The International Maritime Bureau reported that on the 6th of August in Indonesia’s Belawan port:

“Robbers boarded a product tanker at anchor by climbing the anchor chain.  They opened the forecastle store and tried to steal ship’s stores.  Duty crew noticed them. Alarm raised, crew alerted and mustered as per company procedures.  Sensing crew alertness, the robbers jumped overboard and escaped. No injuries to crew and nothing stolen.”

The previous day Sovkomflot’s dry cargoship Damai Lestari sunk after being involved in a hit and run incident in the Malacca Strait.  A suezmax tanker – the Russian SKF Khibiny – rescued 13 of the crew and another ship picked up another 8.  See these articles for more info.

There’s also news that a luxury yacht service on the Lili Marleen which will be running as a floating hotel for tourists that want to visit islands in the Malacca Strait – hopefully they won’t be targeted by other users of the sea lane as a robbery opportunity.

A topic of discussion in Australian energy news is the Rudd Government’s proposed national FuelWatch scheme.  It’s estimated that the scheme will save Australian motorists $10 per tank of petrol, by posting prices online for consumers to access.  Western Australia has a program with the same name monitoring fuel prices since January 2, 2001 in response to a Parliamentary Select Committee’s investigation.  It consists of measures such as the 24 hour rule which requires outlets to notify the following day’s petrol prices by 2pm and maintain this price from 6am for 24 hours.

Two days ago the Federal Cabinet approved the establishment of a national scheme to promote market transparency, and the scheme is to cover unleaded petrol, premium unleaded petrol, LPG, diesel, 98 RON and biodiesel blends.  The ACCC is expected to undertake formal monitoring of prices.

During a recent press conference with the Western Australian Premier Alan Carpenter in Perth, Rudd argues that:

We have a clear cut plan on FuelWatch. A plan which has been based on the experience here in WA. And we say to the Liberals, get real, back motorists and stop being in the pocket of the big oil companies…

The ACCC has produced a report which demonstrates that over time, this is seven years worth of data, there is something like a two per cent per litre differential as a result of having FuelWatch in… [there's also a comment here that an "Econometric analysis undertaken by the ACCC last year concluded that under the WA FuelWatch scheme the 'relevant weekly average price margin was around 1.9 cpl [cents per litre] less on average’.]

That is a huge global force at work but within that, Fuel Watch in this state, WA has given motorists more consumer power. And I say to the Liberals, why don’t the people of Australia deserve to have that same consumer information as well…

The Downside
Independent Senator Nick Xenophon has argued that he won’t be supporting the initiative:

I just can’t see that FuelWatch will deliver benefits to consumers. In fact, there are a whole range of unintended consequences based on the evidence that we’ve seen so far and I can’t in good conscience support something where the evidence indicates overwhelmingly that FuelWatch will be bad for consumers.

The RACV claims the scheme would disadvantage independent service stations, and I’m inclined to agree.  RACV spokesman argues that:

“The existing market in Melbourne clearly shows that 60 per cent of all motorists fill up on the four cheapest days of the week”

It seems they are suggesting that demand is relatively inelastic and as such outlets will be hit the hardest.

The scheme may not necessarily deliver lower prices for consumers either, given poor performance in the Australian dollar and delays in Singapore-priced fuel to trickle down to motorists.

On the other hand, the ACCC has revealed that independent outlets have not been adversely affected in Western Australia under FuelWatch.

Comments
All I can really say is that Rudd seems rather geared towards online price monitoring sites for consumer benefit (such as Grocery Choice).  I guess it’s a form of government intervention facilitating complete knowledge of various markets (if that’s possible!), and hoping the ‘invisible hand’ will draw prices down – seems like there has been positive price outcomes for consumers from Western Australia’s FuelWatch in its seven years so far…according to the above quote in any case.

Howard even proposed other measures to try to lower fuel costs for motorists, such as the LPG vehicle scheme, involving presenting subsidies for car owners who chose to convert their cars to LPG, seeing it’s less polluting (in terms of carbon/CO2), cheaper for consumers, and moving away (even if only a very small part) from oil consumption.

ExxonMobil and BHP Billiton are developing a $1.4 billion gas and oil project through a joint venture in the Bass Strait.  The Turrum Project is expected to deliver about 110 million barrels of oil and gas liquids but construction isn’t to start until 2009 with the field producing in 2011 and gas sales starting in 2015.

Victoria’s Premier has states that the project will enhance southeast Australia’s energy security.

Premier John Brumby also argues that:

“There is enough resource of oil and gas to fuel a city of 1 million people for more than 20 years.”

That’s all well and good for employment and the economy in general, but most Australian crude oil is not consumed locally.  The hypothetical 1 million person city is unlikely to be an Australian city.  Perhaps Australia will benefit more from selling the crude (and gas?) abroad.

Australian domestic oil resources only contribute towards some 30% of its crude oil needs, especially since Australian crudes tend to be ‘lighter’ and less suitable for its refineries.  Oil refineries are configured to process certain types of oils, and the 7 curently operating in Australia process heavier crudes which are imported largely from the Asia Pacific, such as Vietnam.  Australia’s refineries have a limited capacity too, and given that they currently do not satisfy refined petroleum needs, additional refined resources are imported from states such as Singapore.

There doesn’t appear to be much mention of where these resources will be going exactly (in terms of refinement and consumption), so it will be interesting to watch this space! I guess oils just ain’t oils…

Info gleaned from the Herald Sun and the Australian Institute of Petroleum

Australia is hosting Exercise Kakadu IX, a cooperative exercise with other states in maritime security.  It’s been running in Darwin since the 21st of July and is set to conclude tomorrow, on the 8th of August.  Participating states include:
- Papua New Guinea
- New Caledonia
- New Zealand
- Singapore
- Malaysia
- Pakistan
- Japan and
- Thailand.

India, Indonesia and the Philippines have sent observers to the exercise.

Australia’s involvement is primarily focused on the RAN but the RAAF has provided some equipment:
- Replenishment Vessel HMAS Sirius
- Anzac Class Frigate HMAS Toowoomba
- Adelaide Class Frigate HMAS Melbourne
- a Collins Class Submarine
- HMAS Collins
- two Huon Class Mine Hunters
- HMA Ships Diamantina and Gascoyne and
- the Armidale Class Patrol Boats HMAS Maryborough and HMAS Maitland.

RAAF:
- two AP-3C Aircraft and Hornet and Hawk Fighter Strike Aircraft

The aim of Ex Kakadu IX is to foster interoperability and cooperation between international naval forces – something no doubt highly valued by Australia, being a maritime state and all.  I only wonder whether the US was  invited?  I suppose it could be argued that the US isn’t part of Australia’s immediate region, but given ANZUS, the US’s blue water power and the strategic value of the Asia Pacific, surely there would be incentive for some involvement?  Then again China is not on the list either, even as an observer…

See DoD and Radio Australia

Lately a number of state-based alliances in the broad ‘Asia-Pacific’ region have held summits for states to address a wide variety of security issues.  I’ll attempt to summarise the events of the recent SAARC summit here.

SAARC (South Asian Association for Regional Cooperation)

The 15th SAARC summit held in Colombo was attended by India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, Maldives and Afghanistan.  Discussions have been ongoing throughout July and some of August.  The states have adopted the 41 point Colombo Declaration, and reaffirmed their commitment to the SAARC Charter.  The Declaration addresses the following issues:
- the implementation of a South Asian Free Trade Agreement (SAFTA) which aims to address Non-Trade Barriers (NTBs) between states
- food security
- energy security
- trade
- combating terrorism (member countries have pledged the “strongest possible cooperation” – see the the SAARC Convention on Mutual Legal Assistance in Criminal Matters.  This issue came into more focus after the Indian Embassy in Kabul was suicide bombed on July 7, killing 41 people including 2 senior ministers, and following blasts in Bangalore, which killed one person and injured eight, and Ahmedabad, which involved a serial blast of 20 bombs which killed approximately 50 people.  A crude bomb was also detonated on August 3 and killed four people in India)
- climate change
- connectivity
- partnership for growth for the peoples of the region
- environment
- water resources
- poverty alleviation
- SDF
- transport
- ICT Development

It’s a wide range of issues here to be addressed -  I wonder what the full effectiveness of such a declaration will be.  At the least it can be hoped SAARC acts as a discussion arena for member states.  I’ve not yet seen any real discussion of what the declaration consists of aside from online news articles listing the above areas of discussion.  The SAARC website has not been updated aside from a list of the activities undertaken throughout the summit.  Here’s hoping we can get a little more detail on these areas – with regards to energy security I’ve heard there’s been some commitment to developing alternative energies between member states but what this consists of exactly remains to be seen.

The first idea that came to mind when reading the ABC News article from 25th July, Rice visit throws spotlight on WA was, “it has to be about the gas!”  Why else would Condoleezza Rice be interested in Western Australia?

After a quick search I found an earlier article from 21st July, Smith to host Rice Perth visit. It states,

The Foreign Affairs Minister Stephen Smith says he will promote Western Australia’s ability to provide secure energy when the US Secretary of State Condoleezza Rice visits Perth this week.

Interesting!

Indonesia is taking steps to substitute gas for liquid fuels in automobiles as well as a current initiative to replace domestic kerosene use for LPG. This follows the opening of Indonesia’s first compressed natural gas (CNG) plant in Cikarang, east Jakarta. The plant was developed by Malaysian based company IEV Group Sdn Bhd, and following feasibility studies further construction in east Java (in Tanjung Priok, Jakarta, and west Jakarta) is anticipated to start in 2010.

The initiative could involve converting public transport to gas. The Cikarang plant produces five million cubic feet per day which can supply fuel for 5,000 taxis per day. Antara quotes Indonesian Vice President Jusuf Kalla that speeding up such a program:

“…is very important because the use of gas will economically be more advantageous as it is more efficient, more friendly to the environment, and reduce our need for fuel oils”.

This would be a very beneficial development if successful, for it is estimated that gas would be available at half the price of petrol. The costs however from installing new infrastructure and distribution outlets, and providing convincing incentives to change fuel sources shouldn’t be underestimated and could pose considerable obstacles to the initiatives.

Sources: Antara, ‘JK to speed up oil-to-gas conversion in land transportation’, 13/07/08, available at http://www.antara.co.id/en/arc/2008/7/13/jk-to-speed-up-oil-to-gas-conversion-in-land-transportation, Sharon Kaur, ‘IEV Energy Plans IPO to Fund Java Gas Project’, Business Times Online, 13/07/08, available at http://www.btimes.com.my/Current_News/BTIMES/Monday/Nation/IEV1.xml/Article/print_html/html2pdf?url=/Current_News/BTIMES/Monday/Nation/IEV1.xml/Article/index_html/print_html, NGV Global, IEV Launches Virtual Pipeline in Indonesia – Targeting Taxis, 16/07/08, available at http://www.ngvglobal.com/es/market-developments/iev-launches-virtual-pipeline-in-indonesia-targeting-taxis-02010.html.

The International Maritime Bureau (IMB’s) online weekly piracy report indicates that piracy continues in Southeast Asia, particularly in Indonesia. The latest report describes two incidents, both while the targeted ships were anchored:

One week later on 20th July in Belawan, Indonesia, robbers jumped overboard a bulk carrier after being found by watchmen while attempting to access the ship’s stores.

On 13th July four robbers became violent after being found stealing ship equipment on a LPG carrier anchored at the Philippines’ Manila Quarantine. They were armed with knives and pipes but escaped overboard to waiting vessels.

Though there are only two reported robberies in the past week for the broader region, this works out to an average in excess of 100 per year. It’s possible the attack rate is higher than this, as operators could be deterred from reporting incidents due to the associated paperwork from informing the authorities, and the prospect of their insurance premiums being raised.

It’s interesting that a gas tanker was targeted. I wonder whether vessels’ cargo affects the ease of boarding, as carriers of volatile substances face some restrictions in their on board activity especially where static electricity is involved. On one hand some activities such as use of mobile phones and smoking needs to be managed/confined to certain areas on board (see the International Safety Guide for Oil Tankers and Terminals). On the other hand Jayant Abhyankar has mentioned how gas and petroleum carriers cannot use SecureShip, a 9,000-volt non-lethal electrifying fence used to prevent unauthorised boarding (See J. Abhyankar, ‘Piracy, Armed Robbery and Terrorism at Sea: A Global and Regional Outlook’, in Piracy, Maritime Terrorism and Securing the Malacca Straits, ed. G. Gerard Ong-Webb, Institute of Southeast Asian Studies, Singapore, 2006).

China is pressuring ExxonMobil not to undertake operations in the South China Sea. Exxon signed an agreement with PetroVietnam, Vietnam’s state owned oil company to cooperate in exploratory activities in the Spratly and Paracel Islands, which are known for their oil and gas reserves.

According to Peter Navarro of the Asia Times,

China has warned Exxon to pull out of the exploration deal, describing the project as a breach of Chinese sovereignty, according to the South China Morning Post at the weekend, citing unnamed sources close to the US company.

Though the disagreement concerning sovereignty negotiations of these islands (largely between China, Vietnam and the Philippines but other states have made claims too) is these days regarded as a stalemate, it’s interesting to consider to what extent China will try to assert control throughout the area (and therefore, the offshore resources in proximity to it), considering its ongoing development of a blue water presence and rising energy needs.