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KUALA LUMPUR: Malaysian state energy firm Petronas said on Monday that subsidies which cause excessive consumption and distort markets must be removed.
Amid the fallout from a 41 percent fuel price hike in Malaysia last week, Petronas president and CEO Hassan Marican said that while the industry was trying to step up production, Asia must become more energy-efficient.
"While this is being pursued, nations must also work towards a gradual removal of generous energy subsidies, which cause unmitigated consumption and market distortions that are unmanageable in the long run," he said.
"Saving energy is no longer about achieving cost savings -- it is a matter of survival and providing for the future generation," Hassan told the annual Asia Oil and Gas Conference.
Faced with ballooning bills to underwrite cheap fuel, Asian governments have taken steps to reduce subsidies in recent months but their efforts have triggered public outrage and protests in Malaysia, India and Indonesia.
The Petronas chief said that in spite of a looming slowdown, forecast oil demand for 2008 was steady at 87.5 million barrels per day, with lower usage in the developed world offset by growth in Asia, the Middle East and Africa.
"Emerging economies are expected to drive energy demand growth by approximately 2.2 percent per annum up to 2030," he said, while adding that there was no cause for panic over future supplies.
Although more than 250 billion barrels of oil has been extracted globally over the past decade, net proven reserves has risen by more than 100 billion barrels, he said.
"In fields where two decades ago roughly one third of the oil in place ultimately could be extracted, almost 50 percent is recoverable today."
"While we should not underestimate the magnitude of the below-ground challenges, from maturing producing fields to the difficult geology of frontier areas, the world is not running out of energy resources," he said.
Hassan said that chronic under-investment in the 1980s and 1990s, as well as consolidation aimed at cost-cutting, had driven away experienced staff and contributed to the current energy crunch.
"The industry must play its part to continue to attract the best to ensure future continuity," he said. - AFP/ac
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