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Monday, Sept. 23, 2002

Forum focuses on new oil source

Energy ministers looking for gas outside Middle East


Staff writer

OSAKA -- The eighth International Energy Forum moved into its second day Sunday with meetings between Asian energy ministers on how to cooperate more closely to ensure stable supplies in the face of mounting uncertainty in the Middle East.

Nearly 70 countries and 13 international organizations are gathered in Osaka until Monday to discuss ways to secure a stable energy supply, primarily using fossil fuel. Participants are motivated in part by mounting fears that a U.S.-led war in Iraq would disrupt oil supplies and drive prices up.

These fears are especially prevalent in the Asian region, which relies heavily on oil from the Middle East. The region already pays an extra one to two dollars per barrel more than for oil shipped to North America and Europe. This is known as the "Asia Premium," attributed in part to defects in the pricing mechanism.

Worries about an increase in this premium in the event of war with Iraq was one of the main areas of discussion Sunday between Japan, China, South Korea and ASEAN energy ministers. The countries are also looking at ways to secure a stable energy supply closer to their own countries.

But differences among the members over how to address the issues led to the ministers to only agree to study the issue and report back when ASEAN meets next February.

In addition to the Asian premium issue, the ministers agreed to cooperate in other areas related to energy security. The first agreement was to create an emergency communication network among the energy ministers of Japan, China, South Korea and ASEAN nations.

A second agreement was to promote the stockpiling of oil by both corporations and governments in the region. At present, the Japanese government and private firms have about a three-month stockpile of oil.

At a meeting of the ASEAN nations next February, Japan plans to encourage other Asian nations, particularly China, to create oil-stockpile initiatives. Malaysia also plans to encourage other countries, especially China.

In East Asia, only Japan and South Korea have national oil stockpiles in addition to the required private sector stockpiles.

"It is our hope that other countries in the Asian region will look at Japan's policy of stockpiling and learn from our experience," said an official of the Ministry of Economy, Trade and Industry, speaking anonymously.

The ministers also agreed that the nations of Asia should study the possibility of developing an infrastructure to extract natural gas reserves in the region.

They did not talk about politically sensitive issues related to the exploration for oil and gas in the Asian region, such as oil and gas production in the disputed Spratley Islands in the South China Sea. Nor did they discuss the issue surrounding the exploration of oil and natural gas by China and Japan in the vicinity of the Senkaku Islands.

Although they proclaimed it essential for Asia's energy future, little was said at Sunday's meeting about energy conservation and the development of renewable energy sources. A pledge, however, was offered from Japan to assist China in developing clean energy technologies to convert low-grade coal into other, more environmentally friendly energy resources.

A METI official said the lack of discussion was due to time constraints.

Although the forum is supposed to address a variety of energy issues besides oil and gas over the past two days, the focus was on the two resources.

Nuclear energy, for example, has been barely mentioned. Both Japan and South Korea have strong nuclear power programs and plan to expand them, but Sunday's meeting between the Asian ministers avoided the issue of nuclear power's role in the future of Asia's energy supply.



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The Japan Times

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