Global Energy Security

31 August 2006 (Last Updated August 31st, 2006 18:30)

The only way to secure energy supplies in the future is by developing a new framework for cooperation. Peter J Robertson, vice chairman of the board of the Chevron Corporation, says that it is essential that all stakeholders are involved.

Global Energy Security

Energy security is important for everyone. Consumers need secure supplies and producers require secure demand. In fact, energy security requires, first and foremost, partnerships between all stakeholders.

It is also important to appreciate the futility of planning for energy independence in a world based on energy interdependence. Consuming and producing nations have to work together instead of pursuing energy isolationism, or as Russian President Vladimir Putin calls it, energy egotism.

Government, industry and national and international oil companies also need to collaborate. It is urgent that all parties promote a global marketplace for the production, sale and transportation of affordable, reliable energy.

"Consuming and producing nations have to work together instead of pursuing energy isolationism."

TOWARDS A NEW FRAMEWORK

The debate about energy security, and the solutions reached, will determine the quality of life for millions of people. It will also affect the performance of every country’s economy in the future.

Nowhere is this more apparent than in the ASEAN + 3 area, comprising South East Asia plus Japan, China and South Korea. This region is rapidly becoming an economic powerhouse; however, like North America and Europe, its domestic resources cannot meet its energy needs.

Japan and South Korea, two of the most advanced economies, remain wholly dependent on foreign oil sources. And China, Asia's fastest-growing economy, is second only to the USA in oil imports.

Cambodian Prime Minister Hun Sen believes that new energy sources and supplies are "the most critical factor for sustainable development in ASEAN, and Asia at large, in the 21st century."

In Asia, as in the rest of the world, the response to this challenge will determine not only the economic outlook of individual nations, but of the entire globe. Developing a new producer-consumer framework is becoming increasingly urgent.

Producing nations need to agree to increase capacity through shared investment with consuming nations while consumers must commit to improving efficiency and maintaining reliable demand.

Such a framework should be a top priority of energy diplomacy, offering a realistic alternative to producer-consumer confrontation and the current volatility of prices and consumption. It ought to contain five fundamental elements:

  • Open markets: transparency and the free flow of energy trade and investment can only occur on a level playing field. Removing market barriers can significantly increase production and moderate price volatility.
  • Sound policies: these are required to promote stable, predictable fiscal and regulatory regimes, the sanctity of contracts and the rule of law. The better established these are, the greater the investment, development and security of energy resources for all countries.
  • Robust technology: it is essential to conserve and optimise the resources we have now and develop new energy sources while protecting the environment. This can be achieved through joint ventures and partnerships that foster the sharing of technology and best practices.
  • Increased energy efficiency: this remains the most abundant, cheapest form of new energy we have. Energy conservation and efficiency requires commitment from everyone.
  • Responsible development: the production and use of energy must serve as a platform for broader economic growth and social wellbeing. The economic benefits of energy must flow to all stakeholders, including the poor and the vulnerable. This can only be done through proactive national and international leadership fully supported by industry.

Taken together, these elements can effect a profound change in the relationship between energy producers and consumers; they can provide true energy security based on a clear understanding and acceptance of interdependence supported by strong, mutually beneficial partnerships.

DEVELOPING PARTNERSHIP

Partnership is one of Chevron’s core values. Many of its alliances are decades old, including those in Asia. Chevron’s kerosene signs first appeared in Shanghai almost a century ago. In the 1930s, the Caltex colours flew in Indonesia, the Philippines, Singapore, India, Cambodia and Malaysia.

In Thailand, Chevron built a refinery to supply the Caltex system
in the mid-1990s and today it maintains a retail network of more than 500 stations.

"Secure energy is essential to improving standards of living and individual security as well as improving economies around the world."

In the Gulf of Thailand, Chevron works with Unocal, its partner of over 40 years, to produce 1.5 billion cubic feet of natural gas per day, representing almost 30% of Thailand's total power demand. Chevron's success in this region has been built on long-term relationships.

Chevron, Unocal and Caltex have partnered with most of Asia's national oil companies, including Pertamina in Indonesia, Petronas in Malaysia, and PTT and PTTEP in Thailand. Secure energy is essential to making standards of living and individual security better as well as improving economies around the world.

Throughout Asia, rising standards of living and economies have been fuelled by increased demand for local and world energy supplies. In addition to energy production, the partnerships formed to support this industry have had many other benefits, including training, education and jobs for tens of thousands of residents.

More than 10,000 Thai nationals have been hired and trained by the petroleum industry and the industry has helped build schools, health clinics and hospitals. It has supported small businesses and assisted local communities teaching occupational skills.

A new framework is important to help all countries secure their energy supplies. Enabled by partnership and supported by open markets, just policies, robust technology, efficient energy use and responsible development, consuming and producing nations can reach a positive supply-demand equilibrium.

And by embracing rather than denying our interdependence, we will be well on our way to true energy security.