They said there was little discussion among the 10 members of ASEAN - Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam - about emergency oil reserves, despite concerns red-hot prices this year could dampen regional economic growth.

“Those who don’t have (oil) want to stockpile. Those who have oil are quite reluctant,” said Malaysia’s energy minister Lim Keng Yaik. “And who’s going to pay for this?” With the exception of Brunei and Malaysia, most members of the Association of the South East Asian Nations are net importers of oil, which hit a 21-year high above $42 a barrel last week.

Another official said strategic oil reserves, viewed by some analysts as critical to the region’s supply security, were briefly mentioned as part of emergency response measures. “The ministers agreed to push through renewable energy. It’s the main point,” said on official after the two-hour talks in the Philippines capital.

A draft statement late on Tuesday said ministers agreed to increase the share of renewable energy in power generation to at least 10 percent up to 2010 to address rapidly rising oil prices. Renewable energy would include hydro, wind or geothermal sources. Weerawat Chantanakome, executive director of the ASEAN Centre for Energy (ACE) said on Tuesday developing renewable and indigenous resources would be top priority.

“Right now most of the ASEAN countries are facing the problem of the oil price. In ASEAN our consumption is very high and in the next 10 years it will keep growing because of our population. All ASEAN countries must look for an appropriate energy source based on their indigenous resources,” Mr Weerawat, who took over at the helm of ACE on Monday, told Reuters in an interview.

Rising demand: ASEAN estimates that an oil price of $35 a barrel for one year would cut the group’s combined economic growth by one percent. The running one-year average for US benchmark light crude was $32.71 a barrel on Wednesday, but prices so far this year have averaged $36.68.

ASEAN ministers will meet later on Wednesday with their counterparts from China, Japan and South Korea to try to coordinate energy strategy as the region’s dependence on oil imports, especially from the volatile Middle East, grows.

The International Energy Agency has forecast Asia’s oil demand will rise 4.6 percent to 23 million barrels a day this year. China, Japan, India and South Korea are some of the biggest oil consumers in the world.

Tokyo and Seoul, which rely almost entirely on imported oil and gas, are the only Asian governments to have built significant emergency oil stockpiles.

China, where robust economic growth is expected to lift oil demand 14 percent to more than 6.2 million barrels a day this year, says it is working to build strategic inventories as domestic production declines.

A delegate to the ASEAN+3 talks said ASEAN’s promotion of renewable energy would help diversify supply by utilising indigenous resources but may have a limited impact on the overall economy. “Renewable energy is interesting and affordable for rural areas, but not on the nationwide, macro level. It is not economical and volumes are too small,” the delegate said. — Reuters

They said there was little discussion among the 10 members of Asean - Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam - about emergency oil reserves, despite concerns red-hot prices this year could dampen regional economic growth.

"Those who don't have (oil) want to stockpile. Those who have oil are quite reluctant," said Malaysia's energy minister Lim Keng Yaik. "And who's going to pay for this?"

With the exception of Brunei and Malaysia, most members of the Association of the South East Asian Nations are net importers of oil, which hit a 21-year high above $42 a barrel last week.

Another official said strategic oil reserves, viewed by some analysts as critical to the region's supply security, were briefly mentioned as part of emergency response measures.

"The ministers agreed to push through renewable energy. It's the main point," said on official after the two-hour talks in the Philippines capital.

A draft statement late on Tuesday said ministers agreed to increase the share of renewable energy in power generation to at least 10 percent up to 2010 to address rapidly rising oil prices. Renewable energy would include hydro, wind or geothermal sources.

Weerawat Chantanakome, executive director of the ASEAN Center for Energy (ACE) said on Tuesday developing renewable and indigenous resources would be top priority.

"Right now most of the ASEAN countries are facing the problem of the oil price. In ASEAN our consumption is very high and in the next 10 years it will keep growing because of our population. All ASEAN countries must look for an appropriate energy source based on their indigenous resources," Weerawat, who took over at the helm of ACE on Monday, told Reuters in an interview.

ASEAN estimates that an oil price of $35 a barrel for one year would cut the group's combined economic growth by one percent. The running one-year average for US benchmark light crude was $32.71 a barrel on Wednesday, but prices so far this year have averaged $36.68.

ASEAN ministers will meet later on Wednesday with their counterparts from China, Japan and South Korea to try to coordinate energy strategy as the region's dependence on oil imports, especially from the volatile Middle East, grows.

The International Energy Agency has forecast Asia's oil demand will rise 4.6 percent to 23 million barrels a day this year. China, Japan, India and South Korea are some of the biggest oil consumers in the world.

Tokyo and Seoul, which rely almost entirely on imported oil and gas, are the only Asian governments to have built significant emergency oil stockpiles.

China, where robust economic growth is expected to lift oil demand 14 percent to more than 6.2 million barrels a day this year, says it is working to build strategic inventories as domestic production declines.

A delegate to the ASEAN+3 talks said ASEAN's promotion of renewable energy would help diversify supply by utilizing indigenous resources but may have a limited impact on the overall economy.

"Renewable energy is interesting and affordable for rural areas, but not on the nationwide, macro level. It is not economical and volumes are too small," the delegate said. (Reuters)

SINGAPORE, Aug. 10 (AFP) — Asian economies braced themselves for tough times as world oil prices soared to a new record high of US$44.99 a barrel Tuesday after militia threats forced Iraq to stop production from its southern oil fields.

As oil prices continued to reach new historic highs, a top Southeast Asian energy official urged the region to expedite efforts to cut its dependence on oil by increasing the development of alternative fuel sources. Analysts said there was no stopping prices from reaching 50 dollars a barrel or beyond, citing a slew of factors, including persistent terrorist threats and the troubles of Russian oil giant Yukos.

“We are afraid prices might be on an increasing trend throughout the year, especially if there is an uncontrolled situation. That is why we should be taking preventive action,” said Weerawat Chantanakome, executive director of the Jakarta-based ASEAN Centre for Energy.

World oil prices surged to an intra-day high of US$44.99 a barrel — a new record — Tuesday after Iraq stopped pumping crude from its southern oil fields following a threatened attack by Shiite Muslim militia. This topped the record US$44.98 a barrel set in New York trading the previous day.

At 2:55 p.m. (0655 GMT) Tuesday in Singapore trade, light sweet crude for delivery in September was at US$44.70 a barrel, down from its close of US$44.84 a barrel in New York on Monday. Weerawat warned that at US$50 a barrel, oil-dependent ASEAN economies would be turned “upside down” and he urged the Association of Southeast Asian Nations to hasten energy cooperation and the search for alternative power sources.

Efforts are being made. Japan recently agreed to finance a feasibility study on oil stockpiling, while a meeting of East Asian energy ministers in Cambodia in July 2005 will address the region’s energy security.
A seminar on renewable energy has been scheduled for next month, while there are proposals to harmonize ASEAN’s energy regulatory framework aimed at stabilizing oil prices. Oil prices have been consistently breaching historic levels since July 30, largely due to spiraling violence in the Middle East and the travails of Yukos, which accounts for two percent of global output.

The specter of US$50 price levels is worrying market watchers.“That’s what everyone is talking about,” Gerald Rigby, an analyst with China Aviation Oil, told AFP. “Who knows where it could stop?” Rigby and other analysts said prices were largely based on fears of supply disruptions in Iraq and Yukos halting production as a result of its dispute with the Russian government over tax payments.

Southeast Asia to use more renewable energy sources for power generation

As oil prices continued to reach new historic highs, a top Southeast Asian energy official urged the region to expedite efforts to cut its dependence on oil by increasing the development of alternative fuel sources. Analysts said there was no stopping prices from reaching 50 dollars a barrel or beyond, citing a slew of factors, including persistent terrorist threats and the troubles of Russian oil giant Yukos.

"We are afraid prices might be on an increasing trend throughout the year, especially if there is an uncontrolled situation. That is why we should be taking preventive action," said Weerawat Chantanakome, executive director of the Jakarta-based ASEAN Centre for Energy.

World oil prices surged to an intra-day high of 44.99 dollars a barrel -- a new record -- Tuesday after Iraq stopped pumping crude from its southern oil fields following a threatened attack by Shiite Muslim militia. This topped the record 44.98 dollars a barrel set in New York trading the previous day.

At 2:55 pm (0655 GMT) Tuesday in Singapore trade, light sweet crude for delivery in September was at 44.70 dollars a barrel, down from from its close of 44.84 dollars a barrel in New York on Monday. Weerawat warned that at 50 dollars a barrel, oil-dependent ASEAN economies would be turned "upside down" and he urged the Association of Southeast Asian Nations to hasten energy cooperation and the search for alternative power sources.

Efforts are being made. Japan recently agreed to finance a feasibility study on oil stockpiling, while a meeting of East Asian energy ministers in Cambodia in July 2005 will address the region's energy security. A seminar on renewable energy has been scheduled for next month, while there are proposals to harmonise ASEAN's energy regulatory framework aimed at stabilising oil prices.

Oil prices have been consistently breaching historic levels since July 30, largely due to spiralling violence in the Middle East and the travails of Yukos, which accounts for two percent of global output. The spectre of 50-dollar price levels is worrying market watchers. "That's what everyone is talking about," Gerald Rigby, an analyst with China Aviation Oil, told AFP. "Who knows where it could stop?"

Rigby and other analysts said prices were largely based on fears of supply disruptions in Iraq and Yukos halting production as a result of its dispute with the Russian government over tax payments. "The market is not trading on fundamentals. There's no shortage of crude, just the fear of Iraq disruptions and Yukos stopping production," Rigby said. "It's the terror premium basically."

Song Seng Wun, a regional economist with GK Goh brokerage in Singapore, agreed with Rigby that oil prices were being pushed by fear that global supplies could be disrupted. "All these factors pushing prices up are outside our control," Song said.

"Anything is possible, not just Iraq, not just Yukos. If Indonesian oil fields get blown up and there's an incident in the Straits of Malacca they could push oil prices up."

The most recent simulation by the Asian Development Bank showed that if oil prices reach 50 dollars a barrel it could shave off 1.1 percentage points from Asia's projected gross domestic product (GDP) growth in 2005, compared with 0.8 percent if prices remained at 40 dollars a barrel.

- AFP

ASEAN energy official urges 'preventive action' to combat oil price problems

Singapura- Perhimpunan Bangsa-bangsa Asia Tenggara (ASEAN) didesak untuk melakukan tindakan preventif untuk mengatasi kenaikan harga minyak dunia. Selain itu ASEAN juga perlu mempercepat daya upaya untuk mengurangi ketergantungannya pada minyak dengan meningkatkan pengembangan sumber bahan bakar alternatif. Hal itu dikemukakan Weerawat Chantanakome, Direktur Eksekutif Pusat Energi ASEAN yang berkantor pusat di Jakarta , Selasa (10/8).

"Kita khawatir harga minyak kemungkinan cenderung terus meningkat sepanjang tahun ini, terutama jika ada situasi yang tak terkendalikan. Itulah mengapa kita sebaiknya mengambil tindakan preventif," katanya. Weerawat mengemukakan jika harga minyak mencapai 50 dolar per barel, negara-negara ASEAN yang tergantung pada minyak akan "terbalik" dan ia mendesak Perhimpunan ASEAN agar mempercepat kerjasama energi dan mencari sumber tenaga alternatif.

Para analis melihat kenaikan harga minyak sebagian besar didasarkan atas kekhawatiran terganggunya pasokan di Irak dan Yukos menghentikan produksinya sebagai akibat perselisihannya dengan pemerintah Rusia atas pembayaran tagihan pajak dan hantu level harga 50 dolar per barel mencemaskan para pengamat pasar."Itulah apa yang diperbincang setiap orang," kata Gerald Rigby, analis pada China Aviation Oil, kepada kantor berita AFP. "Siapa yang tahu di mana harga dapat berhenti?" Dia berpendapat pasar tidak berdagang berdasarkan fundamental ekonomi. "Tak ada kelangkaan minyak mentah, yang ada kekhawatiran terganggunya pasokan dari Irak dan Yukos menghentikan produksinya," ujar Rigby.

Song Seng Wun, ekonom regional pada perusahaan pialang GK Goh di Singapura, sependapat dengan Rigby bahwa harga minyak didorong oleh ketakutan bahwa pasokan global dapat terganggu. "Kesemua faktor ini mendorong naik harga minyak di luar kendali kita. Segala sesuatu mungkin saja terjadi, tak hanya Irak, tak hanya Yukos. Jika ladang minyak Indonesia meledak dan terjadi insiden di Selat Malaka, berbagai insiden ini dapat mendorong naik harga," kata Song. Simulasi terbaru Bank Pembangunan Asia (ADB) memperlihatkan bahwa seandainya harga minyak mencapai US$ 50 per barel, harga tersebut dapat memangkas 1,1 persen poin proyeksi pertumbuhan produk domestik bruto (PDB) Asia, dibandingkan dengan 0,8 persen poin jika harga tetap pada sekitar US4 40 per barel. (afx-asia/afp/hel)

Kuala Lumpur - Soaring oil prices and a slowdown in China's economy are a double-whammy for Asian countries but will not plunge the region into a recession or derail economic recovery, economists said Tuesday.

They told a two-day Asian economic summit here that crude oil prices, which hit a new record high of $44.99 a barrel Tuesday, were expected to ease and a softlanding for China's economy appeared intact.

Despite the optimism, other analysts warned that supply disruptions in Iraq, persistent terrorist threats and the troubles of Russian oil giant Yukos could push oil prices to $50 a barrel or beyond. Singapore-based DBS Bank vice president and regional economist Chua Hak Bin said oil prices were expected to moderate amid signs of a consumption slowdown in the US and China.

Oil prices at $40 a barrel could shave off 0.6-0.8 percentage points from Asia's gross domestic product (GDP) growth in 2005, and up to 1.5 percent if prices hit 50 dollars a barrel, he said.

"It is going to hurt but it is not like the oil shock episodes in the 1970s and 80s. It is not going to derail Asia's recovery. We believe prices will come down slightly from where they are now," he said. MasterCard Int. regional economic adviser Yuwa Hedrik-Wong said oil prices were experiencing a "temporary short-term spike" and would likely average around $34 a barrel this year and ease to $32-$33 next year.

He said the global economy was becoming more energy efficient and could absorb the increase. Despite uncertainties, he said the world economy was undergoing its "first synchronised global upswing in 15 years" with Asia-Pacific emerging as a high-performance economic region and showing its best fundamentals since 1990.

But other analysts in the region were concerned over the spectre of 50-dollar price levels. "We are afraid prices might be on an increasing trend throughout the year, especially if there is an uncontrolled situation. That is why we should be taking preventive action," said Jakarta-based ASEAN Centre for Energy director Weerawat Chantanakome.

At $50 a barrel, he warned, oil-dependent ASEAN economies would be turned "upside down" and he urged the region to hasten energy cooperation and the search for alternative power sources. Malaysian Prime Minister Abdullah Ahmad Badawi, in his keynote address to the Asian summit late Monday, said Asia was expected to grow more than seven percent this year but the region was not yet "bullet-proof" and important policy work was needed to boost its resilience.

DBS's Chua said a cooling of China's economy could cut two to three percent off Asia's export growth but "it is not going to send the rest of the region into recession." "The slowdown is really on the investment side, and limited to targeted sectors. The question is whether the Chinese will introduce more (cooling) measures. I guess it's a balancing act but so far, it looks like soft landing is the most likely scenario," he added.

The Asian Development Bank projected annual GDP growth of China, India and the 10-member Association of Southeast Asian Nations (ASEAN) to average nine, eight and six percent respectively from now until 2015, said assistant chief economist Yao Xianbin. By 2015, China's GDP is expected to soar to $3 963 billion from $1 409 billion last year, India to $1 518 billion from $603 billion, and ASEAN to $1 346 billion from $669 billion, he said.

Yao noted that progress in bank restructuring in Asia had been slow and uneven, domestic investment remained weak, and per capita incomes in developing countries were still significantly low. "Countries need to accelerate policy reforms and economic restructuring and pursue closer policy cooperation region-wide to maintain broad-based growth," he added. - AFP

By Eileen Ng

Kuala Lumpur - Soaring oil prices and a slowdown in the economy of China were a double whammy for Asia but would not plunge the region into a recession or derail economic recovery, economists said yesterday. A two-day Asian economic summit heard that crude oil prices, which hit a new record high yesterday, were expected to ease and a soft landing for China appeared intact.

However, other analysts warned that supply disruptions in Iraq, persistent terrorist threats and the troubles of Yukos could push oil prices to $50 a barrel (R15 344 at prevailing exchange rates). The Asian Development Bank projected the annual gross domestic product growth of China, India and the 10-member Association of Southeast Asian Nations (Asean) to average 9 percent, 8 percent and 6 percent respectively from now until 2015.

Singapore-based DBS Bank vice-president and regional economist Chua Hak Bin said oil prices were expected to moderate amid signs of a consumption slowdown in the US and China. Oil prices at $40 a barrel could shave up to 0.8 percentage points off Asia's growth in 2005, and up to 1.5 percentage points if prices hit $50 a barrel, he said.

"It is going to hurt but it is not like the oil shocks in the 1970s and 1980s. It is not going to derail Asia's recovery. We believe prices will come down slightly." MasterCard's regional economic adviser, Yuwa Hedrik-Wong, said oil prices were experiencing a "short-term spike" and were likely to average $34 a barrel this year and ease to between $32 and $33 next year.

He said the global economy was becoming more energy efficient and could absorb the rise. Despite uncertainties, the world economy was undergoing its "first synchronised global upswing in 15 years", with the Asia-Pacific region showing its best fundamentals since 1990. But other analysts in the region were concerned over the spectre of oil above $50 a barrel. "We are afraid prices might be on an increasing trend, especially if there is an uncontrolled situation. That is why we should be taking preventive action," said Asean Centre for Energy director Weerawat Chantanakome.

At $50 a barrel oil-dependent Asean economies would be turned "upside down" and he urged the region to hasten energy co-operation and the search for alternative power sources. Chua said a cooling of China's economy could cut between 2 and 3 percentage points off Asia's export growth but "it is not going to send the rest of the region into recession. The slowdown is really on the investment side, and limited to targeted sectors".

Tuesday, August 24, 2004