Abstract
South-East Asia has one of the world’s more favourable accumulations of ultimately recoverable petroleum.1 Each of the host governments in the region has its own goals with regard to the development of these resources,2 with such goals determined by individual country socio-economic needs.
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The term `demand’ will be used synonymously with `consumption’ in this study.
Measured resources are those whose quality and quantity have been estimated, within a margin of error of less than 20 per cent, from analyses and measurements done for closely spaced and geologically well-known sample sites. The term indicated is applied to resources whose quantity and quality have been estimated partly from sample analyses and partly from reasonable geologic projections. The term inferred refers to materials in unexplored but identified deposits estimated on the basis of geologic evidence.
The term hypothetical resources is used to refer to undiscovered resources that may be expected to exist in a discovered area under known geologic conditions, while the term speculative resources refers to resources that may occur in areas where no discoveries have yet been made, both in known and unknown types of deposits.
These definitions are taken from Federal Power Commission, National Gas Survey ( Washington, D.C.: 1974 ), Appendix A, Vol. I, Chapter 9.
The notion of recovery efficiency,expressed in percentage terms, refers to the quotient of the total proved petroleum at a point in time divided by the estimated cumulative total in reservoirs known to exist at that point in time.
The relationships between resource base and extraction of reserves may be expressed in a more formal way as follows. There is an estimated quantity of oil-inplace, whose production is constrained by engineering and economic factors, and this may be represented as follows: where S represents original oil-in-place, x is a factor indicating the maximum proportion of the oil-in-place that is physically recoverable with existing technology, T is the production time horizon, and q(t) the rate of production. The unknown function q(t) may be expressed as a function of the initial capacity installed and the production decline rate such that: where o is the subscript indicating the present, t is any point in time, q o represents initial installed capacity, and a represents the rate of decline in production. As described above, total resource recovery is generally a negative function of the rate of production. It may thus be postulated that reserves, S o ,may be expressed as: where ß and 7 are physical parameters related to geological conditions, qo is the installed capacity, and g o e- a is the initial rate of production. The term installed capacity’ refers to the rate of production that is sustainable for a brief period without further drilling of new wells. See R. J. Kalter et al., Atlantic Outer Continental Shelf Energy Resources: An Economic Analysis (Ithaca, New York: Cornell University), A.E. Res. 74–17, mimeographed, and W. F. Lovejoy and P. T. Homan, Economic Aspects of Oil Conservation Regulation (Baltimore: Johns Hopkins University Press for the Resources for the Future, 1967)
The term secondary recovery is used when oil is recovered by supplementing the natural reservoir pressure by other agents (such as water flooding or gas injection).
The term tertiary recovery refers to any process used to obtain recovery levels not achievable with conventional primary and secondary processes.
The term `original oil-in-place’ is used to refer to the volume of crude oil estimated to be in known reservoirs prior to any production.
See American Petroleum Institute, Reserves of Crude Oil, Natural Gas Liquids, and Natural Gas in the United States and Canada ( Washington, D.C.: 1978 ).
National Petroleum Council, Enhanced Oil Recovery ( Washington, D.C.: 1976 ), p. 12.
A field is the general area underlain by one or more reservoirs formed by a common structural or stratigraphic feature. R. E. Megill, Exploration Economics (Tulsa, Oklahoma: The Petroleum Publishing Company, 1971), p. 12.
The term marginal cost refers to incremental cost or the cost of producing an additional unit; the term marginal revenue refers to the revenue added by an additional unit produced.
The difference between production costs (which include a minimum, or reasonable, return on investment—or `normal’ profit) is referred to in economic jargon as economic rent. Other authors use the term `net price’.
See H. Hotelling, `The Economics of Exhaustible Resources’, Journal of Political Economy, Vol. 39 (April 1931), pp. 137–75; R. L. Gordon, `A Reinterpretation of the Pure Theory of Exhaustion’, Journal of Political Economy, Vol. 75 (June 1967), pp. 274–86; O. C. Herfindahl, `Some Fundamentals of Mineral Economics’, Land Economics, Vol. 31 (May 1955), pp. 131–8; A. D. Scott, `The Theory of the Mine Under Conditions of Certainty’, in M. Gaffney (ed.), Extractive Resources and Taxation (Madison: University of Wisconsin, 1967), pp. 25–62; and R. Solow, Intergenerational Equity and Exhaustible Resources’, Review of Economic Studies (December 1974), pp. 29–46.
See, for example, W. Nordhaus, `The Allocation of Energy Resources’, Brookings Papers on Economic Activities, No. 3 (Washington, D.C.: Brookings Institution, 1973). See also P. Dasgupta and J. E. Stiglitz, Uncertainty and the Rate of Extraction Under Alternative Institutional Arrangements, Technical Report No. 179, Institute for Mathematical Stùdies in the Social Sciences ( Stanford: Stanford University, 1976 ), p. 3.
See the Oil and Gas Journal,25 December 1978. Henceforth the symbol OGJ will be used to refer to this publication.
See Petroleum Economist,September, 1977, p. 373; OGJ,31 July 1978, p. 102, `Viet Nam claims more Hanoi trough discoveries’, and Petroleum News Southeast Asia,September 1978, p. 3. (Henceforth, the symbols PE and PN will be used to refer to these publications.)
To gauge the potential of given areas, one needs to know the sedimentary area, sedimentary volume, thicknesses, lithology, structure, etc., but these data may only be obtained from geological and geophysical exploration and drilling. See B. F. Grossling, `The Petroleum Exploration Challenge with Respect to the Developing Nations’, in R. Meyer (ed.), The Future Supply of Nature-Made Petroleum and Gas, Proceedings UNITAR-IIASA Conference, Laxenburg, Austria, 5–16 July 1976 (Pergamon Press, 1977 ), pp. 57–69.
Grossling estimates that in the developing regions, about 34 per cent of undiscovered petroleum is in Latin America, 35 per cent in Africa and Madagascar, about 25 per cent in South and South-East Asia and about 6 per cent in mainland China. (See page 8 and Table 8 in B. F. Grossling, `A Long-Range Outlook of World Petroleum Prospects’, prepared for the Subcommittee on Energy of the Joint Economic Committee, Congress of the United States, 2 March 1978.) He defines South and South-East Asia as the mainland countries east of the Middle East and south of China plus the islands of Oceania excluding Japan, Australia and New Zealand. See Grossling (1977), op. cit., p. 59.
See, for example, comments at the Circum-Pacific Conference, Honolulu, U.S.A., July—August 1978, reported in OGJ,28 August 1978, pp. 37–8, ‘Esso: Far East oil potential limited’.
The term `coal’ is used here to cover all kinds of coal and lignite but not including peat.
See World Energy Conference, World Energy Survey (1974).
See United Nations, ESCAP, `Energy Resources in the Region’, Document NR/WGMEPP/1, 6 July 1978, Annex II.
See papers presented at the Indonesian National Committee, World Energy Conference, 1978 Workshop on Energy, Jakarta, 26–27 May 1978; the Philippines’ Ministry of Energy, Ten-year Energy Development Program, 1978–1987 (Manila, 1978 ); and the Thailand Delegation to the UN, ESCAP Committee on Natural Resources, Progress in Energy Development in Thailand ( Bangkok: October 1975 ).
See the Philippines’ Ministry of Energy report (1978), op. cit., p. 80, and UN, ESCAP (1978) document.
See Asian Wall Street Journal (Hong Kong), 19 December 1978, p. 3, and Philippines, Ministry of Energy (1978), op. cit. (Henceforth, the Asian Wall Street Journal will be cited as AWSJ.)
See the Ministry of Energy (1978), op. cit.
Thailand Delegation to UN, ESCAP (1975), op. cit.
Its policies are spelled out in Philippines Act 1442 on geothermal exploration.
Ministry of Energy (1978), op. cit., p. 78.
The term `commercial’ is used in the energy literature generally to refer to forms traded in large markets, and the term `non-commercial’ to those not falling under the former category.
See, for example, the unpublished papers read at the 1978 Workshop on Energy in Jakarta.
UN, ESCAP (1978), p. 11.
See UN, ESCAP (1978), p. 3.
See UN, ESCAP (1978), p. 3.
The historical energy/GDP relationships in South-East Asian countries is discussed in C. M. Siddayao, The Off-shore Petroleum Resources of South-East Asia (Kuala Lumpur: Oxford University Press, 1978 ), Chapter I.
These projections are based on the underlying assumption of a relationship between economic growth (as represented by the Gross National Product), population growth, and demand for energy. Thus, the estimating equation in the Indonesian case was in the foi m, log EIP = a + b log Y/P, where E = total energy consumption, P = population, and Y = gross national product. See Budi Sudarsono et al., Proyek Penelitian Perspektip Jangka Penjang Perekonomian Indonesia (Jakarta: LEKNAS-LIPI, 1977). In the Philippine case, the energy-GNP relationship was expressed as log C = log A + a log P + (3 log P. See Ministry of Energy, Ten-Year Energy Development Program, 1978–1987 (Manila: 1978). The Thai case was not specified in the report, but implied in Table I-3, of the Thai Government, UN Delegation’s report, Energy in Thailand (Bangkok: 1978). Explanations of the reasons for assigning specific percentages to individual energy forms are argued in the respective reports
Central Bank of the Philippines, Statistical Bulletins and Annual Reports,and International Monetary Fund, International Financial Statistics.
PN,`Hydropower in Peninsular Southeast Asia’, June 1977, p. 16.
PN,July 1978, p. 18, and AWSJ,15 June 1978, p. 2.
Straits Times (Singapore), 3 September 1977, p. 8, and 22 October 1977, p. 6. (Henceforth, this reference will be cited as ST.)
Asian Development Bank, Key Indicators of Developing Member Countries of ADB,April 1977, and the World Bank Atlas,1976, as presented in Chia Siow Yue, ‘Economic Developments in the Region‘, in Southeast Asian Affairs 1978 ( Singapore: Institute of Southeast Asian Studies, 1978 ).
See assumption by the World Bank, in Price Prospects for Primary Commodities. Report No. 814/78, June 1978, p. 277.
Ibid.
The elasticity concept is a device to indicate the degree of responsiveness of one variable to changes in another variable. The income elasticity of energy demand refers to the relationship between relative changes in energy consumption resulting from relative changes in real GNP. In symbolic form.
See, for example, the reports by the U.S. Central Intelligence Agency, `The International Energy Situation: Outlook to 1985’, April 1977; by the International Energy Agency, Towards an International Strategy for Energy Research and Development, September 1977, and the Workshop on Alternative Energy Strategies (WAES), Energy: Global Prospects, 1985–2000, 1977.
World Bank, Report 814/78, op. cit., Table 4, p. 290, and Exxon Corporation, `World Energy Outlook’, January 1977, Chart 5.
Conversation with Petronas official. This view has also appeared in the press on many occasions.
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Siddayao, C.M. (1980). Introduction. In: The Supply of Petroleum Reserves in South-East Asia. Natural Resources of South-East Asia. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-6852-6_1
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