Consumers and suppliers — both have tremendous stakes in the emerging energy scenario and its stability over a longer period. Long-term security of supplies, at affordable rates, is emerging as a key issue for the continuity of the current phase of extra ordinary economic growth, especially in parts of Asia. As the global economic engine heats up, especially in the Southern part of the globe, the issue of security in the energy sector is increasingly coming under focus. Things have changed drastically over last three decades. The sleeping Asian giants, in the meantime, have woken up. Major industrial economies are now much more flexible and capable of facing the oil price swings. Their cushion is much stronger than in the early seventies. The impact of higher oil prices on the economies of the industrialized world is comparatively fairly minimal.
However, the high growth economies of the developing countries such as China, India, Korea and Pakistan, are much more exposed today to the exigencies of the energy markets than they were decades back. This is in the interest of both the producers as well as the consumers, oil analysts concede. Asia needs energy, at affordable prices, so as to continue fueling the hyper growth. Further these are some of the most populous nations on earth. To sustain their growth, they all need energy that too in abundance.
Global producers and consumers have been meeting for last many years, at least every second year, to sort out energy related issues amongst themselves. The International Energy Forum, now permanently based in Riyadh, was formed basically to promote consultation between the consumers and the producers of energy.
Asia is the next energy front, every one concedes.
Already China and Japan are the number two and three consumers in the world after the United States. The growth of the Indian economy over the last few years has been staggering. For transformation into an economic power house, India has a task in hand to ensure security of supplies at affordable prices. Similarly Pakistan’s energy requirements are also galloping. After China, the Indian and the other emerging regional economies could be the harbinger of another bull run in the crude markets, some now predict. And fossil fuel is not an unending commodity.
On the side lines of the Asian Energy conference, India and Iran signed a 25-year long-term agreement under which Tehran will supply liquefied natural gas (LNG) to India. As per the agreement, Iran will ship five million tons of LNG to India per annum for the next 25 years, with an option to increase the quantity to be shipped to 7.5 million tons.
India and Iran are also discussing downstream LNG production and processing projects in the South pars field. Besides the Indian OVL has been given a 20 percent stake the development of Iran’s biggest onshore oil field, Yadavaran and 100 percent equity in the 30,000 bpd Jufeyr field. The 20 percent in Yadavaran would translate into 60,000 bpd of crude oil.
With Pakistan’s economic engine also heating up — with a seven percent plus growth anticipated the current year — its gas shortfall is simulated to go up to 400 million cubic feet per day by 2010 and to about 4 billion cubic feet per day by 2025. Hence, in case India does not opt for a gas pipeline from Iran to India via Pakistan, Islamabad has proposed a stand alone gas pipe to Pakistan from Iran. Time is running short and steps have to be taken without any further delay, the economy mangers in Islamabad are emitting signals.
Saudi Minister of Petroleum and Mineral Resources Ali Al-Naimi even proposed a long-term agreement, as it has done with 30 other states, to India and the other Asian states. The idea of an Asian petroleum market, with trading exchanges was also floated during the New Delhi forum. The objective was basically to serve the region’s fast growing economies and soften price volatility. Oil producers have indicated they were ready to look at the proposal closely. A deep sense of fraternity was definitely evident in New Delhi.
