Asia-Pacific looks for energy sources

Cebu, January 10:

Southeast Asian nations hope to outline a sweeping plan for cutting dependence on Middle East oil, but analysts say any workable alternative is likely still decades away.

Energy security will be on the agenda when the ASEAN bloc and its regional allies hold their annual summit, looking at everything from a communal gas pipeline network to biofuels made out of foodstuffs such as soybeans and corn. But even relatively simple proposals — such as the communal stockpiling of oil — face a host of complications, such as disputes over where supplies would be located and which nations would take responsibility for securing them.

Countries “are very aware that if they don’t work together they are going to be very much vulnerable to events much farther away that could cause a crisis locally,” said Dave Ernsberger from energy information giant Platts.

Turmoil in the Middle East, which led to historic oil prices that topped $78 per barrel last year, is underscoring the need for a joint alternative — but something like a regional gas grid takes decades to put in place.

“I think it will take ASEAN as much as 50 years to have an integrated gas network stretching from the Philippines to Indonesia,” Ernsberger said. “There has to be agreement about the conditions for using the pipeline, who gets to put gas through it and at what price,” he said, adding that investors would be prepared to put in the money if and when those issues were settled.

The 10 ASEAN nations and regional partners such as Australia, China and Japan will meet in the Philippines this week, looking at ways to ensure a stable and affordable energy supply.

In addition to considering massive region-wide infrastructure projects, they will look at ways to increase energy efficiency and other strategies for easing the region’s reliance on oil imports.

Regional officials said Japan would help provide expertise in technology to convert coal to synthetic oil, and that the Southeast Asian bloc was also looking to increase production of biofuels.

The most popular biofuel, ethanol, is made primarily from sugar or corn and is used mainly as an additive mixed with petrol, while biodiesel is produced from oil-bearing crops such as soybeans. But each potential solution carries its own set of obstacles.

Victor Shum of US energy consultancy Purvin and Gertz, said oil stockpiling can be very expensive and difficult to manage, with nations needing to agree on issues from supply access to security.

“The question is: where will the stockpiles be located?” Shum said.

Ernsberger said the main challenge with a gas network would be hammering out agreement on market pricing, while others note that new-technology solutions such as biofuels could be of restricted short-term usefulness in the region.

Conventional gasoline and diesel would remain dominant because the region’s transportation is likely to continue depending on oil for now, said Kang Wu, an energy specialist at the East West Center, a Hawaii think tank.