Introduction of APEC Oil and Gas Security Initiative

Conference on APEC Regional LNG Trade Facilitation 15 July 2015, Taipei

Kazutomo IRIE, Ph.D General Manager, APERC

OUTLINE

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1. Background

2. APEC Oil and Gas Security Exercises (OGSE)

3. APEC Oil and Gas Security Initiative (OGSI)

4. Progress of OGSI

5. Future Plan of OGSI

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Asia Pacific Economic Cooperation (APEC) Asia Pacific Energy Research Centre (APERC)

• Supports the energy activities of APEC with:

o Research, especially analysis of energy supply and, demand in the APEC Region;

o Cooperative programs to promote energy efficiency and low-carbon energy.

• Funded by the Japanese government and based in Tokyo.

• Currently has 27 research staff, including 17 visiting researchers from APEC economies.

1. Background: APEC and APERC

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• APEC demand on oil and natural gas significantly exceeds internal production and APEC highly relies on outside sources.

• APEC oil and LNG imports are highly dependent on maritime routes through extremely busy straits.

• Oil and natural gas are shipped over long distances, typically from the politically unstable Middle East and Africa.

• APEC region aligns with the “Pacific Ring of Fire” along which volcanoes are common and earthquakes occur frequently.

1. Background: Oil and Gas Security

2. APEC Oil and Gas Security Exercises (OGSE): Mandate

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• The APEC Oil and Gas Security Exercises was launched in response to the “APEC Energy Ministerial Meeting Declaration” adopted in St. Petersburg, Russia in 2012.

St Petersburg Declaration: “We encourage EWG and APERC to work in collaboration with the International Energy Agency (IEA) and the Association of Southeast Asian Nations (ASEAN) on activities to improve the response to oil and gas emergency situation in the APEC region, including emergency response workshop and exercises”.

• APERC carried out two Emergency Exercises (Bangkok, Jakarta) in 2013 with the support of international/regional organizations (IEA, ACE, ASCOPE, HAPUA and ERIA).

Fire at Cilacap Refinery

• APERC also held two fora, a kick-off meeting in 2013 and a wrap-up meeting in 2014, both in Tokyo.

2. APEC Oil and Gas Security Exercises (OGSE): Overview

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2. APEC Oil and Gas Security Exercises (OGSE): Bangkok Exercise

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Note: Though some economies are exporters of crude oil, they import petroleum products mainly from Singapore.

• Bangkok Exercise was the 7 Joint Southeast Asian Exercise.

• APEC ASEAN economies have different situation and condition of oil and gas.

• The 1st stage of scenario for oil and gas exercises consisted of 3 different phases with focusing on the problem situation in the middle east and the strait of Hormuz (Terrorist attack).

• The 2nd stage of scenario for gas exercise was assumed that each economy’s gas supply is cut by 20-30% over two weeks due to damaging gas facilities.

Thailand Importer of oil and gas

Singapore Importer of oil and gas

Indonesia Importer of oil and exporter of gas

Viet Nam Importer of oil

Philippines Importer of oil and gas

Brunei Darussalam Exporter of oil and gas

Malaysia Exporter of oil and gas

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Lessons Learnt

• Releasing stockpiled oil is one of the measures.

• Many economies still have no supply-side measures available.

• Less knowledge of mechanisms/policies to deal with supply disruptions for gas emergency situation.

• Have strong regional cooperation.

2. APEC Oil and Gas Security Exercises (OGSE): Bangkok Exercise

2. APEC Oil and Gas Security Exercises (OGSE): Jakarta Exercise

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• Jakarta Exercise was focused on oil supply security in Indonesia.

• Indonesia is the economy which the oil and fuel production is downward trend, while the fuel demand is increased rapidly.

• The 1st and 2nd stage of scenarios for oil was focusing on “Natural Disaster” where earthquake strikes the biggest oil refinery causes a loss of fuel production.

• The 3rd stage of scenario was focusing on “Social Unrest” where some local residents cut off the oil pipeline to protest against the government and the private oil company causes a problem for the distribution of oil.

INDONESIA

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Lessons Learnt

• PERTAMINA (State Owned Oil & Gas Company) is leading in dealing with emergency situation.

• No emergency response plan.

• No public communication plan.

• No oil stockpiling.

• ASEAN Petroleum Security Agreement (APSA) is a potential vehicle for regional cooperation for oil and gas supply crises.

2. APEC Oil and Gas Security Exercises (OGSE): Jakarta Exercise

• The result of “APEC Oil & Gas Security Exercises (OGSE)” was reported back to EWG 47 in May 2014 in Kunming, China and the 11th APEC Energy Ministers’ Meeting (EMM11) in September 2014 at Beijing, China.

• The 11th APEC Energy Ministers’ Meeting (EMM11) in September 2014 at Beijing, China, APEC Energy Ministers instructed

“the EWG, including through APERC, to continue cooperation on emergency response, with the International Energy Agency (IEA), ASEAN, the Economic Research Institute for a ASEAN and East Asia (ERIA) and other international organizations.”

3. APEC Oil and Gas Security Initiative (OGSI)

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• APEC Oil & Gas Security Initiative (OGSI) was approved as an APEC Self-Funded project in EWG 48 in November 2014 in Port Moresby, Papua New Guinea.

• Reflecting the instructions of APEC Energy Ministers, OGSI consists of three pillars: Oil & Gas Security Exercise (OGSE) on a voluntary basis, Oil & Gas Security Network (OGSN) by officials in charge of oil and gas security

policy in each Economy, Oil & Gas Security Studies (OGSS) on research topics related to oil and gas

security in the APEC region.

3. APEC Oil and Gas Security Initiative (OGSI)

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3. APEC Oil and Gas Security Initiative (OGSI)

1. OGSE Oil and Gas Security Exercise Model

Procedure (EMP) was drafted. It provides a step-by-step approach for

any economy to develop and implement supply emergency exercises. EMP will be brushed up and revised

through the exercises.

4. Progress of OGSI: OGSE

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2. OGSN The 1st OGSN Forum was held in Kitakyushu City, Japan on 23-24 April 2015.

4 OGS Newsletters have been issued in December 2014, February, May and July 2015.

4. Progress of OGSI: OGSN

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3. OGSS Initial results of studies were presented at the 1st OGSN Forum in order to seek

comments and supplementary information from APEC economies.

Study titles (some examples): ＊Oil Emergency Preparedness ＊Oil Distribution in Emergency ＊Energy Reform in Mexico ＊Geopolitical Impact of the “Arab Spring” ＊Petroleum Product Trade and Energy Security ＊Melting of the Arctic Sea Ice

4. Progress of OGSI: OGSS

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1. OGSE OGSE in Manila, the Philippines will be conducted in December 2015, based on the draft

EMP for the first time.

2. OGSN The 5th issue of OGSN Newsletter will be prepared. The 2nd OGSN Forum will be held in Spring 2016, though the venue is under consideration.

3. OGSS Study results are prepared to be published and uploaded to APERC’s website. New studies are ready to start for 2015.

5. Future Plan of OGSI

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Thank you for your kind attention

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http://aperc.ieej.or.jp