial importance to its energy strategy.

The energy declaration in Cebu was perhaps a first step forward for the nascent grouping, with ambitious plans ahead.

It remains to be seen how the third EAS in Singapore can bring the energy security issue to the next plane of action as the ASEAN countries search for a common energy security policy.

Dr Eric Teo Chu Cheow is a Council Member of the Singapore Institute for International Affairs.

(China Daily February 28, 2007)