Introduction

I am pleased to be here today to launch the inaugural Singapore Energy Conference. This conference is a timely initiative as energy plays a key role in enabling global economic growth and development. It is useful to bring together experts from around the world to share insights into the challenges posed in the areas of energy security, sustainable development and energy efficiency.

Today's Energy Challenges: Growing Interdependence

For over two decades since the 1970s, we have been accustomed to cheap energy. Even as our consumption of energy has risen steadily with our rapidly growing economies, we have concurrently taken for granted that the supply of energy will continue to be cheap and sustainable. Recently, however, this idyllic state of affairs has been disrupted. Between January 2004 and August 2006, the price of oil increased by almost 300 per cent to more than US$75 per barrel. Strong demand growth by the surging economies of China and India; the lack of spare capacities in oil production and refining; concerns over “peak oil” ; geo-political uncertainties; as well as natural disasters, were all contributing factors. Arguably, the continued growth of the global economy will depend on a sustainable supply of oil and gas to the energy- hungry emerging economies like China and India.

At the same time, the energy supply-demand relationship has grown in complexity over the years. First, the scale of global oil trade has doubled in the past two decades. Instead of declining, U.S. dependency on oil imports has climbed from 32 per cent in 1985 to 65 per cent in 2005. A fast developing Asia now accounts for a much bigger share of Middle East oil and gas exports, and it is looking into new supplies from Africa, Latin America and Central Asia. As such, energy security cannot be divorced from the strategic interests of the major powers. With greater inter-dependency due to globalization, the need for stable oil markets and reduced price volatilities will expand the scope for cooperation over time.