1) The document discusses energy security in Asia and cooperation between energy producers and consumers in the region. 2) It outlines increasing energy demand and trade links between Asian countries and Gulf oil producers. 3) The document calls for greater cooperation between Asian countries on issues like investment, infrastructure development, and ensuring stable energy supplies and prices to support economic growth across Asia.

1. 2nd Asia Energy Security Summit 2012
Colombo, 29 Feb – 1 March 2012
Paradigms of Asia and the Concepts of Energy Security
Talmiz Ahmad
Former Ambassador of India to
Saudi Arabia, Oman and the UAE
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2. Contents
1. The new Silk Routes
2. Gulf Oil
3. GCC’s Economic Scenario
4. Pan-Asian Connectivities
5. Centrality of Energy Security
6. Producer – Consumer Cooperation
7. Towards a Pan – Asian Security Paradigm
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3. THE NEW SILK ROUTES
 Trade and business corridor across Asia.
 Largely the result of:
 High growth rates in China and India
 Energy potential of the Gulf and availability of investible funds
 Emergency of Central Asian Republics as sovereign states
• Over the past three decades, China’s economy has grown fifteen-fold to become
the world’s second-largest economy after the United States.
• By 2050, India is expected to be the world’s third–largest economy.
• In 1989, the ten tallest buildings in the world were all in North America; in 2012,
seven of ten are in Asia.
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4. GULF OIL IN THE GLOBAL SCENARIO
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5. GCC’s Economic Standing
 The last ten years have generated oil revenues that are
unprecedented in global economic history: it is estimated that, as
a result of oil price increases before the economic downturn,
there was an additional transfer of US$3 trillion to oil producers,
the largest wealth transfer on record.
 Combined nominal economy of the GCC crossed $ one trillion in
2010, climbing from a $ 345 billion economy in 2000, and is
expected to soar to $ 1.5 trillion in 2015 and $ 2 trillion in 2020.
This will increase the GCC contribution to global GDP from 1.5%
in 2010 to 2% in 2020.
 Saudi Arabia, UAE and Kuwait will post real growth of 4-5% pa
and nominal growth of 9-10% pa till 2020.
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6. The Arab Spring:
Economic Priorities of the GCC Countries
1. Energy
2. Infrastructure
3. Welfare
4. Industry/Services
5. Human Resources
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7. Intra-Asian Economic Connectivities
(A) Energy
•Oil consumption in Asia will grow by 4.4% per year on average over
the next five years, while the OECD’s demand is expected to plateau.
•The Middle East, given its geographic location and oil production
capacity, will probably remain the dominant supplier to Asia. Imports
meet 75% of Asian demand, and are expected to account for 90% by
2030.
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8. (B) Trade
• Since 2006, Asia has been the GCC’s largest trading partner and
accounted for 55 per cent of the region’s total foreign trade of
around $765 billion in 2009, increasing from $ 260 billion in
2005.
• GCC – China Trade: $74 billion (2008) [increasing from $ 1.5
billion in 1991]
• GCC-India - $ 91 billion (2008-09)
* Indian imports from GCC = $ 59.56 bn
* Indian exports to GCC = $ 32.12 bn
• Trade between ASEAN and GCC shot up from $18.3 billion in
2002 to $57.1 billion in 2006. Two-way trade during the next
five years reached $ 160.1 billion, a 213 percent growth.
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9. (C) Investment
• GCC countries invest an average of 80% of their wealth offshore. Asia will
be a key market for GCC investors in coming years, with cross - border
capital flows between the GCC and Asia climbing from US$15bn in 2007 to
as much as US$290 bn by 2020.
• Gulf countries invested $60 billion in Asia during the period 2002-2006.
However, during this period, Gulf investors also announced some
longterm infrastructure investments in Asia in the coming years,
suggesting that the GCC could put in $ 250 billion into Asia between
2009-14.
• About 11% of FDI from the Gulf has gone to Asia so far. But, by 2021, it
could nearly double to 20%, while the share of West Asian capital flowing
to the West will fall to about 50% of the total, from the current proportion
of about 75%.
• Abu Dhabi Investment Authority, one of the largest sovereign wealth
funds of West Asia, aims to have 8-12% of its estimated $500 billion-plus
fund invested in emerging market stocks, with Asia as the key destination.
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10. What is Energy Security?
What is Energy Security?
•Assured and, where possible, exclusive access to energy
resources at affordable prices to obtain sustainable economic
growth rates and national economic development.
Why are there concerns over Energy Security?
•Energy security is essential to achieve economic growth rates
•High global demand and attendant supply constraints, as also
geopolitical developments, are continuously pushing up oil and
gas prices.
•With supply constraints, there is considerable international
competition to secure these resources.
•National policies for energy security have to be compatible with
concerns regarding climate change, particularly in regard to
Greenhouse gases. 10

11. Energy Security in Asia
• In recent years, the most significant development in the
consumption of hydrocarbon fuels is the increase in Asian
demand. In fact, there has been a consistent increase over
the last few decades: between 1970-94, Asian energy demand
increased by 400%, with demand for oil increasing by 274%;
world demand growth during this period was only 63%.
• China’s widening gap between domestic supply and demand
and a growing appetite for foreign oil, oil and energy issues
have turned increasingly into a core national interest, energy
security is not only economically vital, but also has political,
diplomatic and military implications.
- Wu Lei
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12. Co-operation for Energy Security:
• Unique features of energy security
(a) Inherently cooperative
(b) A dynamic concept
• The logic of Global Co-operation
(a) Need to mobilize resources globally:
* Hydrocarbon resources to meet global demand over next 30-35 years are available:
new technologies continue to yield fresh discoveries and augment supplies from old
fields.
* Oil will be available in physically challenging areas such as the deep sea or frozen
terrain or environmentally sensitive locations.
* Exploration and development of these resources will require rather huge investments
amounting cumulatively to over $ 5 trillion up to 2030, @ $20 per annum.
(b) Need to protect the entire energy supply chain and infrastructure:
* production facilities, transport, refining, pipelines, storage facilities, power plants and
transmission lines.
* Currently, daily 40 million barrels of oil cross the oceans in tankers; could come 67mill.
barrels in 2020.
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* Currently, 150n million tons of LNG is transported by sea; could come 460 MT by 2020.

13. Producer – Consumer Cooperation
The opportunity, Your Excellencies, lies in fashioning a more fair, more just and more
remunerative oil order for all of us in Asia-in which the Asian producer is ensured a
stable, secure and sustainable return for a most precious but depleting natural
resource, and the Asian consumer is assured a stable, secure and sustainable regime
within which to promote progress and prosperity for that deprived one-half of
humankind and inhabits our shared continent of Asia.
-Mani Shankar Aiyar, Indian Petroleum Minister, Jan 2005
We consumers need energy. You producers have energy. We need assured sources of
supply as much as you need assured markets. Both of us – producers and consumer –
can jointly invest in infrastructure. We can together invest in exploration (as we are,
for instance, already doing in Sakhalin); we can together invest in production (as we
already doing in numerous producing fields in Asia and elsewhere); we can together
invest in transportation (I call upon your imagination to summon up an Asian oil and
gas grid); we can together invest in ship building and shipping, in ports and terminals;
we can together build refineries and gas processing plants and power generation
stations and petrochemicals units; in short, we can together take on the world! That
would be true Energy Security.
-Mani Shankar Aiyar, November 2005
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14. The Regional Security Scenario
• Implications of the “Arab Spring”
• The Saudi – Iranian divide and strategic
competition
• The GCC – NATO Alliance against Iran: the
Israeli factor
• Regional theatre confrontations;
* Bahrain * Syria
* Iraq * Lebanon
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15. China’s Ties with Gulf Countries
In the coming 5-10 years, China will have to import 200mn tonnes of oil in 2010, and 300mn
tonnes in 2020, with 144mn tonnes and 220mn tonnes coming from the Middle East and North
Africa respectively, plus oil from other parts of the world (Latin America and Asia-Pacific). The
two figures, when put together, indicate that China’s oil import from the Middle East and North
Africa will make up over 70% of the country’s total volume of oil imports.
- Wu Lei
India’s Relations with the Gulf
• The region is the principal source of India’s crude oil requirements, providing
over two-thirds of annual imports: these imports, as also those of natural gas, from
the region will increase over the next 20 years as India’s energy demands increase.
Thus, the security of the oil facilities and of the sea-lanes is a crucial element in
India’s long-term energy security interests.
6.The region is a major economic partner and a market for its goods, as also a
partner for joint ventures and transfer of technology arrangements, and a principal
source of remittances from the resident Indian community. The
financial value of India’s ties with the GCC is over $ 180 billion per year.
3. Concerns relating to the welfare of India’s 6.5 million - strong Indian community
require that India maintain the closest possible political ties with the
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countries of the region.

16. Towards a Pan – Asian Security Paradigm
The Asian Quest for Energy Security could lead to Asian regaining its traditional place-
a place it has held for thousands of years of recorded history and lost only in the last
two hundred years or so – in the vanguard of the advancement of human civilization.
The Asian renaissance brought us all to independence and liberation. Now, the Asian
Resurgence depends on energy cooperation in Asia. The 21st century will indeed be the
Asian century only if Asian countries – buyers or sellers – join hands together in a
continent – wide bid at bringing Asia together and keeping Asia together. I am
confident that we will.
-Mani Shankar Aiyar, Indian Petroleum Minister, Jan 2006
Bases
* Shared energy interests * Shared Security Interests
Constraints
viii.Deep divisions within the region
ix.The problem of Iran
x.The robust US military presence and interventionist policies
xi.Interests of other regional and extra-regional role-players: Turkey, Israel
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