NEAT WORKING GROUP MEETING ON
ENERGY SECURITY COOPERATION IN EAST ASIAHELD ON 6 MAY 2005, SINGAPORE

I. INTRODUCTIONNEAT Singapore is tasked with the organization of NEAT WG (Network of East AsianThink Tanks Working Group) on Energy Security Cooperation in East Asia. For the WG
meeting, invitations were extended to all 13 NEAT countries. Participants from 12 NEAT
countries attended the meeting on 6 May 2005. All participants spoke in their personal
capacity to ensure free and full discussions. The discussions were held in a frank, relaxed,
cordial and co-operative manner.
This report identifies major and important issues among delegates who attended the WG
on Energy Security Cooperation. A preliminary draft was first distributed to all delegates
for their comments and acceptance. The final report on energy security cooperation will
be presented along with other WG reports at the Third Annual NEAT meeting in Tokyo in
August 2005.

II. THE BACKGROUND

The WG meeting took the format of a conference and was divided into four panels. Eachpanel had two sessions: presentation and discussion. Prepared background papers werefirst read to set up the agenda for discussion. Delegates then freely exchanged theirviews on the issues concerned.

1The panels consisted of the following:(i)East Asia Energy Supply and Demand Outlook
This panel provided the backdrop for discussions in subsequent panels. The
background study gave a more realistic projection of overall East Asian energy
supply and demand conditions for the medium and long term based on an updated
profile of the ASEAN + 3 countries.

It took into account the risk factors

associated with terrorism, piracy, political instability and conflict in oil producing
regions as well as increased demands from emerging big energy players.
(ii)

Energy Maritime Security Cooperation
This panel explored various potential areas for cooperation among East Asian
countries in their search for energy maritime security. It comprised a backgroundstudy that tracked outstanding maritime concerns of energy trade in the region. It
placed emphasis on piracy and terrorism in the Straits of Malacca.

(iii)

Harmonizing Oil Diplomacy in East Asia
The panel examined the prospects of a regional cooperative “oil diplomacy”. The
background study for this panel also compared oil policies of China and Japan. It
also highlighted the structure of world oil trade and its unilateralist tendencies,
and identified potential areas for cooperation. The panel concurred that East
Asian countries should also come to a better understanding of theirinterdependency and common interests in the energy area.

(iv)

Regional Cooperation in Energy Conservation
The panel looked at ways in which the more developed and energy efficientcountries in the region can share their useful energy conservation experiences andtechnology with less developed countries. The background study examined theneed for technical cooperation in better managing energy consumption throughconservation and greater efficiency in energy usage.

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III. DEFINING ENERGY SECURITY

The WG defines “Energy Security” as the process to secure energy supply at reasonable
cost in a sustainable manner.
The definition should not be confined simply to “ensuring physical supply of oil,” asenvisaged after the “oil shocks” in the 1970s and 1980s. A more comprehensive
definition should include fulfilling one’s energy needs in a sustainable manner.

Energy security can be achieved through increasing the robustness of regional
economies and the international market, and such an approach will best ensure thelong term demand-supply balance. It also entails reviewing current energy policies,
trade and industrial practices, actively shaping market structure and monitoringmarket players, exploring cooperative measures between state actors, improving
energy efficiency and quality, and investing in research and development ofalternative energy sources.

“Reasonable cost” in the definition should be based on basic market function, taking
into consideration the unique needs and wide-ranging capacities and approaches ofdifferent countries in dealing with issues like state-society relationships,
environmental costs and regulations over market.

IV. POLICY RECOMMENDATIONSThe WG recommends the following:1.

Institutionalizing Regional Energy Cooperation Framework
Energy policy and oil diplomacy tend to be driven by economic nationalism. To
create synergies based on commonality and complementarity, East Asian3

countries should institutionalize energy policy cooperation within a regionalframework. This would provide a platform for accommodating different policy
objectives, creating a more conducive environment for free exchange of ideas,seeking common grounds for coordination and cooperation, and providing
comprehensive “win-win” solutions to energy security in the region.
Through this multilateral framework, East Asian countries can share and learn
from each other’s experiences and build trust, thus paving the way for a nascent
East Asian Community. East Asian countries may also consider modeling thisframework after the International Energy Agency (IEA). It should perform therole of establishing “coordinated emergency response measures” through oilstockpiles for mutual benefit, as well as coordinating energy policies of member
countries for collective interests.
Five major components were identified as integral to realizing this regionalenergy cooperation framework:(i)

Respecting and Complying with International Law
East Asian countries are urged to:comply fully with international law, particularly the 1982 United
Nations Convention on the Law of the Sea;

harmonize their respective domestic laws and regulations with
contemporary international law as far as possible;[for Asian coastal states which have yet to participate] join the 1988
Convention on the Suppression of Unlawful Acts against the Safety ofMaritime Navigation; and

consider using international judicial means including the International
Court of Justice to settle their maritime disputes related to islands or tomaritime boundaries.

4(ii)

Coordinating Oil Stockpiling in East Asian countries
East Asian countries should consider:coordinating their efforts in building up sizeable oil stockpiles thatare consistent with the needs of individual countries;

sharing experiences and know-how in building up oil stockpiles;and

expanding regional swap mechanism to meet sudden andtemporary energy shortfalls.

(iii)

Promoting Transnational Energy Projects
Notwithstanding the sensitive issue of sovereignty, East Asian countries
are encouraged to peacefully work out modalities of joint oil explorationeven in disputed territories and other territorial waters for mutual benefit.
Other cross-border cooperation such as pipelines for oil/natural gas should
also be explored.

(iv)

Improving Quality of Energy Data and Statistical Information
East Asian countries are urged to:establish an effective regional energy information system andstatistical clearing house. Information on regional energy demand,supply, trade and storage may help East Asian countries reasonably
and accurately achieve their own energy policy objectives; and

strengthen their efforts in improving quality and timeliness ofenergy data.

(v)

Step-up Coordinating Efforts on Energy Maritime Security
East Asian countries are urged to:5establish a mechanism for member states to share information on
maritime security;develop a regional sea-lane security scheme in accordance withinternational maritime laws and agreement of littoral states toensure smooth shipment of oil in the region;

assist littoral states in ensuring maritime safety in the Straits ofMalacca by providing material and technical aid, training as wellas timely and critical information;adhere to the ASEAN TAC (Treaty of Amity and Cooperation);

support the Indonesian-led Track II South China Sea workshops
and adhere to the Code of Conduct in the South China Sea;

abide by nuclear safeguards provisions in the SEANWFZ(Southeast Asian Nuclear Weapons Free Zone) Treaty, as moreregional states may consider the nuclear energy option for energy
diversification; and

engage in contingency planning to multilaterally address potential
environmental disaster in the scenario of oil spillage from tankers.

2.

Developing Market for Conventional Energy

East Asia should promote more transparent market practices and make the Asianenergy market more responsive to market forces.
cooperation were identified:(i)

Developing Asian Oil Markets
East Asian countries are recommended to:

6Three potential areas forconsider a cooperative scheme to ease speculative oil pricefluctuation; and(ii)

remove impediments to trade and investment for energy sectors.

Developing Asian Natural Gas Markets
East Asian countries are encouraged to:diversify their energy consumption pattern, in particular by
reducing their energy dependence on oil and oil-fired subsidiaries.
Where feasible, conversion to natural gas and its derivatives shouldbe promoted;develop the infrastructure for converting to natural gas. Projects
for pipelines and LNG (Liquefied Natural Gas) facilities, as well as
their financing methods should be pursued between stateauthorities and the private sectors; and(iii)

consider developing spot and futures markets for natural gas.

Establishing East Asian Energy Consortium
East Asian countries are urged to:set up a working group (consortium) comprising both East Asianstate authorities and private/public ventures to explore cooperationin energy development in the region and beyond; and

conduct energy-related dialogues with extra-regional groupings forpromoting understanding and building rapport for futurecooperation.

3.

Promoting Energy Conservation and Alternatives
Besides securing and diversifying energy supply, East Asian countries should
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collaborate to improve existing energy use, and explore alternative forms ofenergy, especially renewable resources. East Asian countries should share freely
their expertise and country experiences in energy conservation.
Three issues were highlighted for further feasibility study:(i)Improving Energy Efficiency and Conservation
East Asian countries are urged to:promote effective policies on energy efficiency and conservation
for industries that are heavy energy users;

share experiences and know-how in energy conservation.
Countries

whicharetechnologically-advanced

inenergy

conservation should provide expertise and comprehensive training
for less-developed markets; and

study existing domestic regulations of more developed East Asianstates to enhance energy efficiency and conservation.

(ii)

Promoting Cleaner Use of Coal
East Asian countries that rely heavily on coal-fired technologies should beencouraged to adopt cleaner use of coal.

Regional cooperation fortechnological advancement and deployment of such technologies shouldbe pursued.
(iii)

Promoting Renewable Energy
East Asian countries should engage in feasibility studies of renewablesources of energy including solar, wind, hydro, geothermal and biomass.
They should look into the feasibility of promoting the use of such energies.

8V. CONCLUSION

The NEAT WG on Energy Security Cooperation takes the view that the spirit of regional
cooperation will be extended to the energy sector for mutual benefit. This will help build
trust and enhance the goal of an East Asian Community.

ANNEX I:

Program of NEAT Working Group Meeting on Energy Security
Cooperation in East Asia

ANNEX II:

List of Participants9