OIL & GAS IN ASIA

Asia’s oil & gas industry has been exponentially increasing both production and consumption of energy in recent years. According to the BP 2014 Statistical Review of World Energy, the Asian Pacific region had proven reserves of 42.1 thousand million barrels of oil at the end of 2013, with a reserves-to-production ratio of 14.01. For this specific report, we will investigate the activity of the oil & gas industry and the environmental impact of the industry’s activity in the countries of China, South Korea, Malaysia, Indonesia, Thailand, and Vietnam. Japan, India, and the Philippines will be excluded, due to the fact that domestic oil & gas production in each of these countries is either negligible or flat-lining (Japan’s local energy resources meet less than 9% of the country’s demand2, India’s production of petroleum is predicted to hover at one million bbl/day until 2040, compared to the increase in demand to 8.2 million bbl/day at around the same time3, and the Philippines rely primarily on renewable resources such as geothermal and hydropower to supply their energy needs4.

CHINA

China is currently the world’s most populous country and fastest growing economy, resulting in the largest energy consumption and production on the globe, alongside the United States.5 At the end of 2013, China had a production rate of oil at 4180 thousand barrels daily, and of natural gas at 117.1 billion cubic meters daily thanks to abundant domestic energy resources, yet their daily consumption rate exceeds production in both, leading to heavy importing. 6 In 2014, China overtook the US as the world’s biggest net importer of oil by 0.2 billion barrels a day.7 The central region of China contains the Sichuan, Ordos, and Jiangshan oil basins, which are abundant in shale oils. The northern Songliao and Bohai Bay Basins contain dense kerogen reserves, while northwest China’s Qaidam, Tarim, and Junggar Basins house bitumen and heavy oils. Right along the eastern coast, offshore natural gas and oil reserves have been found in the South Yellow Sea Basin and the East China Sea Basin as well. 8 Most of China’s inland oil fields, such as the Daqing field in the north, have reached maturity, leading to new developments in oil flow sustainability technology, as well as exploration into untapped reserves in the western provinces and offshore fields for both petroleum and natural gas located in the South China Sea (though there is much dispute over the energy resources in this area among the Pacific Asian nations9). The three largest energy companies in China are China National Offshore Oil Corporation (CNOOC), Chinese National Petroleum Corporation (CNPC), and China Petroleum & Chemical Corporation, or Sinopec Limited.10

1 BP Statistical Review of World Energy 2014: http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2014/BP-statistical-review-of-world-energy-2014-full-report.pdf 2 Japan, US Energy Information Administration: http://www.eia.gov/beta/international/analysis.cfm?iso=JPN 3 India, US Energy Information Administration: http://www.eia.gov/beta/international/analysis.cfm?iso=IND 4 Philippines, US Energy Information Administration: http://www.eia.gov/beta/international/analysis.cfm?iso=PHL 5 China, US Energy Information Administration: http://www.eia.gov/beta/international/country.cfm?iso=CHN 6 Refer to footnote 1.7 “China Overtakes US as the Biggest Importer of Oil.” BBC Business News: http://www.bbc.com/news/business-24475934 8 Refer to footnote 5.9 Refer to footnote 5.10 Fortune Global 500: http://fortune.com/global500/

However, all the unprecedented expansion of the oil & gas production and exploration in combination with lax industry oversight and regulation has led to significant environmental backlash. As of 2013, 59.6% of the nation’s underground water resources have been corrupted to undrinkable levels, and the Chinese Environmental Protection Agency later found out that 71 of 74 monitored major cities “did not meet state environmental standards with various degrees of problems11.” The Ministry of Environmental Protection has taken swift action, forbidding both CNPC and Sinopec from building and expanding more oil refineries until the Fortune 500 companies meet emission targets that were previously failed in 2013.12 The State Council put an action plan into effect on April 16, 2015 that would “lower import tariffs on components for treatment plants and other equipment used to cut water pollution13,” as well as shut down small factories involved in “dirty” industries such as papermaking, pesticide production, tanning, fertilizer production, oil refining, and the coking sector by the end of 2016.14 The plan also mandates improvements to irrigation systems to aid in the cleanup of the pollution of 20% of Chinese farmlands15 and the implementation of a new set of standards for shipbuilders by the beginning of 2018.16 Just how effective these measures will be, only time will tell.

SOUTH KOREA11 “China’s Eco-crisis.” RT: http://rt.com/news/154268-underground-water-china-polluted/12 “China’s Oil Giants Punished for Environmental Failings.” China Dialogue: https://www.chinadialogue.net/article/show/single/en/6367-China-s-oil-giants-punished-for-environmental-failings 13 “China Targets Dirty Businesses in Water Pollution Action Plan.” Financial Times: http://www.ft.com/intl/cms/s/0/0977193c-e3fb-11e4-9039-00144feab7de.html#axzz3ftBv4H1t 14 “Inside China’s Grand Plan to Fight Water Pollution.” Market Watch: http://www.marketwatch.com/story/inside-chinas-grand-plan-for-water-pollution-2015-05-04?page=2 15 “One-fifth of China’s Farmland is Polluted, State Study Finds.” New York Times: http://www.nytimes.com/2014/04/18/world/asia/one-fifth-of-chinas-farmland-is-polluted-state-report-finds.html 16 Refer to footnote 13.

Unlike China, South Korea must rely almost solely on imports to supply 97% of its energy demand due to insufficient domestic resources. In fact, the nation is one of the world’s leading energy importers, taking fourth place in coal imports, fifth in total petroleum and other liquids, and second in the importing of liquefied natural gas (LNG), behind Japan.17 Although the country has taken precautions in order to ensure a constant gas supply (“diversification of supply sources, ensuring LNG supply on the basis of long-term contracts…18”), oil remains the dominant energy source, accounting for 40% of Korea’s total primary energy supply (TPES), while coal takes second place at 28% of the TPES.19 What little domestic exploration that occurs is exclusively offshore, with active natural gas and ultra-light crude (condensates) wells in the Yellow Sea Basin, Chenju Basin, and Ulleung Basin, all located in the seas surrounding Korea and Japan.20 However, despite the setback of lack of domestic energy reserves, the nation houses some of the most advanced refineries on the planet, and has the world’s sixth largest refining capacity, containing 3 of the 10 largest crude oil refineries on Earth.21 GS Caltex (jointly owned by Chevron and Korean conglomerate GS Group) owns a refining facility in Yeosu with a capacity of 775,000 bbl/day.22 Other noteworthy refineries include the SK Innovation facilities in Ulsan and Inchon, with capacities of 840,000 and 275,000 bbl/day, respectively, and the S-Oil Corporation’s refinery in Ulsan, with a capacity of 669,000 bbl/day.23 When including refineries owned by Hyundai, South Korea’s total capacity sits at 2,958,500 barrels refined per day.24 Significant companies with interest in oil & gas based in South Korea include GS Caltex, Korea National Oil Corporation, SK Group, S-Oil Group, and Hyundai Oil Bank.25

17 South Korea, US Energy Information Administration: http://www.eia.gov/beta/international/analysis.cfm?iso=KOR 18 Republic of Korea, Oil & Gas Security: Emergency Response of IEA Countries: http://www.iea.org/publications/freepublications/publication/korea_oss2011.pdf 19 Refer to footnote 18.20 Refer to footnote 17.21 Refer to footnote 17.22 GS Caltex: http://www.gscaltex.com/eng/company/production.aspx 23 “Asia-Pacific Refining Primed for Capacity Growth.” Oil & Gas Journal: http://www.ogj.com/articles/print/volume-112/issue-12/special-report-worldwide-report/asia-pacific-refining-primed-for-capacity-growth.html 24 Refer to footnote 23.25 Refer to footnote 10.

In contrast to China, South Korea has put significant effort and funding into improving environmental quality early on after the ecologically damaging reign of dictator Park Chunhee during the 1970s.26 The government has passed a number of environmental laws relating to green belts and emission restriction, and although citizens still tend to boil and filter their tap water, the water quality levels are acceptable in most locations. The Ministry of Environment’s “1st Seoul Metropolitan Air Quality Control Master Plan” that was effective from 2005 to 2014 has effectively decreased the PM10 and nitrogen dioxide levels in the air surrounding the capital city to levels similarly found in Paris, around 40 micrograms per cubic meter and 22 ppb, respectively.27 In fact, “South Korea’s biggest air quality problem is dust blown from expanding deserts in China [and Mongolia].28” The government has made a push to invest in clean energy as well, putting up $8.2 billion into a 2,500 MV wind farm in 2010 and $1.9 billion in 2014 to create six clean energy-related businesses.29 South Korea is the world’s fifth largest user of nuclear power, with around 70% of the country’s nuclear waste in temporary storage pools, prompting discussion into switching to underground waste storage starting in 2030.30

MALAYSIA

Although the country only ranks 27th in the world for primary energy production, Malaysia is one of the Asian Pacific region’s premier areas of oil and gas production and export. In fact, “Malaysia is the world's second-largest exporter of liquefied natural gas and the second-largest oil and natural gas producer in Southeast Asia, and is strategically located amid important routes for seaborne energy trade. 31” The nation sits on top of the fourth-highest offshore oil reserves in Asia-Pacific after China, India, and Vietnam, yet takes advantage of their exporting infrastructure to rise above other competitor countries.32 The largest reserve in the country’s possession is the Lawit Field, which is located right in middle of the South China Sea and came online in June 1997.33 Due to the nation’s more than exceptional work in the energy industry, Malaysia has grown to heavily incorporate it into the growth of its overall economy, expanding energy to almost 20% of the total gross domestic product.34 Being situated right at the South China Sea allows Malaysia to account for about half of the region’s oil production of 1.3 million bbl/day.35 Although the country is taking full advantage of its prosperous upstream operations, downstream projects still need attention, prompting organizations to start development of the planned 22,000-acre Pengerang Integrated Petroleum Complex (PIPC) and the 4,065-acre Sipitang Oil & Gas Industrial Park (SOGIP) that will house oil refineries, naphtha crackers, petrochemical plants and LNG import terminals and regasification plants.36 Most operations are 26 How clean is your country? South Korea, AZO Cleantech: http://www.azocleantech.com/article.aspx?ArticleID=552 27 Urban Air Quality Management, Ministry of Environment: http://eng.me.go.kr/eng/web/index.do?menuId=235 28 Refer to footnote 26.29 Refer to footnote 26.30 “South Korea Needs New Facility for Spent Nuclear Fuel.” Reuters: http://uk.reuters.com/article/2015/06/11/us-nuclear-southkorea-spentfuel-idUKKBN0OR0AT20150611 31 Malaysia, US Energy Information Administration: http://www.eia.gov/beta/international/analysis.cfm?iso=MYS 32 Refer to footnote 31.33 “South China Sea Oil and Natural Gas.” Global Security: http://www.globalsecurity.org/military/world/war/spratly-oil.htm34 Refer to footnote 31. 35 Refer to footnote 33.36 “Meet Malaysia.” MIDA: http://www.mida.gov.my/env3/uploads/Publications_pdf/MeetMalaysia_AsiaOilGasHub/

undertaken by significant international energy companies at work in Malaysia include Shell, ExxonMobil, Conoco, Hess Oil & Gas, Rools-Royce, and Nippon Energy, while only a handful of small local companies, like Perisai Petroleum, Petra Energy, and Petronas Carigali, to name a few, are known to operate reserves.37

Location Proven Oil Reserves (Billion

Barrels)

Proven Gas Reserves (Trillion

Cubic Feet)

Oil Production (Barrels/Day)

Gas Production (Billion Cubic Feet)

Brunei 1.35 14.1 145,000 340

Cambodia 0 0 0 0

China* 1 (est.) 3.5 290,000 141

Indonesia* 0.2 29.7 46,000 0

Malaysia 3.9 79.8 645,000 1,300

Philippines 0.2 2.7 <1,000 0

Singapore 0 0 0 0

cTaiwan <0.01 2.7 <1,000 30

Thailand 0.3 7.0 59,000 482

Vietnam 0.6 6.0 180,000 30

Total 7.5 (est.) 145.5 1,367,000 2323

*Only the regions near the South China Sea are included 

(Taken from Global Security)

Malaysia’s biggest environmental issues stem from the mass production of palm oil, which is devastating the tropical forests in the area.38 Indonesia and Malaysia are responsible for 90% of global palm oil production, and endangered species such as the Sumatran tiger, Oriental dart, and elephants and rhinos are facing a dramatic reduction in their habitat space due to the

MeetMalaysiaONG_2013.pdf 37 Refer to footnote 36. 38 Environmental Problems in Malaysia, WWF: http://wwf.panda.org/who_we_are/wwf_offices/malaysia/environmental_problems_malaysia/

industry.39 Malaysia’s air quality was decent overall compared to the rest of the Pacific Asian region, until Indonesian peat fires and forest fires created a large haze problem in the country in 2005.40 In fact, the smoke was so thick in the main city of Kuala Lumpur that a state of emergency was declared, due to a reading of over 500 on the Malaysian air pollution index.41 Recently this year, Malaysia adopted the Kyoto Protocol at Copenhagen 2015 in an attempt to start an action plan on reducing emissions.42

INDONESIA

Though Indonesia is the 4th most populous country in the world behind China, India, and the USA, the former net oil exporter’s energy industry now faces challenges due to “regulatory uncertainty and inadequate investment.43” As of now, the country is desperately trying to find a balance between keeping up its exemplary exports (Indonesia ranked as the world’s largest coal exporter by weight in 2012 and is the 4th largest LNG exporter as of 2013) while also meeting a growing demand back home.44 This issue has prompted the nation’s withdrawal from the Organization of the Petroleum Exporting Countries (OPEC) at the end of 2008, though the organization’s only Southeast Asian member did not have much influence to begin with.45 Most of Indonesia’s product comes from northern Sumatra, but now the area’s resources are drying up, causing stagnation in production, with very few fresh, new and proven reserves.46 However, the nation remains the world’s largest producer and exporter of thermal coal to this day, overtaking Australia’s production back in 2011. Roughly 75% of the produced coal is shipped off as export.47 A recently developed resource to in the country is coal bed methane (CBM), with reserves of an estimated 453 Tcf found in South Sumatra, South Kalimantan, and East Kalimantan.48 PT Adaro is the country’s largest coal producer, having turned up 50 million short tons of coal in 2012.49 PT Bumi Resource’s subsidiary, PT Kaltim Prima Coal (KPC), is in possession of one of the world’s largest coal mines.50 As for oil & gas, this part of the energy

39 “Malaysian Deforestation: Why is Palm Oil so Controversial?” The Telegraph: http://www.telegraph.co.uk/news/worldnews/asia/malaysia/8295815/Malaysia-deforestation-Why-is-palm-oil-so-controversial.html 40 “Indonesian Forest Fires Again Cause Haze in Malaysia.” Mongabay: http://news.mongabay.com/2005/08/indonesian-forest-fires-again-cause-haze-in-malaysia/ 41 Refer to footnote 40. 42Environmental Issues, Ministry of Foreign Affairs, Malaysia: http://www.kln.gov.my/web/guest/md-environmental_issues 43 Indonesia, US Energy Information Administration: http://www.eia.gov/beta/international/analysis.cfm?iso=IDN 44 Refer to footnote 43.45 “Indonesia to Withdraw from OPEC.” BBC News: http://news.bbc.co.uk/2/hi/business/7423008.stm 46 Refer to footnote 45.47 Refer to footnote 43.48 Oil and Gas in Indonesia, PwC: http://www.pwc.com/id/en/publications/assets/oil_and_gas_guide_2014.pdf 49 Refer to footnote 43.50 Refer to footnote 43.

industry is dominated by international firms such as Exxonmobil51, BP, ConocoPhilips52, and Chevron.53

Indonesia is the world’s 3rd largest geothermal energy generator behind the USA and the Philippines, after adding 130 megawatts (MW) of geothermal capacity back in 2012.54 Despite their large use of renewable energy, the nation faces unsustainable practices of deforestation, illegal wildlife trade, overfishing, and pollution, which originates from heavy urbanization along the Indonesian coast. 55 Like Malaysia, the palm oil industry is also largely prevalent in the country, with more than 3.5 million workers pledged to the sub-sector.56 In 2009, Australia was responsible for the Montara oil spill into the Timor Sea, which devastated the Indonesian fishing and seaweed farming sectors.57 Currently, Law No. 22/2001 regulates the oil & gas industry by

51 Exxonmobil Indonesia: http://www.exxonmobil.com/Indonesia-English/PA/about.aspx 52 ConocoPhillips Indonesia: http://careers.conocophillips.com/en/location/indonesia-careers/ 53 Indonesia Fact Sheet, Chevron: http://www.chevron.com/documents/pdf/indonesiafactsheet.pdf 54 Refer to footnote 43.55 Environmental problems in Indonesia. WWF: http://wwf.panda.org/who_we_are/wwf_offices/indonesia/environmental_problems_indonesia/ 56 Refer to footnote 55.57 “New report Calls for Inquiry into Montara Oil Spill.” The Sydney Morning Herald: http://www.smh.com.au/world/new-report-calls-for-inquiry-into-montara-oil-spill-20150714-gibhj0.html

setting up environmental standards for all energy organizations and declaring that foreign companies in the nation are allowed to engage in either upstream or downstream operations but cannot be involved in both areas.58

THAILAND

Although Thailand is forced to import most of its oil supply due to a lack of domestic reserves paired with a spike in demand (just this last year, crude oil reserves dropped some 4 million barrels, according to Oil & Gas Journal), the country does sit on large proved reserves of natural gas, and has recently become a net importer of natural gas due to high demand growth.59 The nation currently holds a domestic supply of 1,636,388 tetrajoules of natural gas, according to the International Energy Agency (IEA).60 Prominent oil & gas reserves are mostly offshore in the Gulf of Thailand, and include Malay Basin, Pattani Basin (the southern area contains the largest Erawan gas field), and the onshore Mae Sot Basin, with exploration occurring in the Chumpon Basin, Kra Basin, and Songkla Basin.61 One of the most recent oil fields to come online is offshore at Manora, which is operated by Mubadala Petroleum.62 Perhaps the biggest company at work in Thailand is Chevron, as they have operations going on in the Benjamas (the nation’s largest crude oil field), the Pakakrong fields, the Lanta field, and the Tantawan field.63 Chevron Corporation hit their first gas from the Platong II Project back in October 2011, with a retrospectively accurate projection at the time of producing 18,000 bbl/day of LNG.64 Other significant companies include PTT Public Company Limited’s subsidiary, PTT Exploration and Production (PTTEP), who does massive production in the Sirikit field, and Salamander Energy and Coastal Energy, who run projects in the shallow water fields of Bualuang, Songkhla, and Bua Ban.65 The prominent Unocal Limited, who has a historical average of drilling about 55 wells per year, is at work in the Southern Pattani Basin in search of even more promising reserves of natural gas.66

58 “Challenges in Indonesia’s Oil and Gas Industry.” Global Business Guide Indonesia: http://www.gbgindonesia.com/en/energy/article/2011/challenges_in_indonesia_s_oil_and_gas_industry.php 59 Thailand. US Energy Information Administration: http://www.eia.gov/beta/international/analysis.cfm?iso=THA 60 Thailand statistics. International Energy Agency: http://www.iea.org/statistics/statisticssearch/report/?country=Thailand&product=naturalgas&year=2012 61 Petroleum Geology of the Gulf of Thailand. Greg Croft Inc. : http://www.gregcroft.com/thailand.ivnu 62 “Manora Oil Field Offshore Thailand Comes on Stream.” Oil & Gas Journal: http://www.ogj.com/articles/2014/11/manora-oil-field-offshore-thailand-comes-on-stream.html 63 Refer to footnote 59.64 “Chevron Announces First Gas from Platong II Project in Gulf of Thailand.” Chevron: http://www.chevron.com/chevron/pressreleases/article/10242011_chevronannouncesfirstgasfromplatongiiprojectingulfofthailand.news 65 Refer to footnote 59.66 Refer to footnote 61.

(Taken from Greg Croft Inc.)

Currently, environmental policy isn’t very strict in Thailand, resulting in everything from water pollution, to smog and air pollution, to deforestation. The government often approves many of the new industrial projects, such as the recent plan of the European and Mediterranean Plant Protection Organization (EPPO) to increase coal-fired generation as a means to reduce the nation’s dependency on natural gas imports to meet energy needs.67 In fact, there is a string of hunger strikes that are currently being held in protest to Thailand’s plan to install new coal plants on the Andaman Coast in the Krabi province, an area which houses the nation’s 2nd largest area of sea grass bed, and was even featured in one of Leonardo DiCaprio’s films.68 The Bangkok Metropolitan Administration collects around 8000 tons of fresh trash every day, and yet the majority of the waste in the area is never processed. This has led to a “critical level” of pollution in the streets and canals of the city.69 Most of the air pollution in urban areas arises from congestion in road networks.70 There is severe danger for environmental protesters as well, with many companies going as far as to having activists killed off by hired guns if energy operations are being impeded.71 Currently, in order to resolve these issues, the country is attempting to adapt an Alternative Energy Development Plan (AEDP) that would last from 2012 till 2021.72 Back in 2008, “the electricity capacity of municipal solid waste in Thailand was 5000 kW, and the total electricity generation was 94.63 TJ.73” Now, alongside the generation of solar, wind, and hydro power, increased usage of biofuels such as sugarcane, cassava, molasses, and palm oil converted to biodiesel fuels will be utilized in the attempt to reach the goal of 25% of the total energy consumption in Thailand being renewable energy by 2021.74 The United Nations is aiding the country as well in setting up new emission standards, enforcing fuel reformulation in the industry, and improving traffic management and VKT, or vehicle kilometers traveled.75

VIETNAM

67 Refer to footnote 59.68 “Hunger Strikes, Protests to Oppose Thailand’s Plan for Coal Plants on the Andaman Coast”. US News: http://www.usnews.com/news/world/articles/2015/07/21/coal-plant-proposed-for-pristine-thai-coast-sparks-outcry 69 “Thailand: Rivers, Roads, and the Pollution They Hold.” Pulitzer Center: http://pulitzercenter.org/reporting/thailand-conservation-sustainability-rivers-roads-water-air-pollution-trash-Bangkok 70 Environmental Policies in Thailand and their Effects. United Nations: http://www.un.org/esa/gite/iandm/viroatpaper.pdf 71 “Thai Environmentalists Pay for Activism with their Lives.” Aljazeera America: http://projects.aljazeera.com/2015/04/thailand-activists/ 72 Thailand Biofuel Policies. International Energy Agency: https://www.iea.org/media/technologyplatform/workshops/southeastasiabioenergy2014/Thailand.pdf 73 Biomass in Thailand. World Energy Council: https://www.worldenergy.org/data/resources/country/thailand/biomass/ 74 Refer to footnote 72.75 Refer to footnote 70.

Unlike some of the countries previously discussed, Vietnam has not only been taking full advantage of its residual oil and gas reserves in the South China Sea, but also has worked on reforming the energy market and allowing for greater investment and cooperation with greater foreign companies and nations in the industry’s sector.76 On September 15, 2014, Vietnam and India signed a new agreement to “expand cooperation in oil and gas exploration and production in contested waters of the South China Sea, despite previous objections from China77” (China argued that this treaty violated Chinese sovereignty). China and Vietnam have had ongoing tension ever since conflict arose on May 7, 2014, when Vietnam suspected that China was planning to illegally drill into the Vietnam continental shelf.78 Although the nation has established favorable relations with surrounding countries, their personal resources are beginning to diminish. According to Oil and Gas Journal, even though Vietnam’s recent success in offshore exploration has increased their reserves from 0.6 billion barrels in 2011 to 4.4 billion barrels as of 2012, that figure has remained constant into 2013 and 2014.79 This goes to show that although the nation’s diplomacy is certainly aiding the energy sector, what resources they managed to find earlier are reaching maturity (a production rate of 353,700 bbl/day in 2013 was 3% less from production in 2012 and 12% down from the 2004 peak of 403,000 bbl/day80). Along with rising demands, this caused Vietnam to become a net exporter of crude oil, but a net importer of all oil products and LNG.81 The oil that they do get comes primarily from the Cuu Long Basin, with production primarily in the Bach Ho (White Tiger) Field in the east, the Rong (Dragon) Field in the south, and the Rang Dong Field in the southeast.82 Being a communist nation, oil & gas is monopolized by a single state-owned enterprise, PetroVietnam.83 This key company runs operations and production of oil and natural gas in the country, with an upstream subsidiary PetroVietnam Exploration and Production (PVEP) and a number of joint ventures with international oil companies such as ExxonMobil, Chevron, and Zarubenzhneft (foreign firms, however, must receive approval from the Oil and Gas Department of the Prime Minister before commencing production and have no other choice but to negotiate with PVEP on almost all acquired upstream licenses).84

76 Vietnam. US Energy Information Adminstration: http://www.eia.gov/beta/international/country.cfm?iso=VNM 77 “Vietnam, India Sign New Oil and Gas Deal despite Previous Objections from China.” Wall Street Journal: http://www.wsj.com/articles/vietnam-india-to-expand-oil-exploration-in-contested-south-china-sea-1410777168 78 Refer to footnote 76.79 “Global reserves, Oil Production Show Increases for 2014.” Oil and Gas Journal: http://www.ogj.com/articles/print/volume-112/issue-12/special-report-worldwide-report/global-reserves-oil-production-show-increases-for-2014.html 80 Refer to footnote 76.81 Refer to footnote 76.82 Petroleum Geology of Cuu Long Basin. AAPG Search and Discovery: http://www.searchanddiscovery.com/documents/2004/hung/ 83 Oil and gas law in Vietnam. Norton Rose Fulbright: http://www.nortonrosefulbright.com/knowledge/publications/101076/oil-and-gas-law-in-vietnam 84 Refer to footnote 76.

Due to the explosive economic growth of Vietnam in recent years, the local environment has taken a huge hit, with issues ranging from deforestation, to water & air pollution, to the hunting of endangered wildlife (the last Vietnamese Javan rhino was killed in 2010 for its ivory85). The air in urban areas was found to contain pollutants such as SO2, CO, NO2, and even lead (Pb), while both marine and inland waters have been polluted with heavy metals and organic substances.86 Where the environment is concerned, the ministry of Natural Resources and Environment is usually the one to setup regulations and verify land us permits.87 However, as soon as petroleum is involved, the Prime Minister’s office becomes the primary decision-maker, though the input of the various ministries is still considered.88 The Prime Minister proposes all new laws which concern the energy industry and authorizes new regulations, such as the National Strategy for the Energy Sector, the Gas Master Plan, and the Energy Master Plan.89 In terms of measures to insure ecological protection, the Prime Minister issued technical regulations in 2004 to ensure safe onshore gas pipeline systems, The National Strategy on Energy Development (2007-2020), and a 2008 Petroleum Law.90 The NSED’s goal was to shift management of the oil and gas sector into a “state-controlled market mechanism”, while the Petroleum Law gave new responsibilities to the Ministry of Industry, although much of the burden actually fell onto PetroVietnam’s shoulders. Vietnam recently commenced an

85 20 years WWF-Vietnam – What we have achieved. WWF: http://wwf.panda.org/about_our_earth/all_publications/?248151/20-years-wwf-vietnam---what-we-have-achieved 86 Key issue summary. State of the Environment in Vietnam 2001: http://www.rrcap.ait.asia/pub/soe/vietnam/sumary/key_issue_sumary.htm#2.5. 87 “Policy Suggestions for the Initial Development of Vietnam’s Gas Industry.” The Brookings Institution Center for Northeast Asian Policy Studies: http://www.brookings.edu/~/media/research/files/papers/2012/9/vietnam-gas-industry-hai/09-vietnam-gas-industry-hai.pdf 88 Refer to footnote 83.89 Refer to footnote 83.90 Refer to footnote 87.

environmental protection tax in 2012 on all goods which may cause damage to the environment, which included all oil and gas from production and import (export is exempted).91

Asia’s development in the energy sector will continue to grow and fluctuate in the coming years. Some of the listed countries are still in various exploration phases and dramatically increasing production, while others are beginning to increase imports and considering negotiation with foreign suppliers. Perhaps some of the countries dismissed in the introduction of this report will rise up and become net importers themselves somewhere down the line. How well the countries’ accept their diverse environmental responsibilities is also still in question. What can be determined for certain is that the Pacific Asian region is most definitely not finished with oil & gas just yet. ---

91 Refer to footnote 83.