Monday, October 10, 2005

Global Oil Politics and the Energy Security in the Asian region

The oil price in the international energy market appears set to remain high for the rest of this year despite the attempt of the oil giants to increase production. The major sufferers of the price hike are those Asian countries whose dependency on Persian Gulf oil is alarmingly growing day by day. Meanwhile, the OPEC countries’ plan to revise the price band of oil to a higher level, currently set at $22-$28 per barrel, suggests that the international oil price would not come back to a ‘pre-Iraq level’. Is the ‘enormous’ energy demand by the Asian countries the fundamental reason behind the growing oil price in the world? It is felt that any attempt to secure energy supplies by Asian countries would be under continuous challenge from many forces around the world – the balance seekers of world power. The two hundred and ninety million people who live in the United States make up just five per cent of the world’s population, but they consume a quarter of the world’s oil supply. In this context, if the energy demand in the developed countries is compared with that of the Asian region the present oil demand of Asia can never be projected as a ‘demand shock’.

World Energy Situation
This year’s World Energy Outlook (WEO) by IEA predicts that the worldwide demand of oil will touch new heights with an increase of 1.6 per cent a year to 90 million barrels per day (b/d) in 2010 from the current 82 million b/d and to 121 million b/d in 2030. The major demand boom will be in the present energy-poor nations, especially the import dependent developing countries. According to IEA (Analysis of the Impact of High Oil Prices on the Global Economy, IEA, May 2004), the adverse economic impact of higher oil prices on oil-importing developing countries is generally more severe than for OECD countries. Since the growing oil prices will be a threat to the import dependent countries in the future, most of these nations would invest more on developing indigenous and traditional energy resources. Though this would not be helpful in avoiding the risk of oil dependency completely, it would give way in future energy investments to a reconsideration of the potential of other available energy materials. Simultaneously, to a great extent, investments in the field of nuclear energy would considerably increase in the Asian region which might be an eyebrow raising factor for the West. As noted, the growing price impact on the developing countries would affect the world economy in general. This would also reflect in the GDP of OPEC and its oil revenues, as higher prices would not compensate fully for lower production.

Zeroing in on the Asia-Pacific
As the recent WEO projects the rise of Russia as the ‘energy superpower’ in the coming years, the Siberian resources would be able to supply a notable quantity of oil to the East Asian markets. In the east, the Asian giants, Japan and China are involved in oil politics regarding the trans-Siberian energy pipeline from Taishet (previously the plan was to construct the line from Angarsk, but later the point of origin was changed by Moscow) in Siberia to the East Asian markets. Moreover, Russia is looking for a partner, which can make financial and technical support to the development of the oil fields in the Siberian region. The Russian energy pipeline has got a greater dimension since it can be an energy umbilical cord to the Asian Region. As the major energy consumers of the region, it would be the responsibility of both Japan and China to look for the fast realization of the energy pipeline. Both China and Japan must cooperate in this regard as well as to promote a pattern of constructive sharing of available energy resources in the region. As of now, this would seem to be a less practical idea due to different reasons including the information on the available quantity of resources in the Siberian region. Initiatives in this regard such as AMEM+3 (ASEAN Ministers’ Energy Meeting + China, Japan and South Korea) must be able to develop a collective bargaining to ensure adequate supply of energy to the Asian countries from the Persian Gulf and other energy rich areas of the world. The initiatives in energy cooperation would bring closer cooperation in many other fields including greater economic integration among the Asian countries.
In a meeting between American and Russian delegates on September 21, 2004, the Russian Minister of Economic Development and Trade, German Gref indicated that the US is a promising oil export market. This shows the possibility of large scale export of Siberian energy to the United States through the Murmansk port in Western Siberia. So far, the Russian plan is to exclusively export oil and gas in the Eastern Siberian region to the Eastern market mainly China, Japan and the Koreas. But any kind of energy politics over the pipeline construction by these countries would adversely affect the fast realisation of the same.

Politics of Energy Information
Energy security has been one of the most important issues of national interest to any import dependent country. Hence, the present political volatility in the Persian Gulf poses a major threat to the developing economies. Most experts are concerned with the economic impacts of energy security. But to a great extent the ‘politics of energy information’ has also been haunting the imported energy dependent countries for the past many years. The information regarding energy resources, availability, accessibility, transportation and costs etc., play a major role in the orbit of energy information in the world. The energy policy of a country and the future plans of resource development, energy investments etc., are largely dependent on the information available in the world. Today the information regarding the same has been largely manipulated by some of the interest groups. These interest groups include the energy dependent Western countries, energy companies that are active in the upstream and downstream energy activities etc.
According to Zbigniew Brzezinski, (Counselor, CSIS) America's security role in the Persian Gulf region gives it indirect but politically critical leverage on the European and Asian economies that are dependent on energy exports from the region. While on one hand the growing oil and gas consumption is projected as a major challenge to the developing economies of the world, on the other hand use of coal and the use of nuclear energy are brought under strict observation in the name of environmental security or nuclear non-proliferation. This approach of the developed world would adversely affect the overall development of the import dependent regions and in the longer run these restrictions would turn out to be critical impediments in their economic development. The developing economies of Asia have to seek all possible damage limiting measures in this regard. It may also include a wide range of measures like enhancing cooperation among the countries in the region in the creation of energy stockpiles, developing energy networks, effective sharing of resources, increasing energy efficiency and diversification of supply.

Monday, July 19, 2004

Spinning Into the Chinese Orbit

After being kept out for centuries, China is now on every Western country’s trading list

The enormous economic growth of the “Middle Kingdom” has attracted the world’s attention for many decades. Its vast geographic territory, manpower, resources, and its incredible business opportunities have the miraculous ability to seduce the market dreams of the West and the countries of the Global East.

The isolation policies and xenophobia of the Chinese have kept foreigners away from the mainland for centuries. But in many ways that helped China to focus on its domestic development without any intervention from any external power. It also seems that China had sufficient domestic resources in earlier times and hardly required imports from the rest of the world. This logically justified China’s closed-door policy for centuries. And due to the unique character of China’s trade relations, its foreign counterparts were found running into high trade deficits.

The continuous knocking at the door of the Chinese kingdom by the Western world has rarely given way for them to enter the Chinese market, as they had expected. No other country on the Asian continent has become as important, in terms of market opportunities, or shows as much promise as China.
This article looks at some specific factors that make China the world’s most important developing country this century.

The Orbit
The Chinese orbit is a vast imaginative space of China’s interaction with the outside world. With its elusive quest to gain an understanding of China and to access its untapped opportunities, the outside world revolves around the Chinese orbit. This orbit mainly includes the magnetic points such as the “Chinese market,” its “economic growth” and its “social, political and cultural systems.” All the above-mentioned factors have undeniable roles in bringing the outside world closer to China.
Despite many criticisms of China on different issues, such as its projection of economic growth, human rights issues, etc, a growing affinity for China is evident in the international community. In the past, missionaries, commercial lobbies and governmental agencies waited to push themselves into the Chinese mainland, but could do so only with great difficulty. Time changed as China started opening up slowly to the outside world. The opening up was approached with great caution from the Chinese side. And in effect, it allowed China to learn more about the outside world than what others could learn about China.

China’s Market: A Galaxy of Opportunities
With a population exceeding 1.3 billion and a fast-growing economy, China promises to be the largest possible market for commercial activities in the world. The story of the Western world’s commercial fascination with China dates back 2,000 years and began with a product that still symbolizes the relationship—silk. The romance of the Chinese market and its products has been growing through centuries. Trade commodities like silk and tea, and the desired know-how for papermaking were fascinating factors to the outside world.
The Chinese have taken a courageous step toward open markets, recognizing that no nation can isolate itself in today’s global marketplace if its economy is to grow and its people are to prosper. China today offers enormous market opportunities. It can assure sufficient returns to any investor, and is therefore a market that neither investors nor international brands can ignore. The Chinese market is irresistible to many multinational giants in the fields of automobiles, software and information technology (IT), among others. China’s entry into the World Trade Organization (WTO) has also contributed to the development of its vast market. The entry was a relief to many multinational companies, waiting for new markets in the Asian region after the Asian financial crisis in 1997.

Great Leap in Economic Growth
China’s economic growth reached 9.1 percent, and its external trade reached $851 billion (7 trillion yuan) in 2003, according to official Chinese sources. Though there was concern about China’s economic development due to the impact of SARS (severe acute respiratory syndrome), the slowdown in economic growth did not persist throughout 2003. Moreover, China’s foreign exchange reserves reached $415.7 billion by the end of January 2004, the world’s second largest after Japan. Despite criticisms of this economic growth as dodgy and unsustainable, the Chinese economy has been gaining attention among other countries. It is true that official information on many facts is not available to the outside world and there were fluctuations in economic growth in the past. However, these are purely due to the domestic political conditions from time to time.
The worst times for the Chinese economy came during the Great Leap Forward (1958-59) and the Cultural Revolution (1966-76). But in the post-1980s, the situation changed, and the modernization processes had great influence on national development. Even during the slowdown in other Asian economies, China was witnessing immense progress in its economic growth. When East Asia was attacked by a financial crisis in 1997 and 1998, China introduced a policy of not depreciating its currency, and it really delivered the goods, making remarkable contributions to the East Asian economies’ riding over the crisis and restoring stability and growth.
China’s economy is greatly influenced by the ongoing globalization trend. Globalization has opened up investment opportunities in China, and in addition, the Chinese Government’s effective policies on taxation, plus its long-term investment in infrastructure construction have also contributed to a more pleasant investment climate. All these factors collectively make China’s economy an important one on the global stage.

Society, Culture and Political Systems
Chinese society has its roots deep in Confucianism, a realistic moral philosophy. Though it was never practiced as a religion, it played a major role in shaping China’s society, its political system and molding Chinese thinking. China has a very rich cultural history that dates back centuries. The development of literature, architecture, painting, ceramics and Chinese medicine has gained notable importance in the world. These factors have influenced the West’s fascination with China and brought many Western countries to its shores.
The political system in modern China is another important factor, which has always made China watchers enthusiastic. Communism in China was different from the communist experience in Russia. What the world could see in China was the “Sinofication” of a communist ideology.
Western Sinologists always suspected the survival of communism in post-liberation China, but Chinese leaders were ambitious and confident that they could make the country into a strong economic world power. Though the failure of some policies during the late 1950s and early 1960s was viewed critically by Western Sinologists, China never gave up its efforts to push itself onto the global platform. By the end of the Cold War, China had gained attention as a growing Asian power and was the only country able to fill the power vacuum created by the collapse of the Soviet Union.
Since the Tiananmen incident (in 1989), China has become more assertive in protecting its national interests in a pragmatic way. Developing relations with the West or former ideological enemies is no longer taboo for China. Moreover, it has been given due importance to improving its trade relations.

Conclusion
Sinologists have different opinions on whether China is a threat, competitor or opportunity to other countries, especially to its Asian neighbors. What is more important to its Asian neighbors is to understand that the growth of China as an economic power will always be better than a China suffering from economic or political problems. While the West projects China as a threat to its Asian neighbors, it is evident that they have already fallen into the Chinese orbit, looking for access to the world’s most promising market. The only country that is always worried about the truth of multi-polarity is the United States. And if China is blamed by the United States for hegemonizing the Asian continent, it only reflects U.S. interests in the continent.
In addition to the Western powers, Russia also maintains strong relations with China. For Russia, China is a promising customer for its arms industry, and its bilateral trade is greater with China than with the United States. China is an economic giant and a dependable trading partner to other Asian countries, and it stands to make the demands of the developing countries more vocal in the international arena after being dubbed “the most important developing country” in the Asian region. China’s cooperation is undeniable and essential in bringing about pragmatic solutions to issues like energy security, economic development, the fight against terrorism, etc., especially in the Asia-Pacific region.
China’s economic growth and market avenues have opened up channels for many more trading giants showing their interest in the country. Countries that had refused to kowtow before the Chinese emperors centuries ago have now kowtowed before modern China a hundred times to gain entry to its market. They have indeed been well and truly sucked into the Chinese orbit.

Friday, June 25, 2004

Energy Politics and China's Future

NEW DELHI - Energy security of nations has become one of the major issues gaining global attention today. Since the Middle East, which has been the synonym for oil and gas, has become a breeding ground of European and US energy politics, most of the imported-energy-dependent Asian countries are worried about their future energy security. In this context a rise in energy geopolitics can be foreseen in the Asian continent.

The politics over accessing Russian oil and gas by both China and Japan has become an important issue. Japan is more likely to gain the majority of Russia's Siberian supply since it can make a better economic offer to Russia than the Chinese. The Chinese government has almost lost all confidence in getting a pipeline built to Daqing. The plan for a pipeline to China from Russia's Siberian region was a decade-long ambition of Beijing. This would have supplied a sizable volume of oil and gas compared with the small quantity exported by rail to China.
China's energy hungerChina imported 100 million tons of crude oil in 2003, an increase of 20 million tons over the previous year. It made China the world's second-largest oil importer and consumer, after the United States. [1] Actual import and consumption has surpassed projections in China for many years. Moreover, the simultaneous shortage of oil, electricity and coal is an indicator that China needs to improve its energy security. [2] Since the pipeline project is still stuck in the pipeline, China will have to think more seriously about its growing energy needs, otherwise the energy shortfall may limit its economic growth.

China's pipeline option from Central Asia has been showing progress, and this might be the priority in Beijing's energy-security planning in the coming years. The Kazakh government issued a decree recently favoring the second stage of pipeline construction. The Sino-Kazakh oil pipeline, from Atyrau, a city on the coast of the Caspian Sea in Kazakhstan, to Dushanzi, Xinjiang, covers a distance of 3,000 kilometers and will transport 20 million tons of oil a year. Its construction is expected to cost US$3 billion. [3] But doubts about the economic viability of the pipeline will continue until the Chinese are sure it would supply around 20 million to 25 million tons of oil per year. This could be done only through connecting Kazakhstan's Uzen oilfield to the proposed pipeline, to which the Kazakhs expressed their disapproval long ago.
SPRs in ChinaA widely believed necessity of a "strategic petroleum reserve" (SPR) in China has to be analyzed in a context where energy supply for everyday activity is at stake. The role of an SPR is important in distributing oil during an emergency - a shortage in the energy supply due to unforeseen internal or external factors. Since the energy network supplying fuel to the growing daily domestic demand has not been effective in China, the four proposed SPRs with the investment of 6 million yuan ($725 million) may take longer than expected to complete.
Concern over the growing dependence on imports has been the main reason for the building of four 75-day-capacity SPRs, expected to be completed by 2010. In the coming years China will have to do an extensive search for energy, and this would surely make way for more investments in areas other than Russia and Central Asia.

New areas of energy exploration
Chinese policy in the coming decade will be more focused on gaining access to the energy-rich countries of the world. This may have similar features to Dale C Copeland's "theory of trade expectations", where the foreign policy of a country is greatly influenced by trade expectations. But here the expectations are much more focused on the energy sector.

For the past many years energy security has been one of the key factors that determined China's political as well as economic relations with other countries, especially with oil-rich countries in Africa and South America. The statistics currently used by China show that the volume of the country's oil resources is 106.9 billion tons, and natural gas 53 trillion cubic meters. Experts have corrected the above figures with various coefficients and determined that China's recoverable oil reserves stand at 13 billion to 16 billion tons and natural gas at 10 trillion to 15 trillion cubic meters. [4] This is a shocking fact showing that China's energy situation is much worse than previously thought. And so China will have to find energy sources from abroad other than in Russian and Central Asia.

Tan Zhuzhou, chairman of the China Petroleum and Chemical Industry Association, said: "Take our technologies and capital to Africa and South America and exploit oil there so as to have diverse supply and avert the risk brought about by concentrated oil imports." China should focus much toward these areas for its energy plans.

Conclusion
The growing energy demands of China necessitate its greater cooperation in the international energy market and in developing its relations with oil-rich countries. The present energy scenario in China shows its alarming demand for energy to support its economic growth.
As part of its search for energy sources, China may be able to focus on the South China Sea. China's energy plans in this area may witness coercion of those Southeast Asian countries with which China has strained relations due to the issue of the Spratly and Parcel island chains. Moreover with the South China Sea being one of the busiest energy-transportation routes to South Korea and Japan, China's energy-exploration plans may open the way for new geopolitical developments in this region.
China's "strategic partnership" with Russia has not been very fruitful in the Siberian pipeline negotiations because of Japan's involvement in the pipeline-construction plans. So if the Siberian pipeline is going to be off the table for the Chinese, that may reflect in the geopolitics of East Asia and more specifically in Sino-Japan relations in the future, including the Diaoyutai-Senkaku Islands dispute. But at present from the Chinese side a more pragmatic calculation will be evident by leaving behind the energy politics in this region and slowly moving away from the regional energy market and looking at Africa and South America for its energy supply to satisfy some of its energy needs.

Notes:[1] Feng Jianhua, "Energy Crisis", Beijing Review, January 15, 2004, p 28.
[2] Ibid, p 29.
[3] "Sino-Kazakhstan oil pipeline construction to start second stage."
[4] "China to establish four coastal strategic oil reserves", People's Daily, December 4, 2003

Friday, June 18, 2004

India, China and Energy Security

India and China have been witnessing a steady increase in their energy consumption for many years. Increasing economic growth characterized by high industrial activity has been the main reason behind it. Though consumption of coal accounts for a major share of the total energy use, imported petroleum takes an irreplaceable position in the energy mix of both India and China.
Until 1993, China was the world's fifth-largest oil producer and was a net exporter. Driven by a surge in economic growth, however, China's growth in oil consumption is now running close to 8 percent a year and, as a result, that country is now a major importer. (1) Meanwhile, India, the world's second-most-populous country, is also experiencing year-over-year consumption growth in excess of 8 percent, and has recently replaced France as the sixth-largest oil-consuming nation in the world. (2)
The key energy-related issues for these two countries are increasing energy dependency on imported oil, growing environmental concerns due to the dependency on coal, transportation and supply problems, and regional geopolitics.
China is the second-largest energy consumer in the world after the United States. A study projects that China's energy consumption will equal that of all the Organization for Economic Cooperation and Development (OECD) countries combined by the year 2020.
The geographic position of China is an advantage for its energy strategy. China borders Russia and the energy-rich Central Asian states on one side, and on the south it has the South China Sea, which is the main energy transportation route to Korea and Japan. Though China is planning to maintain production of about 3.1 billion barrels a day to limit its energy imports, depending only on domestic oil reserves will not be a long-term practical option. Moreover, China's plans for the establishment of strategic reserves to store up to 18 million tons of oil will keep its energy imports on for the near future. The west-east pipeline, which is to be built from Kazakhstan to Xinjiang and then to Shanghai, will bring the energy from Kazakhstan to the east coast of China.
Asia-Pacific: Nearly a third of world energy demandThe total Asia-Pacific energy demand is expected to be 31.4 percent of total world demand by 2005, and India and China will have the lion's share in it. While China has managed to spread its tentacles in the energy-rich regions of the world, India has been less successful in this regard. The main reason for this difference is the long-term political and economic policies of these countries toward their neighbors. Though China had border problems and political differences with Russia, now it is trying its level best to rope the Russians into building an oil pipeline to Chinese markets. China's interest in the Russian weapons trade is also a part of its long-term strategy to improve the strained relationship with the aim of accessing the energy market.
India is comparatively in a weaker position regarding these aspects. Russian and Central Asian energy is important for the Asian region, but the geographic position of India does not provide an opportunity to tap this source, as does China's. Even a direct pipeline from Iran to the northwest coast of India through Pakistan's coastal area has not been put into practice because of Pakistan's opposition to it. The pipeline plan from Central Asia faces similar problems, Pakistan being a geographic barrier to India.
The Indian energy sector is mainly dependent on coal; imported petroleum and other energy resources include nuclear and renewable resources. Petroleum products were introduced as an alternative to the less efficient, more polluting coal energy. Petroleum products are thus strategically important. Though natural gas is India's most important potential alternative to coal, the effective exploration and distribution infrastructure is yet to develop. As per the present situation, oil is the main imported-energy source.
Estimates indicate that oil imports to India will meet 75 percent of total oil-consumption requirements in 2006. (3) Since the energy import is mainly from the Middle East, volatility in that region's political situations will have a great influence on supply vulnerability. This vulnerability in the supply of energy resources affects energy security and thereby weakens national security at large. In this regard China has been in a much more advantageous position than India. It has been successful in diversifying energy resources, as well as developing a network of energy suppliers in spite of their foreign ventures and investments.
Though the economic growth rates of China and India are different, their energy-consumption growth is almost same. Moreover, as mentioned, both are imported-energy dependent. The energy strategy of these two countries will have a crucial role in their energy security. A Strategic Petroleum Reserve (SPR), which China is planning, alone may not provide any tangible relief to any energy shortage or oil shock. Developing alternative energy resources will have a greater importance than an SPR. India and China have great potential for renewable energy, nuclear energy, hydrogen energy etc. It is important to promote investment in these areas so as to avoid the fear of any supply shortage from abroad. While privatization of the energy field is promising, for an efficient domestic production and supply of oil the role of external and internal pressure groups in controlling the oil market should be carefully watched.
Kazakhstan: China's entry to Central Asian energyChina has been keen to develop its access to Central Asian energy resources, especially focusing on deepening relations with Kazakhstan. Since Kazakhstan is China's major entry point to access Central Asian energy, this region is of special importance to China. Moreover, China has been working very hard in Xinjiang (East Turkestan) to suppress ethnic or insurgency movements that might otherwise cause disturbances in the region in future.
There is vast potential for regional energy cooperation in South Asia. Subregional cooperation among the contiguous countries - Bangladesh, Bhutan, India and Nepal - is more promising. (4) While India has a huge market for energy, these neighboring states could be potential energy suppliers. Nepal and Bhutan have good hydroelectric potential and Bangladesh has natural-gas resources. If the political atmosphere is favorable, and other issues such as production, development, transportation etc are taken care of, these resources can be of much more use to the Indian energy sector than any other foreign energy import. These energy resources along with Myanmar's resources can be extremely important, and the northeastern states of India will chiefly benefit from it.
The politics of the world's energy sector has been witnessing the United States' attempt to dominate it for the past few years. The Gulf wars have sent a strong message to developing countries such as China and India of the danger of their heavy dependency on Middle East oil and the growing influence of Western powers in that region. This development has tremendous influence in shaping the energy policy of India as well as China.
China and India, as two big powers in Asia, will be the main energy consumers of the region. Burgeoning industrial growth and other energy-consuming activities are part of their economic development. As both these countries have similar patterns of energy use, their energy strategies may also have similarities. Any traditional approach to attain energy security may not be a solution to any kind of forthcoming energy shock or shortage of supply. That requires a comprehensive plan to act in a multi-dimensional way - investing in energy resources abroad, developing existing domestic energy resources, inviting foreign direct investment to develop renewable resources, and above all creating a well-structured network of regional energy cooperation.
Both India and China should look forward to creating an "Asian Union", ie, a Greater Asia that is economically, technologically and politically competent in the world, where the "energy security" of the Asian region will be free from the clutches of any political volatility of any region or any Western power.

Notes
(1) Published on the Obele Oil Corp's website.
(2) TERI, India's energy security, New Delhi, 2000.
(3) Ibid.
(4) Regional Energy Cooperation in South Asia, published in the World Energy Council Report, 2003.

Thursday, June 10, 2004

Energy = ASEAN + China + Japan + Korea

The imported-energy-dependent Asian countries are the major sufferers of the growing oil prices in the international market. Already the Asian countries are paying an energy-premium price for their imported energy. The soaring economic growth or the growing imported energy dependence cannot be blamed for this extra amount. And it is very evident that any hike in the energy price will be a setback to the developing Asian economy.

The 22nd AMEM+3 (ASEAN Ministers on Energy Meeting + China, Japan and Republic of Korea), which was held in Manila on June 9, has discussed these core issues and reached an understanding to work toward an effective solution for the energy security issues in the future. Energy has become the most valuable commodity in the international arena and it is high time that Asian countries work together toward attaining the energy security of the region. ASEAN (Association of Southeast Asian Nations) is a net importer of oil and 60% of its primary energy consumption is based on imports. The case is same with the People's Republic of China, Japan, the Republic of Korea and even India; only the percentage of dependency differs. Most important, the Asian countries must strengthen their relationship with the Persian Gulf countries and adopt a proactive energy policy by diversifying their energy resources.

The 22nd meeting of AMEM has proposed to concentrate on cooperation in energy security, natural-gas development, oil-market studies, oil stockpiling and renewable energy. According to SOME (Senior Officials' Meeting on Energy), "The AMEM+3 can work together for stable and secure energy markets in ASEAN+3 region and can develop the energy security communication system to enhance the regional capacity for timely emergency response by sharing information including oil data under the Joint Oil Data Initiative (JODI) for interested countries."

Other than the common energy goals, the 22nd AMEM+3 has notable relevance in bringing these countries together to solve the long-standing issues pertaining to the energy security of the region. The South China Sea is rich in oil and gas deposits and thus the ownership of the island chains in the region has been disputed by the countries nearby. Moreover this region is strategically important, as it is one of the busiest sea lanes of transport, transit and communication.

The 22nd AMEM+3 would be able to look at this issue and could bring an amicable solution for the long-pending issue of ownership. It would help to formulate a joint energy-exploitation plan in the South China Sea and would be a dependable energy source for the concerned countries. Simultaneously AMEM+3 would help to have greater cooperation among the partner countries.

The Russian energy pipeline that has been proposed to be constructed to the port of Nakhodka could possibly satisfy the energy appetite of the neighboring countries. Greater cooperation among China, Japan and the Koreas would help to build an energy network within Northeast Asia and this would provide a dependable consumer circle for Russia. The plan to bring in the Central Asian energy resources across China to the Asian market seems to be more practical at this stage. The investment for the pipeline construction can come from a joint front of ASEAN and the other Northeast Asian countries. The swift realization of the pipeline would be a great relief for the energy security of the region.

The larger the group, the stronger the bargaining leverage. India, being an inevitable partner for Asia's energy quest, must join hands with the AMEM+3 in the realization of energy security of the region. India currently ranks sixth in world energy demand and the dependence on imported energy has been growing. According to the Energy Information Administration, oil consumption in India is expected to grow rapidly, to 3.2 million barrels a day by 2010, from 2.0 million in 2002.

Though there are attempts to reduce India's dependence on Persian Gulf oil considerably, it (the Persian Gulf) will remain the major source of energy import for the foreseeable future. Most important, India's energy policy should include an approach of collective bargaining toward securing its energy supply from the Middle East and in its energy exploitation plans in non-Middle East energy reserves. In the Indian president's address on June 7 to the joint session of parliament, APJ Abdul Kalam stressed, "The government will put in place policies to enhance the country's energy security with special emphasis on petroleum and natural gas." This would bring forth a comprehensive national energy security that would mainly include developing domestic as well as overseas energy resources. Closer participation from India with its other Asian counterparts would help ensure energy security, and allow access to an adequate and affordable energy supply for economic development.