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)
