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Bangkok Post: Natural gas becomes key to economic growth in Asia

Friday March 14, 2008
Some 2,000 years ago, the Chinese piped natural gas through bamboo poles from shallow wells, and then burned the gas to heat large pans to evaporate sea water for salt.

Today, state-of-the-art liquefied natural gas (LNG) tankers call on ports from China to Japan to South Korea and beyond, and countries that include India, Thailand and Singapore are seeking to import LNG to satisfy growing demand.

Natural gas has always helped power economic growth in Asia, and the importance of this abundant, clean-burning fuel in the region’s energy portfolio will only continue to grow.

But while leading-edge technology and transportation systems are helping shape the emerging global market for natural gas, the catalyst for providing Asia with the natural gas it needs are partnerships that are stronger and more aligned than ever before.

An increasingly complex and challenging global energy environment demands this.

The World Bank expects the global economy to double between 2005 and 2030, increasing global energy demand by 50%. World economic growth in terms of gross domestic product will shift to Asia from 37% in 2005 to 52% by 2030 at the expense of Europe and the United States.

Asia’s muscular economic growth is generating much of today’s energy demand. Between 2005 and 2025, Asia is forecast to account for 45% of the growth in world oil demand and approximately 25% of the growth in natural gas.

Meeting this demand for energy _ in Asia and beyond _ is one of the most profound challenges of our time. And we have a responsibility to address this challenge with a real sense of urgency.

In a world that is more energy interdependent than it has ever been, one country, or one company, cannot go it alone. This is especially true for the emerging natural gas market.

Natural gas is a particularly attractive solution to the energy needs of fast-growing regions like Asia.

The world has a lot of natural gas. It’s the cleanest-burning fossil fuel, which makes it particularly attractive in an age where air quality and climate change are growing concerns. And a global infrastructure is emerging to match supply with demand.

At the same time, however, natural gas projects are growing in size and complexity. They increasingly involve intricate commercial arrangements that use multiple interfaces covering different markets, with many billions of dollars in investment.

To bring these projects online faster and more efficiently demands partnerships based on three strategic principles: shared respect, shared capabilities and shared rewards.

Shared respect is imperative, because all partnerships require alignment around common goals. That is why the first and most important principle of partnership must be to respect, appreciate and understand differences.

Chevron’s partnership with Thailand _ a relationship that began in the early years of the last century _ could not have endured without shared respect. That result: numerous projects that have found, produced and delivered significant energy supplies to the kingdom for decades.

In today’s world of energy, technology, economics and geopolitics intersect. Shared respect is crucial to the energy security that all nations seek.

The second principle of effective partnerships is shared capabilities.

Recently, China National Petroleum Corporation (CNPC) signed a 30-year production-sharing contract with Chevron for the joint development of the Chuandongbei natural gas fields in cen tral China.

CNPC had extensive knowledge about the area, having discovered the fields and started development. It sought a partner with the specialised technical expertise to develop the distinctive sour gas reservoirs found at Chuandongbei.

This kind of shared capabilities will become increasingly important, especially in partnerships between national oil companies, who control a majority of the world’s petroleum resources, and international oil companies who bring to the table technical, project management, safety and environmental expertise.

The third principle of effective partnerships is sharing rewards.

There is no better example of this principle today than the Gorgon project in Western Australia, a partnership between the governments of Australia and Western Australia, Chevron, ExxonMobil and Royal Dutch Shell.

The Greater Gorgon area contains more than 40 trillion cubic feet of gas with prime access to the entire Asia-Pacific region. The project has the potential to supply natural gas to Asia-Pacific consumers for the next 40 years and will provide domestic gas supply to Western Australia.

That is a lot of clean-burning fuel, for a lot of people for a long time.

The benefits to Australia alone are immense: thousands of new jobs, additional export income, taxes and royalties, expansion of existing services and industries and attraction of new ones.

With climate change moving to the forefront of the global agenda, Gorgon will also include one of the world’s largest, most advanced carbon sequestration projects.

About 3.7 million tons per year of carbon emissions will be sequestered that would otherwise be released into the atmosphere. That’s a reduction of 40% from business-as-usual emissions _ rewards that are truly shared with the rest of the world. Going forward, the partners of choice in the global energy industry will be those who master the principles of shared respect, shared capabilities and shared rewards.

The world has changed from the ancient era of piping natural gas through bamboo poles. To deliver the benefits of natural gas to an energy-hungry world will take collaboration, innovation _ and yes, partnership.

By applying the principles of shared respect, shared capabilities and shared rewards, we can build natural gas partnerships that help ensure economic growth and energy security for the generations that will follow us.

Jim Blackwell is president, Chevron Asia Pacific Exploration and Production.

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