RIYADH, Jan 15: Oil diplomacy is gaining in currency. The continent is "set to become the gravity centre of the world's energy consumption." The energy world is diverting its focus towards Asia too.
Both consumers and suppliers have tremendous stakes in the emerging energy scenario and its stability over a longer period. The long-term security of supplies, at affordable rates, is emerging as a key issue for the continuity of the current phase of extraordinary economic growth, especially in parts of Asia.
As the global economic engine gains momentum, especially in the southern part of the globe, the issue of security in the energy sector is increasingly coming under focus.
During the oil crisis of the early 1970s, the industrialized/ developed world - now referred to as OECD states - had to face the brunt. For most of the Asian economies the oil price hike, despite creating gaping holes in the budgets, somehow was still manageable.
Remittance in foreign exchange by overseas workers, lured in considerable numbers to the petro-dollars of the Gulf, compensated in some ways the impact of higher oil prices on the budgetary deficits of major economies of Asia then.
Things have changed drastically over the last three decades. They have undergone a complete transition. The sleeping Asian giants, in the meantime, have woken up.
Major industrial economies of the West are comparatively less dependent on the Gulf oil than in the 70s, shade more flexible and their economies are much more capable today of facing the oil price swings.
Their cushion is much stronger than in the early 70s. The impact of higher oil prices on the economies of the industrialized world is comparatively less than what it was in the early 70s when oil power was used for the first, and apparently the last time, by the Gulf oil producers.
However, high growth economies of developing countries such as China, India, Korea and even Pakistan are much more exposed today to the exigencies of energy markets than they were decades back.
This is in the interest of both producers as well as consumers, oil analysts concede. Asia needs energy, at affordable prices, so as to continue fuelling the hyper growth. Further, these are some of the most populous nation on earth. To sustain their growth, they all need energy that too in abundance.
Global producers and consumers have been meeting for the last many years, at least every second year, to sort out energy related issues amongst themselves. The International Energy Forum, now permanently based in Riyadh, was formed basically to promote consultation between the consumers and producers.
However, the focus of all such deliberations has mostly been on the energy requirements of the western world. Thus when India mooted the idea of holding a meeting of Opec oil producers and major consumers from Asia in New Delhi, it was not only welcomed, but all the major players in the regional energy industry, made it a point to attend that.
It was indeed a welcome move, virtually every one in Dhahran, the virtual global energy capital, strongly felt that Asia is the next energy front, every one concedes.
Already China and Japan are the number two and three consumers in the world after the United States. The growth of Indian economy over the last few years has been staggering.
For transformation into an economic power house, India has a task in hand to ensure security of supplies at affordable prices. Similarly, Pakistan's energy requirements are also galloping.
After China, Indian and other emerging regional economies could be the harbinger of another bull-run in crude markets, some now predict. And fossil fuel is not an unending commodity. Thus the scramble to secure supplies!
On the sidelines of Asian energy moot, India and Iran signed a 25-year long term agreement under which Tehran will supply liquefied natural gas (LNG) to India. As per the agreement, Iran will ship five million tons of LNG to India per annum for the next 25 years, with an option to increase the quantity to be shipped to 7.5 million tons.
India and Iran are also discussing downstream LNG production and processing projects in the South parts field. Besides, Indian OVL has been given a 20-per cent stake in the development of Iran's biggest onshore oil field, Yadavaran, and 100 per cent equity in the 30,000 bpd Jufeyr field. The 20 per cent in Yadavaran would translate into 60,000 bpd of crude oil.
Even Pakistan has to be on guards as far as secure energy supplies are concerned. As Pakistan's economic engine is apparently heating up - with a seven per cent plus growth anticipated during the current year - its gas shortfall is simulated to go up to 400 million cubic feet per day by 2010 and to about 4 billion cubic feet per day by 2025.
Hence, in case India does not opt for a gas pipeline from Iran to India via Pakistan, Islamabad has now proposed a stand-alone gas pipe to Pakistan from Iran. This is a significant development and points to the fact that time is running short and steps have to be taken in this regard without any further delay.
However, oil producers are trying to sooth down the sentiments of energy thirsty Asia. Saudi Oil Minister Ali Al-Naimi took time during the Delhi moot to soothe down the frayed nerves of its Asian customers, assuring them it was capable of meeting their growing requirements, for many more years to come.
About 60 per cent of Saudi crude exports are intended towards Asia and "Asia was its number one customer," the world's largest oil producer Saudi Arabia noted, emphasising it has all the capabilities and intentions to meet the galloping Asian demands.
Ali Al-Naimi even proposed a long-term agreement, as it has done with 30 other states, to India. The idea of an Asian petroleum market, with trading exchanges was also floated during the New Delhi moot.
The objective was to serve region's fast growing economies and soften price volatility. Oil producers have indicated that they were ready to look at the proposal closely. A deep sense of fraternity was definitely evident in New Delhi.
The Delhi moot has succeeded in bringing some focus on the growing Asian market, and Mani Shankar Aiyer, tipped by many as the first oil diplomat, needs to be complemented for that.