Academic journal article Asia - Pacific Issues

Managing Asia Pacific's Energy Dependence on the Middle East: Is There a Role for Central Asia?

Academic journal article Asia - Pacific Issues

Managing Asia Pacific's Energy Dependence on the Middle East: Is There a Role for Central Asia?

Article excerpt

The Asia Pacific region has long been heavily dependent on oil imports-particularly from the Middle East-to meet its energy needs. This dependence has increased since the early 1990s, when China joined the ranks of Japan, South Korea, and other Asian nations as a large and rapidly growing oil importer. At the same time, India's oil imports also rose dramatically. With the region's own oil production stagnated and oil demand rising continuously, Asia's reliance on oil imports will reach even higher levels in the coming decades.

The region's dependence on oil imports and the dominance of the Middle East oil supply have made energy security a concern for many Asian nations. Supply diversification is one way to address the issue, but oil importing countries in Asia have been hard pressed to find viable alternatives to Middle East oil. The prediction that all major countries in the region, including Indonesia and Malaysia, will be net oil importers within the next 15 years increases the urgent need to diversify.

While Asia Pacific has sought to broaden its oil supply, Central Asia has emerged as a potential player in the world energy market. Strategically located between Russia, the Middle East, and Asia Pacific, and adjacent to Iran (a U.S. adversary), Turkey (a Western ally), and Afghanistan (a war-torn country undergoing reconstruction), the geopolitical importance of Central Asia is obvious. More importantly, Central Asia may prove to have potentially large oil and gas reserves and its petroleum production is rising. Even before the terrorist attack on the World Trade Center in September 2001, the United States and other Western powers were greatly interested in Central Asia, given its strategic location and oil and gas potential. The recent conflict in Afghanistan and the role played by Central Asian nations such as Uzbekistan and Georgia, as well as by Russia in the U.S.-led war on terrorism have heightened Central Asia's geopolitical importance.

When considering the energy needs of the Asia Pacific region and the potential role of Central Asia, two critical questions present themselves: Can Central Asia be a viable alternative energy supplier, and can an energy triangle be formed between Asia Pacific, the Middle East, and Central Asia? To answer these questions, many factors must be considered and Central Asia's role in addressing the energy supply and security concerns of the Asia Pacific region assessed.

Rising Oil Import Dependence in Asia Pacific

Asia Pacific encompasses East Asia, Southeast Asia, South Asia (including Afghanistan), and Australasia (including the Pacific Islands). In 2001, the region consumed a little over 20 million barrels per day (b/d) of oil, of which 12.6 million b/d were net imports.' This represents an import dependence of 62 percent, up from 49 percent in 1990 (see Figure 1). Despite the 1998 financial crisis and the slowdown of regional and global economic growth in 2001 associated with high oil prices, oil demand in Asia Pacific is poised to grow continuously over the next 15 years, albeit at rates much lower than those seen in the late 1980s and most of the 1990s. With flat regional oil production, overall oil imports-and hence import dependence-are set to rise.

A comparison between U.S. and Asia Pacific oil consumption and dependence highlights the seriousness of the latter's reliance on imported oil from a single source-the Middle East. Both regions have oil consumption and oil import dependence, but Asia Pacific's consumption is slightly greater and its import dependence higher. In 2001, the United States consumed 19.6 million b/d of oil with an import dependence of 54 percent, up from 42 percent in 1990." The Asia Pacific region is facing a more precarious situation: More than 90 percent of the region's oil imports comes from the Middle East; only a quarter of U.S. oil imports stems from the Persian Gulf. In terms of total oil consumption, the Middle East accounts for well over half the amount consumed in the Asia Pacific, as compared to less than 15 percent in the United States. …

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