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Ministers agree to develop Asian oil market

By Our Special Correspondent

NEW DELHI, JAN. 6. The first-ever roundtable of Asian Oil Ministers today agreed to endorse India's proposal for the development of an Asian oil market. The meeting also decided to create a benchmark crude for the Asian market. The schedule of future meetings was also finalised.

However, the day-long meeting felt that the idea for the oil market required more consideration. While the oil importing countries were concerned about supply security, the oil producing countries wanted demand security. The conference, however, called for inter-region cooperation for investment in exploration and strategic storage of hydrocarbons for energy security.

Agreeing generally on regional cooperation to promote energy sustainability, stability and security, particularly in view of volatility seen in the recent past, the oil producing countries assured that the supply would be maintained and said they had enough reserves and capacities to meet the demand. The consuming countries wanted creation of storing capacities and an emergency mechanism to guard against disruption of supply.

There was consensus that prices should be sustained at levels, which encourage Asian consumers to increase their purchases of Asian produce; at the same time, prices should be such as to encourage Asian producers to promote investment in oil and gas for Asian consumer destinations as an economic priority.

The Minister for Petroleum and Natural Gas, Mani Shankar Aiyar, who took the initiative to bring together for the first time the oil consuming and producing countries of the region, said that the total consumption in Asia almost equalled its production, unlike North America and Europe, and still the region did not have a developed oil market.

"For us in Asia, to convert that underlying stability in production into stability in oil markets, it is essential that we develop a sophisticated Asian market for petroleum and petroleum products," he said.

Oil producing countries of Saudi Arabia, Iran, Kuwait, the United Arab Emirates, Oman and Qatar and major consuming countries such as China, Japan, Korea and Malaysia took part.

Bank for energy development

Iran favoured establishment of an Asian Bank for Energy Development for financing energy projects in Asia and said price of energy supplies from Asian producers to consumers in the region should be lower than that of others. Referring to the need of the growing economies of Asia, particularly China and India, the Iranian Oil Minister, Bijan Zangeneh, said Asian countries were in need of a long-term energy supply security. Saudi Arabia assured the Asian consumers that it would meet all of their oil needs and said it was committed to maintaining prices that do not harm global economic growth.

"I would like to assure our customers in Asia that Saudi Arabia is both capable and committed to meeting the petroleum needs of its Asian partners. We are dedicated to maintaining spare production capacity in the range of 1.5-2 million barrels per day to meet additional demand should the need arise," said the Saudi Arabian Oil Minister, Ali Al Naimi.

The Special Economic Advisor to the Prime Minister of Kuwait, Yosuf Al-Ibrahim, supported India's demand for long-term fuel supply contracts and said it was considering investing in refining and petrochemicals sectors in Asia.

China criticised the concept of `Asian Premium' as charged by the oil producing countries from the Asian nations saying this was against the market principle of fairness and impeded regional economic development.

"Differences exist in crude oil price among different regions, and East Asian nations usually have to pay a higher price for crude oil than European and American countries. This is not in line with the market principle of fairness and impedes regional economic development," said the China National Development and Reforms Commission Vice-Chairman, Zhang Xiaoqiang.

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