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November 18, 2009 16:36 PM

Asean Needs Integrated Energy Market, Says Petronas Chief

By D. Arul Rajoo

BANGKOK, Nov 18 (Bernama) -- With unrelenting increases in energy demand and taking the cue from Asean's single economic community by 2015, the 10 Asean members should go for an integrated energy market, Petronas president and chief executive officer Tan Sri Mohd Hassan Marican said Wednesday.

While identifying the level of integration appropriate for Asean in the next 20 years, Mohd Hassan said an European Union-style energy market was probably beyond the region's reach in this timeframe.

"It's inconceivable that we are content to remain as 10 energy systems, when we have already set our sights on creating a single economic community," he said during the CEO Summit at the Ninth Asean Council on Petroleum Conference and Exhibition here.

Mohd Hassan said the single most important gain to be obtained from an integrated energy market was the lowering of the cost of imported energy.

According to him, this can be attained through being able to achieve a more optimal layout of energy infrastructure investments throughout the region, saying that the lower cost of energy would be vital in sustaining economic competitiveness and at the same time enhancing the security of supply.

The integration, he said, not only mean constructing more pipeline or electricity interconnections, but also a common framework for multilateral contracts, harmonisation of technical standards and even closer coordination of national energy policies.

"Without integration being lifted to this systemic level, we may trigger misdirected investments in pipelines, LNG (liquefied natural gas) facilities and electricity interconnections," he added.

Mohd Hassan said the success of cooperation like the joint oil development in Malaysia-Thai Joint Development Area, Malaysia-Vietnam Commercial Arrangement Area and the tripartite cooperation among Indonesia, Vietnam and Malaysia are good examples.

Stressing the need for such integration, Mohd Hassan said he believed the member countries are close to reaching the limits that would allow them to meet internal energy needs out of their indigenous hydrocarbon resource endowment.

"In saying this, I do not of course deny the vast potential that exists in our deep and ultra deepwater areas," he said, adding that many traditional oil and gas exporters here would turn to importers themselves in the coming decade due to maturing development areas.

Furthermore, he said, relying on imported energy brings about its own set of challenges, citing the global competition for resources that could lead to supplies being held by fewer and fewer producers, as well as being exposed to threat of "energy nationalism or protectionism".

Citing the recent concluded study on the future energy outlook for the Asean region, Mohd Hassan said it showed demand more than doubling in just 20 years, with the power sector making the largest contribution to this rise.

He said oil and gas was slightly increasing its current share in the primary energy mix of around 60 per cent, which translated into a two-and-half fold increase in demand over this period, while was coal seeing the fastest growth but nuclear contributing only above one-and-half per cent.

With this background, the region's rate of oil and gas self-suffiency will drop from 92 per cent at present to less than 40 per cent, pushing the imports of these products to rise from eight per cent to 60 per cent, or a seven-fold increase in import dependence, he added.

-- BERNAMA

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