Asia Oil & Gas Conference
Oil to remain primary source of energy By Hong Boon How OIL is likely to remain the world's primary source of energy in the foreseeable future as there are no viable alternatives at present.
UOP president and chief executive officer Dr Humberto Vainieri said gas usage was however expected to grow faster than oil, with gas to surpass coal after 2010.
Vainieri said energy demand was projected to increase substantially in the next decade in Asia from the combination of strong economic and high population growth.
UOP is a leading American company dealing in petroleum refining and petrochemical technologies.
"Even assuming a conservative gross domestic product (GDP) growth, global energy demand is expected to be at least 50% higher in 2020, with oil and gas projected to make up more than 65% of the increase," he said at the 6th Annual Asia Oil and Gas Conference in Kuala Lumpur.
The conference themed Balance Stability: Co-operation Among Producers and Consumers was organised by Petroliam Nasional Bhd (Petronas) and attended by 780 executives of the international petroleum and petroleum-related industries.
Vaineiri said Asian energy demand was expected to exceed global average and that the region's demand could be 250% higher in 2020.
He said the relative merits of oil, gas, coal and other energy sources, including renewables should be balanced. "We need to understand these better so that our combined actions are responsible".
Vainieri said oil usage would continue to increase from the rapid growth in transportation as there was no cost-effective alternative to oil-derived transport fuels to meet the demand.
He said although the future of the petroleum industry may offer diverse opportunities, each were shrouded in uncertainties and risks which cut across the entire energy industry.
"For example, gas is growing rapidly compared with other primary energy sources for power generation. However, gas offers potential in future for both transportation fuels and new routes to petrochemicals and polymers.
"At present, many of these technologies are not cost competitive with oil, but intensive research are underway, and at any time a technological breakthrough could trigger an entire new phase of development for the industry," said Vaineiri.
He said other fuels such as methanol and hydrogen may come into the forefront ultimately.
Organisation of Petroleum Exporting Countries (Opec) head of petroleum analysis department Javad Yarjani said oils share of world energy demand would decline from 41% in 2000 to 38.8% in 2020. "This 2.2 percentage point decrease contrasts with a forecast of 6.4 percentage point increase in gas demand in the same period from 22.7% to 29.1%," said Yarjani.
However, he said oil would remain comfortably as the frontline energy resource with a market share about 10 percentage points higher than gas in 2020.
Yarjani also said Opec projected that world oil demand would rise from 76 million barrels per day in 2000 to 106 million barrels per day in 2020. "Opec with more than three quarters of the world's proven recoverable reserves will watch its market share grow from around 40% in 2000 to just over 50% in 2020," he said.
Yarjani said as Asian countries which comes to rely more on Opec, especially on its Middle East members for crude oil supply, could respond by providing more incentives in the upstream sectors.
"The investment requirement is staggering and it is up to all producers and consumers to ensure that it is met if consumers wish to receive an orderly supply of oil at reasonable prices in the future," he said.
BP Asia-Pacific Pte Ltd president (gas & power) Nicholas P. Davies said the Asia-Pacific region was leading the world in the growth of natural gas usage.
Davies said global natural gas usage was expected to increase sharply from the present 100 million tonnes per annum (mpta) to 200 million mpta in 2010.
"Fuel substitution by gas, is a potentially powerful growth engine for new liquefied natural gas (LNG) demand, especially in the Asia- Pacific region where many new plants are required," he said.
"Assuming that gas price do not spike temporarily or coal prices are not kept artificially low by explicit or implicit subsidies, gas can beat coal on full life cycle costs at mid-cycle price levels," said Davies.
Pertamina senior vice-president (downstream) Ariffi Nawawi said Indonesia has established itself as the world's biggest LNG producer and supplier.
"Supported by the Arun and Bontang LNG plants, Indonesia LNG production has increased to 28 million tonnes per year.
Ariffi also said Pertamina would concentrate its LNG marketing efforts in Asia and have identified potential gas reserves in Irian Jaya and Papua.
Besides serving its traditional customers in Japan, Korea and Taiwan, he said Pertamina would develop new relationship with new emerging LNG consumers in India, China and other Asian countries.
Ariffi said the Indonesian government was restructuring its policies to enhance the growth of its oil and gas industries.
"The drive is to make the oil and gas industry more efficient, market responsive, and transparent so as to prepare the industry for the requirement in a new global competitive age to attract investment," he said.