INTRODUCTION

While there are varying opinions about the quantity of remaining, easily accessible fossil fuels — oil, gas and coal — on the planet, there seems to be agreement that the price of oil will remain high, that oil production facilities and transport will increasingly be the focus of terrorist activities and that the burning of large amounts of fossil fuels is causing global warming. Thus, there are many reasons why it is in the interest of ASEAN and China to strive together to attain the highest possible efficiencies in the supply and use of energy, that is, cost-effective, secure and environmentally-sound sourcing, conveyance and consumption of different types of energy.

This chapter examines the potential for ASEAN and China to cooperate in the energy sector. As there are many organizations which provide energy demand and import projections, these are not discussed here. It is taken here as a given that energy demand in both ASEAN and China will continue to increase sharply over the next decades at rates considerably higher than the world average. The particular questions addressed here are these:

1. a) What energy supply cooperation is going on now between China and ASEAN?

2. b) What more can be done in the way of energy cooperation between China and ASEAN?

3. c) What can be learned from EU experience in this area?

ENERGY SUPPLY COOPERATION

Oil

China has the largest oil reserves in the region but production growth is expected to be minimal in the coming years. In 2004, production stood at 174.5 million tons (see Table 11.1 which gives comparative production data). There is little possibility of ASEAN and China trading much oil in the future. China became a net importer of oil products in 1993 and a net importer of crude oil in 1996. Consumption of oil has increased at an average rate of about 7 per cent from 1995, while production has grown at about only 2 per cent. In 2005, dependence on imports of oil reached 49.2 per cent.