Mid-East key to Asia's oil supply
THE gap between Asian crude oil supply and demand will continue to widen while regional production is unable to satisfy ever-increasing useage levels, according to a leading energy authority.
Dr Fereidun Fesharaki, director of Resources Programs in the US-based East-West Centre, said regional suppliers would be unable to keep pace with an anticipated six million barrels per day (bpd) growth in oil demand resulting in a major rise in import dependence.
In 1990, 48 per cent of oil consumed in the region was imported.
''By 1995, import dependence is expected to rise to 58 per cent and by the year 2000 to 64 per cent,'' he said an address entitled The supply and demand outlook for energy in the Asia-Pacific region, presented on Wednesday at the Intertanko annual meeting.
He also estimated US oil import dependence in 2000 to be about the same level.
The Persian Gulf, which supplied about 70 per cent of the region's total oil imports, was expected to increase its output to meet 90 per cent of the region's requirements.
This sharply contrasted with the United States whose supplies would be met by Venezuela, Canada, Mexico and the North Sea, he added.
Mr Fesharaki said China and Indonesia were expected to become net oil importers by the turn of the century while Malaysia, Brunei, Papua New Guinea and Burma would be exporters.
Vietnam also would be a sizeable oil producer, though local demand would eat into export availability, he said.
''The changing crude (oil) availability will have a major impact on refining investments since environmental regulations will call for lower sulphur fuel oil,'' he added.
He pointed out that as a result of these changes, exports of low sulphur waxy crudes would fall significantly.
Mr Fesharaki said if an oil crisis occurred in the 1990s, the refiners who would cope best would be those who had the flexibility to achieve considerable conversion while hydroskimming facilities would suffer.
An oil price shock in the 1990s would differ significantly from that seen in 1979 as refinery capacity surpluses were already looming before the Iranian revolution, he said.
''Given the current capacity situation in Asia, unless building speeds greatly beyond current plans, even a major price increase would not result in the kind of widespread misery seen in the early 1980s,'' Mr Fesharaki said.
He pointed out that the one factor that could change this was refining policies in the Middle East.
If Asian nations continued to build to meet their own demand while the Middle East countries also launched a major refining expansion for completion in the late 1990s, the effective capacity overhang could be very large if a price shock occurred as well.
Another speaker, Mr Erric Kertsikoff, vice-president of Eletson Corporation urged Intertanko to take the initiative to start a campaign to inform the public of the real long-term consequences of tanker spills.
''If we cannot change legislation like the Oil Pollution Act 1990, then we should at least try to change the perceptions that led to it,'' he said.