Jakarta, Indonesia, 21 April 2015 – Amid declining global oil prices and uncertainty around a possible deal to lift sanctions imposed on Iran, political and industry leaders told the World Economic Forum on East Asia that long-term vision is required to mitigate oscillations in the price and supply of energy in Asia.
“We also have to come to terms with the fact that it is a cyclical industry where prices will go up and down. But the light at the end of the tunnel is that, in the long term, demand is growing and over the next two to three years we will see prices come to an optimum level,” Shahril Shamsuddin, President and Group Chief Executive Officer, SapuraKencana Petroleum, Malaysia, told participants on the final day of the meeting.
Melody Boone Meyer, President, Chevron Asia Pacific Exploration and Production Company, Chevron Corporation, Singapore, said the extreme price volatility was not uncommon to the energy industry. “While there is a surplus of supply right now, inevitably we believe that decline will occur,” she said. “We take a long-term view of prices. Our investments in oil and gas developments are long-term so we have to take a long-term view. We continue to believe that global demand for oil and gas will continue to grow.”
The security of energy supplies is a critical catalyst to continued development in a fast-growing region. Natig Aliyev, Minister of Energy of Azerbaijan, said it is a priority: “Energy is the main factor in stability and development in each country. To develop our economy we have to secure our energy supply and demand.”
As one of the strongest-growing regions in the world, where consumption will continue to expand, Asia is expected to be a net importer of oil in the coming decades. While low oil prices have allowed the Indonesian government to reduce fuel subsidies, Sudirman Said, Minister of Energy and Mineral Resources of Indonesia, said the nation is looking beyond fossil fuel to geothermal, hydro and solar power to stabilize the future of its energy mix.
“It is time to think about mixing the energy more in renewables,” he said, “Yes, we are declining in terms of fuel, but actually Indonesia has a lot of choices in terms of renewable energy. That is the new direction that we have to set up in the future.”
Looking more broadly at regional geopolitical concerns in the South China Sea, Harry Harris, Commander of the United States Pacific Fleet, US Navy, said that stability is “good for business” and “prosperity requires unfettered access throughout the waters of the world”. He added: “Seven of the world’s 10 largest militaries are in the Indo-Asia Pacific region so we are awash in a sea of uncertainty and that certainly affects energy security, trade and commerce.”
To counter tensions in the resource-rich South China Sea area, Shamsuddin suggested a collaborative model with which ASEAN countries could share the profits of construction and extraction in disputed areas.
The Co-Chairs of the World Economic on East Asia are: Hans-Paul Bürkner, Chairman, The Boston Consulting Group, Germany; John Riady, Executive Director, Lippo Group, Indonesia; Budi Gunadi Sadikin, Chief Executive Officer, Bank Mandiri (Persero), Indonesia; William Lacy Swing, Director-General, International Organization for Migration (IOM), Geneva; and Teresita Sy-Coson, Vice-Chairperson, SM Investments Corporation, Philippines.