The current monetary crisis in South East Asia, though grave, is expected to be contained through international cooperation in a few years and the economies to regain relatively high growth rates for the 1995-2010 period. Accordingly, incremental demand for oil in the region for the coming 1-2 years is projected to shrink by some 200 thousand BBL/d, pressing down short term oil prices. However, by 2010 oil demand will rise to 23 MMBBL/d, leaving a gap of 17 MMBBL/d between regional demand and supply capacity. For gas, many of expansion/grass roots LNG projects seem to have suffered more severely because of large and long-term investment requirements which are severely hit by the current monetary crisis. While regional demand for oil will be on a steady increase, supply capacity from within the region will not expand as much, and dependence on imported oil will exceed 90% by 2015, resulting in increased vulnerability in the world oil market. An increase in oil demand and possible delay/cancellation of large scale LNG projects might delay substitution of coal by oil/gas, entailing further deterioration of environmental issues. To slow down the pace of regional dependency on imported oil, further efforts by the industry are called upon for the development of regional resources in the frontier areas and deep sea waters, complemented by government actions in preparing a better investment climate, including relaxed fiscal terms and appropriate tax considerations. Simultaneously, gas development in the region for local use and export needs to be boosted, Oceania has a competitive edge in this respect. Also, policy recommendations being considered by APEC could be one of the tools towards such a goal. JNOC, along with Japanese industry, is committed to contributing to regional stability in oil/gas supply, as well as sharing its know-how in building emergency stockpiles.
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