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Asia starts to gasp for
energy
By John Berthelsen
Across all of Asia, from India to China and
south to Australia, a severe energy crunch is developing
as construction of energy plants and transmission
facilities lags behind growing industrial capacity and
burgeoning private consumption, according to energy and
market analysts.
Certainly, Asia is hardly
alone, with the United States and Canada having
experienced the biggest energy blowout in recent years
last week after the failure of a plant in the Midwest
sent a blackout cascading across much of North America's
east coast, leaving at least 50 million people in the
dark. Some were still getting back online Tuesday.
Energy officials in the United Kingdom, Europe and Japan
have been warning of possible energy shortages during
peak demand.
"Global economic growth hinges on
reliable, accessible and affordable supplies of energy,"
said Sean Darby, regional head of strategy for Nomura
Securities International Hong Kong. "The recent
catastrophic electricity blackout in the US, the
sabotage attack on Iraq's oil pipeline to Turkey and
warnings from UK, European and Japanese electricity
producers of possible shortages during peak demand
[have] raised awareness of the lack of a solid global
energy infrastructure."
The Paris-based
International Energy Agency, an autonomous agency linked
with the Organization for Economic Cooperation and
Development (OECD), has already raised its forecast of
oil demand twice this year, to 78.41 million barrels of
oil per day, primarily because of China's burgeoning
demand. In Asia, energy markets are so tight that they
could overwhelm the power-transmission industry of some
economies across the entire region, Darby said. "There
is anecdotal evidence of electricity shortages in
Shanghai and the theft of crude from buried pipelines in
northern China," he added.
In fact, he said, "it
is important for investors to consider that China's
economy is reaching diminishing returns due to the power
infrastructure and energy bottlenecks and that growth is
being constrained by underinvestment".
China,
with the fastest-growing economy in the Asia-Pacific
region, is getting most of the attention, although its
current overall imports are only equal to a week's worth
of oil imports into the United States, the world's
energy-consumption behemoth.
And China is hardly
by itself in its appetite for energy. Indonesia last
month ordered the de-mothballing of 27 Suharto-era
energy plants that were halted when the aging dictator
fell from power in 1998 because of corruption in their
construction and energy pricing and is renegotiating
their contracts to deliver cheaper - and less
corruption-ridden - power (see Stalled Suharto-era power plant to be
restarted, August 6). Vietnam, with its anemic
economy, plans to break ground this year for the
construction of six new hydropower projects to try to
keep up with demand.
Some countries are turning
to unconventional power-generation sources as well. The
Philippines, with endemic brownouts, is the focus of
unlikely efforts by non-governmental organizations to
train farmers to convert coconut oil into biomass fuel.
Wind farms are popping up in other parts of Asia. Some
countries are experimenting with solar tiles in
individual houses. China itself is spending more than
US$22 million for the installation of incinerators and a
generator to turn garbage into power.
Pakistan,
warning that its oil reserves will be gone in 10 years
and its natural-gas reserves in 20, is turning with
Chinese, German and Danish help to wind and solar power,
with a 1.2-megawatt wind-power plant to be inaugurated
shortly in Karachi. Some 70 percent of Balochistan's
forests have been cut for fuel use. Pakistan hopes to
produce 10 percent of its needs with renewable energy by
2015. India will be forced to begin importing liquefied
natural gas (LNG) from early next year to augment a
deficit in domestic production, Petroleum Minister Ram
Naik has said. Demand for natural gas is far exceeding
availability, with demand currently at 119 million
metric standard cubic meters per day (mmscm/d) compared
with a supply of only about 65mmscm/d.
With the
growing need for energy, the prospect of environmental
damage from the transport of it is growing as well.
Hardly a day goes by without the publication of stories
such as the current, apparently unending seepage of
crude from a Greek tanker, the Tasman Spirit, which has
been aground near the Karachi coast in Pakistan for the
past three weeks and is threatening the country's $130
million annual seafood export trade.
Virtually
every country in the Asia-Pacific including Australia is
faced with problems as constricted logistics combine
with soaring demand. But China, with its fast economic
expansion, booming fixed asset investment and growing
consumer needs, faces the most critical problems. In the
first week of August it announced it would construct its
largest nuclear power plant in Yangjiang, a city in the
southern province of Guangdong, after years of planning
and delay. A feasibility review was launched seven years
ago but the plant, which is estimated to cost $8
billion, won't break ground until next week and is not
expected to begin production for 15-20 years. It will
have six generators with an installed capacity of 6
million kilowatts.
China's energy use is
voracious. A study by Hugh Peyman, head of
Research-Works, an Asia-based strategic analysis firm,
estimates that China, with 5 percent of the world's
crude, is now consuming 7 percent of annual production,
with energy use climbing. China, in fact, is rapidly
replacing the United States as the country with the most
significant marginal demand for crude in the world oil
market, Peyman says. Last year, it was the
second-largest petroleum-products consumer in the world,
its demand for oil rising by 5.8 percent while its
energy consumption soared by 20 percent.
China's
oil imports have jumped 29.8 percent to 50.6 million
tonnes in just the year to date. As with nearly
everything in China, there is a political component.
China's onshore oilfield production is declining.
Analysts predict flat production from PetroChina's
domestic fields, and the government is growing concerned
about the economic and political consequences of growing
imports, Peyman says, which could take on growing
geopolitical dimensions. China denied that there was a
shortfall in production for some years, Peyman says.
The country's spending on power equipment
actually rose by 50 percent over the last year,
according to Nomura's Darby. Residential power use, at
185.8MW in 2001, soared to 200.2MW in 2002 and is to
climb to 222.2MW by the end of 2003. Overall power use,
including primary, secondary and tertiary industries as
well as residential, is expected to rise from 1.4839
gigawatts in 2001 to 2.106GW by the end of 2004.
In June alone, according to the State Electric
Power Regulatory Commission, demand in China's eastern
electricity networks leaped to 43.9MW, an annual
increase of 3.4MW, while the southern China network's
supply increased by six megawatts to 36.05MW.
To
try to make its system more efficient, China is seeking
to break up its traditional electricity monopolies,
which are organized along provincial lines, into six
regional competitive power markets comprising Northeast
China, North China, East China, Central China, Northwest
China and South China. Beijing hopes to complete the
reorganization within three years.
Asian
companies that deal with energy delivery appear likely
to benefit strongly from the shortage, says Darby,
particularly those involved in production and delivery
of natural gas, such as shippers and manufacturers of
pipe and other energy-transmission services.
These include publicly traded companies such as
the formerly feeble Malaysian International Shipping Co,
a government-controlled longtime underperformer that now
suddenly finds itself owning the world's largest fleet
of LNG tankers and has a captive client in Petronas Gas,
Malaysia's natural-gas-producing company. Darby also
includes Daewoo Shipbuilding & Marine, which builds
LNG tankers as well. Even the perennially ailing Hyundai
Heavy Industries, which manufactures fixed and floating
offshore production facilities, has been raised to
neutral in Darby's assessment.
(Copyright 2003
Asia Times Online Ltd. All rights reserved. Please
contact content@atimes.com for
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