SESSION 3 IEA/ASEAN/ASCOPE Workshop “Oil Supply Disruption Management Issues” Cambodia, 6 April 2004 Norio EHARA Head, Non-Member Countries Division International Energy Agency International Energy Agency AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY
Increase in Primary Oil Demand by Increase in Primary Oil Demand by Region, 2000- -2030 2030 (b/d) Region, 2000 1 0 4 .0 9 3 .5 8 3 .0 7 per cent 2 .5 6 mb/d 5 2 .0 4 1 .5 3 1 .0 2 0 .5 1 0 0 .0 Middle East N.America China East Asia America South Asia Africa economies Pacific Europe Transition OECD OECD Latin OECD In c re a s e in o il d e m a n d A v e ra g e a n n u a l g ro wth ra te (rig h t h a n d a x is ) • Two-thirds of oil demand increase over the next three decades will take place in Non-OECD regions (29mb/d in the 45mb/d increase during 2000-2030). • Developing Asia will take the largest share (China: 7mb/d from 5 mb/d to 12 mb/d). AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY
Oil Supply Security and Emergency Preparedness Asia’s Increasing Oil Import Dependency (%) 94% 1 0 0 83% net imports as per cent of oil supply 82% 9 0 74% 8 0 65% 7 0 60% 61% 6 0 5 0 34% 30% 4 0 3 0 2 0 1 0 0 O E C D O E C D O E C D S o uth A sia C hina E a st A sia P a cific E uro p e N.A m e rica 2 0 0 0 2 0 1 0 2 0 3 0 AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY
Global Oil Stocks (August-2003) Total World Oil Stocks: 6.0 billion barrels* At sea/In transit OECD Commercial *Excludes ex-USSR, China and South African strategic stocks. 16% 45% Non-OECD Commercial OECD Strategic 18% (170 mil. Tons) 21% China + India = 10 million tons => 6% among OECD strategic stocks AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY
IEA’s Collaboration with NMCs � Consumer-Producer dialogue by IEF + Energy Experts Meetings � IEA Ministerial encouragement in April 2003 � Russia: Joint Declaration of Co-operation in 1994 � China: Memorandum of Policy Understandings in 1996 � India: The Declaration of Co-operation in 1998 � ASEAN: Framework for Co-operation between the ASEAN Centre for Energy (ACE) in 2002 AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY
China � The largest oil consumer and Domestic Production and importer outside OECD Import Dependency � Decrease domestic oil production 700 � Rapid increase of oil imports and 82% dependency on ME and Russia 600 � Price volatility and burden on the Mtoe 73% 500 national economy: 60% � 10% price up 0.7% GDP down 400 � Market liberalisation & possible 34% decrease of commercial stocks 300 � Strong concerns on Oil Security & 200 decision for establishing strategic oil stocks by General People’s 100 Congress in March 2001. 0 � IEA/China Joint Workshop in Paris in April 2001 and in Beijing in 2000 2010 2020 2030 December 2002. � Hotline was tested in Spring 2003. Domestic Supply Net import AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY
Current Plan (Industry Proposal) � System : Government stocks and supplemented by compulsory industry stocks. National stocks as the last resort � Stock Level : 2005: Gov. 4 mil tons: 14 days of crude import Ind. 6 mil tons: 21 days 2010: Gov. 8 mil tons: 22 days of domestic cons. Ind. 11 mil tons: 28 days � Quality : C rude oil for gov. and crude & products for ind. � Location : 4 sites in coastal regions were reportedly identified � Legal Issues : to be established � Management : Energy Bureau and final decision by State Council � Time table : 1st stage by 2005 (current 5YP) � Financing : Bank loans? Companies’ responsibility for industry stocks? Ready to collaborate with the international community AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY
Proposed Locations of Strategic Oil Reserves in China KNOC:8 mil. tons JNOC:88 mil tons Zhejiang Islands: 4 mil. tons AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY
India Domestic Production and Import Dependency � Growing oil demand:3.3% pa. 300 2000-2030 94% � Decrease domestic oil production 250 � Rapid increase of oil imports and Mtoe dependency on ME 200 � Price volatility and burden on the 83% 150 national economy 65% � Regional geopolitical uncertainty 100 � Market liberalisation & possible 40% decrease of commercial stocks: 50 60 days of consumption 0 � Strong concerns on Oil Security and decision for establishing 1990 2000 2010 2030 strategic oil stocks by PM in Feb. 2003 Domestic Supply Net import AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY
Current and Future Plan � Stock Level : 15 days of consumption = 5 mil. tons progressively increased to 45 days � Quality : crude oil to start with � Location : 1 site on West coast and 1 on East � System : underground storage � Legal Issues : to be established shortly � Management : 100 % state-owned new entity to be established � Time table : depending on the settlement of financing issue � Financing : Oil tax? IEA/India Joint Workshop on Emergency Stocks in Jan. 2004 in New Delhi. AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY
Proposed Locations for Strategic Oil Reserves Mangalore: Phase I Underground rock cavern – 1.5 MMT + 2.5 MMT Vizag: Underground rock cavern – 1.0 MMT Vizag Mangalore AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY
IEA Collaboration with NMCs � IEA Ministerial encouragement � Activities: � Stocks and oil security workshops � China in 2001 and 2002 � India in 2004 � ASEAN in 2003 and 2004 � Hotlines: agreed with China and India � Simulation exercise (2002, 2004…) AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY
The Approach: Learned Lessons by IEA’s Outreach Activities in Key NMCs � Approaches: � Step by step approach for long term co-operation � Timely and attentive input to their needs � Policy input and sharing experiences at the initial stage of planning � China and India would make a great impact on the global oil security and maybe good models for others � Co-operation with key NMCs for global emergency systems: Global issue need global approach AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY
Step Forward � Step Forward: � Continue to contribute to key NMCs and involve in the IEA events : Simulation Exercise in 2004 in Paris � More Hotlines? � Data collaboration: JODI and IEA training course? � Encourage to establish NESO-type org. in NMCs � Issues to be considered before going ahead: � Co-ordinated actions with key NMCs: on what and to what extent? � Beyond China, ASEAN and India? ASEAN +3, APEC? AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY
Thank you AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY
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