Energy Relations and Policy Making in Asia
Trade between the economies of the Gulf Cooperation Council (GCC) and North East Asia (NEA) reached $471 billion in 2013, based almost entirely on oil and gas. The GCC sends 44 percent of its exports to NEA, which depends on the GCC region for a very high proportion of its oil imports. Trade relations are otherwise very limited: the GCC takes only 3 percent of NEA’s exports.
- GCC-NEA energy links beyond trade are limited. Restrictive upstream ownership laws have largely restricted GCC-NEA joint ventures to a handful of refining projects.
- Current energy trade links are vulnerable to price shocks, distortion of distribution channels, and new sources of hydrocarbons. A possible route to continued trade and cooperation is through opening markets, joint oil stockpiling, technology exchange and a shared understanding of energy security risks.
- The environmental agenda – i.e., renewable energy and improved energy efficiency – represents an opportunity. NEA enjoys great expertise in low-carbon technologies and could be a partner of choice for the GCC to adopt new technologies, freeing up reserves for export. Both sides have the opportunity for a broader trade relationship if barriers and bureaucracy can be reduced.
- Enhanced communication and trust between the GCC and NEA economies is essential to guard against counterproductive responses to anticipated market dynamics, based on a fear of change and instability
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