While most people want a good and clean environment, many may not be sufficiently motivated to act in the interest of the public good to achieve such an outcome. Government intervention is, therefore, necessary to ensure that there is adequate provision of environmental goods and services, as well as to shape individual and organizational decisions to be in line with the desired environmental outcomes. In addition to government investment in environmental infrastructure and government provision of basic environmental services such as public cleansing, other levers which the government employs to ensure a quality environment are the enactment of legislation, coupled with effective enforcement, to make sure that minimum standards are complied with, and the provision of incentives to influence behaviour.

That said, government action alone is insufficient to deliver and sustain a high-quality environment. For instance, while the government can provide infrastructure such as recycling facilities or information on the water or energy efficiency of household appliances, these will come to nought if the public does not use the infrastructure or make informed decisions in support of the environment. Ultimately, the public has to appreciate the importance of the environment and play its part in contributing towards achieving a good environment. This requires not just awareness about environmental challenges, but a mindset and behavioural change towards shared ownership and responsibility.

The Ministry's approach towards working with people and the community is encapsulated in the phrase “3P Partnership”, where the 3Ps represent the Public, Private, and People sectors or the various stakeholders in the environment. The premise of 3P Partnership is that environmental sustainability can only be achieved through a multi-stakeholder approach. The desired outcome of 3P Partnership is to build a community that takes ownership of the environment and is willing to contribute to achieving a good environment. 3P Partnership comprises three key thrusts: (i) communicate, (ii) engage, and (iii) empower.

While some may view the economy as being a part of the environment, it does not mean that the environment is more important than the economy. However, while it is important to alleviate people's suffering from hunger, sickness, and poverty, economic development should not be the only consideration. The choice should never be between the environment or the economy. Instead, it should be both the economy and the environment.

Singapore has been successful because it did not regard environmental sustainability as being incongruous with economic development. Between 1965 and 2005, its GDP1 grew from about US$5 billion to US$112 billion, an increase of more than 20 times. Per capita GDP grew from about US$1,500 to US$27,000. Alongside this rapid development, it continues to enjoy clean air, clean land, clean water, and good public health. This is possible as the government has consciously sought solutions that enabled the environment and the economy to progress in a compatible way.

While Singapore has achieved a good balance between economic growth and environmental sustainability, the work is far from over and the challenge is greater going forward.

On the domestic front, population size, density, and affluence are increasing. This means more demands on resources, more pollution, and more threats to public health unless greater efforts are made to keep Singapore clean. And ironically, as residents become richer and the city becomes cleaner and less heavily polluted, many people seem less willing to sacrifice consumption and convenience for the efforts needed to improve the environment.

The warm and humid equatorial climate in Singapore is highly conducive to the rapid decomposition of refuse and the breeding of vectors or disease-bearing insects such as mosquitoes and flies. In the 1960s, against the backdrop of a high population density of more than 3,000 persons per sq. kilometre (rising to about 15,000 per sq. kilometre in the urban areas), improper disposal of refuse and indiscriminate littering would inevitably create health hazards to the population, and could result in rapid infectious disease transmission.

Keeping Singapore clean was thus one of the foremost challenges that the government had to tackle after the island state gained independence in 1965. It was a challenge born out of necessity.1 Moreover, during the early days of nationhood, a clean living environment was seen as a boost to the national morale and civic pride of a nascent state, helping to motivate the people to strive for higher standards of performance.

Removing litter is expensive as it involves the labour-intensive task of sweeping roads and drains, as well as subsequently collecting and disposing the litter. With the cost of litter removal many times that of domestic refuse removal, cost considerations alone would underscore the need to stop or minimize littering.

The government also recognized that improving public cleanliness was a crucial step towards achieving a good standard of public health, which in turn would contribute to a higher quality of life for Singaporeans. In addition to providing a more comfortable living environment for residents, a clean and litter-free Singapore also presents a significant competitive advantage in terms of attracting tourists to visit, foreign talents to work, and businessmen and industrialists to invest in Singapore.

Singapore's journey in used water management started during the early twentieth century when the country was faced with the urgent need to tackle its hygiene and sanitation problems — issues brought about by rapid population growth in its tropical environment and concerns over public health.

After independence in 1965, the government realized that the development of a world-class used water management system was crucial not only in improving the quality of life for its people but also in sustaining the economic growth of the country. A comprehensive Sewerage Master Plan was thus developed and the necessary investments made to extend the used water infrastructure so that 100 per cent of the population would have access to modern sanitation.

Increasing water demand has also necessitated reclaiming water from used water to augment water supply. Singapore's fully sewered system offered the opportunity for large-scale used water recycling and water reclamation to be carried out. Recent breakthroughs allowed for the development of more advanced water reclamation facilities, namely, the NEWater factories, which are located adjacent to the Water Reclamation Plants (WRPs). These were formerly known as Sewage Treatment Works but they were renamed WRPs in 2001 to reinforce the idea that used water is a resource to be reclaimed. The NEWater factories receive the treated used water effluent and treat (reclaim) it further using advanced membrane technology. The resulting product is high-grade water known as NEWater, which is channelled for both direct non-potable and indirect potable uses. Chapter 5 elaborates on NEWater.

This chapter provides insights into how the management of used water in Singapore evolved over the years and the key considerations behind the government's decisions in adopting various solutions as the country progressed from a simple fishing village to one which was rapidly industrializing, and eventually to the modern, cosmopolitan city of today.

The India Hydrocarbon Vision 2025report, published by the Indian government in February 2000, painted a rather alarming picture of the Indian energy security situation.1 It pointed out that India's requirements of oil and gas would increase significantly over the next twenty-five years to sustain the high growth rates of 8 to 10 per cent per annum to which the country was committed. It said that the country's domestic resources would not be able to meet these high demands, and that India's dependence on imported oil would increase from 65 per cent in 2000 to 85 per cent in 2025. Again, India's gas requirements would also increase significantly to fuel the needs of the power, fertilizer and industrial sectors and for domestic usage. The electric power sector was projected to account for 71 per cent of the total incremental growth in India's natural gas demand from 2000 to 2025. The report highlighted the importance of boosting domestic production through a vigorous national effort, which would include further liberalizing the upstream hydrocarbon sector and encouraging Indian and foreign companies to participate in exploration and development activity by bringing in their rich experience and the latest technology.

One significant impact of this new focus on energy security has been the enthusiasm with which exploration activity is now taking place in India and discoveries are being announced in areas that had been largely unexplored till recently. The recent discoveries of oil and gas in the Krishna-Godavari basin of the Bay of Bengal indicate that this newly explored region has very rich potential. Even before these discoveries, earlier discoveries in the offshore areas of Bangladesh and Myanmar had already indicated that the Bay of Bengal could emerge, in the words of former Indian Petroleum Minister Mani Shankar Aiyar, as the “North Sea of South Asia”.

The Bay of Bengal, which already had great significance in terms of India's strategic interests as the link between South Asia and Southeast Asia, has now acquired a new energy salience as well, with hectic exploration activity being undertaken both by India and Myanmar, and indications that Bangladesh and Sri Lanka are also anxious to expand exploration in their littoral.

This volume is of special relevance for a number of very pertinent reasons. Firstly, the nations of South and Southeast Asia are going through rapid economic change, particularly with India having registered very healthy rates of growth over the last five years or so. At the same time the Asian economic crisis of a decade ago has now become history, and the countries of the region are now making rapid progress in every sector of their economies. But one important area, which could influence economic growth and development in either direction is the issue of energy which, given the dependence of the region on oil imports and prevailing high prices of oil, does introduce an element of uncertainty about the future.

The editor is particularly well qualified to write on the subject of energy and related issues in the Bay of Bengal region. While the countries of the region have clear opportunities for mutually beneficial cooperation in the field of energy, the success of any effort in this direction would hinge on diplomatic initiatives and the history of relationships between the countries of the region. There are also compelling domestic factors that would influence cooperation in the future, such as the ability of Myanmar to open up its hydrocarbon sector to foreign investments and trade. Similarly, in the case of Bangladesh, the possibility of export of natural gas to India or even the provision of a transit pipeline to allow gas from Myanmar to be supplied to India became an emotional issue several years ago. Diplomacy has to take political realities into account if progress has to be achieved with regional initiatives in areas such as energy. The BIMSTEC region has been grappling with possibilities of closer cooperation in energy trade in recent years but without notable success. Hence the need for some “out of the box” thinking and action.

The book effectively makes the point that the Bay of Bengal region holds a total population of 1.5 billion people, which in a relatively small area of land contains one quarter of humanity. While hydrocarbons are produced in the countries of this grouping, it is not a major oil and natural gas producing region of the world.

INTRODUCTION

This chapter examines energy trading and Singapore's role as a hub. Singapore is the third largest refining centre in the world after Houston and Rotterdam. The refineries serve as a swing refinery whereby it will supplement those countries with insufficient refining capacity as well as serve countries whose product shortfalls arise out of refinery outage or extremity of weather. Due to its strategic location, Singapore has served well as a hub where large cargoes of oil are received from Europe and the Middle East and the products are stored and reshipped in smaller lots to suit the requirements and port facilities of the surrounding countries. In view of the above, Singapore also emerged as a major oil trading centre together with New York and London. All the major oil companies are present here and so are most of the Middle East oil producers and refiners, the Chinese, Japanese and the South Korean refiners and oil trading companies. Besides refining 1,300,000 barrels per day of oil, Singapore imports 939,000 barrels per day and exports 1,145,000 barrels per day of finished product.

Refining Capacity (Appendix 7.1)

The Singapore refining capacity remains at 1.3 million bbl per steam day. Except for some debottlenecking at ExxonMobil, the latest addition to the refining unit, a condensate splitter, was added by Shell in 2003. All the refineries in Singapore are sophisticated, that is, on the downstream side there are many upgrading units such as reformers, hydrocrackers, visbreakers, fluid catalytic crackers, residue catalytic crackers, etc. There are many hydrodesulphurizers which can reduce the sulphur content of all the products to meet the current environmental friendly specifications. The range of products produced are liquefied petroleum gas, used for cooking and transportation, naphtha for upgrading to gasoline as well as feedstock for the petrochemical industries, jet fuel for aviation use, kerosene for heating, cooking and lighting, diesel for industries and transportation, fuel oil for ship's use and for power generation, bitumen for making roads, sulphur for industrial use, propylene for petrochemical use, and last but not least, lube oil base stock for making lubricating oil for automotive, ship and industrial use.

The Bay of Bengal region appears set to emerge as an important new oil and natural gas producing province. Major new discoveries have been made, mainly offshore, in eastern India, Bangladesh and western Myanmar. Development raises many issues for governments. One of the most important, but sometimes overlooked, in concerns over energy supply and security and then the euphoria that comes with new discoveries and their economic and commercial allure, is how to best manage the social and environmental impacts of petroleum development. Governments clearly have responsibility to ensure that oil and gas projects in their midst — upstream extraction, midstream pipelines and downstream processing — do deliver real benefits to local regions as well as the overall country, and do not harm them through social and environmental damage. This should also be seen to be vital in ensuring the long-run success of a project. What then is the role of corporations? They too must show responsibility in this regard — and again it is something in their commercial self-interest. There is a strong case then for a partnership between the corporate sector, central and local governments and local communities to deal with these wider dimensions of petroleum development.

The extractive industries — petroleum and mining — are burdened by often damaging stereotypes of their attitudes towards such issues. Record profits being declared by major international oil and mining companies as a result of high commodity prices are fuelling the old stereotypes about these corporate giants. Here, some say, is evidence again of behemoths selfishly and ruthlessly going about their business, extracting finite resources around the globe, especially from the developing world, with little care for the consequences of their operations on local communities and environments. In Bolivia, such fears about foreign oil companies have brought down governments and in late 2005 helped propel Evo Morales to office as Bolivia's new president, promising he would nationalize the country's petroleum industry.

The transnational oil and mining groups, with profits exceeding the gross domestic product (GDP) of some countries, are often seen as laws unto themselves, prepared to make deals with corrupt governments in the developing world and influence powerful Western governments to achieve their goals.

The world is going through an uncertain energy situation. A number of circumstances not directly related to oil and gas production had been driving the prices to a record high. The sharp rise of oil prices which had reached US$70 per barrel in 2006 had thrown markets in a dizzy. And the price which crossed US$135 per barrel in May 2008 shook the economies around the world. Clearly this price is too high for most of the non-oil-producing countries to sustain.

In Asia, it is a coincidence that most of the major economies, namely, Japan, China, India and ASEAN (there are only a couple of ASEAN countries such as Malaysia and Brunei which export oil; the rest including the largest country Indonesia are net importers) are dependent on oil and natural gas imports. With the Indian and Chinese economies projected to grow by 8 to 10 per cent in the coming decade or so, their requirements for energy are expected to rise exponentially. Both are oil importers. India currently depends on imports for over 70 per cent of its oil needs, and that dependence is likely to go up to 85 per cent by 2015. By 2010, China also is estimated to depend on imports for more than 60 per cent of its oil requirements. As in the case of oil, these rapidly growing economies would require very large and regular supplies of natural gas in years to come.

Oil and Natural Gas in the Bay of Bengal Region

Today, Asia's influence on the world's energy landscape is considerable. Asia is the leading producer and a major consumer. Consumption of energy in the fast-emerging economies of Asia is growing rapidly. By 2010, the Asian oil demand will be higher than that of North America. Today, Asian cooperation is vital for both consuming and supplier nations of the world. Looking at different parts of Asia, the Middle East and Central Asia are some of the principal oil and gas producing countries in the world; Northeast Asia with the industrialized economies of Japan, China and Korea, is a large consumer, while South and Southeast Asia are rapidly growing economies with a high level of consumer demand.

Introduction

Global Outlook: Demand and Composition

Demand for energy in the developing regions, particularly in Asia has been following an upward trend. Predictions of the International Energy Agency (IEA) found that in 2030 world demand would increase by 66 per cent compared to demand in 2000. Figure 4.1 shows that Asia's contribution to the world's energy demand will increase from 20 per cent in 2000 to 27 per cent in 2030. On the other hand, demand from the Organization for Economic Cooperation and Development (OECD) countries is expected to decline from 59 per cent in 2000 to 47 per cent in 2030. It seems that over the next decades energy use will continue to grow inexorably, fossil fuels will continue to dominate the energy mix and developing countries will fast approach OECD countries as the largest consumer of commercial energy. Moreover,

world energy use would see a constant rise till 2030. During this period, global primary energy demand would increase by 1.7 per cent per year from 2000 to 2030 reaching an annual level of 15.3 billion tonnes of oil equivalent. But in order to meet this demand, huge capital flow from the industrialized nations to the developing world is required. Forecasts have also been made by the IEA that the importance of natural gas as a source of energy would substantially increase by 2030 (from 23 per cent in 2000 to 28 per cent in 2030). However oil would remain as the world's major energy source that currently occupies 38 per cent of total energy supply.

Table 4.1 portrays that according to the World Development Indicator 2006, per capita consumption of energy in the developing countries is still much lower than the developed nations. However, energy consumption in Bangladesh is not only lower compared to the developed countries, it is also below the per capita consumption of energy in other developing countries in the South Asian region. The table also depicts that energy use in all these countries remained stable and there has not been any surprise. However, energy consumption in China and Vietnam shows faster growth compared to the other developing and least developed countries.

I would like to congratulate Ambassador Sudhir T. Devare for his energy and enterprise in organizing the Conference on Energy in the Bay of Bengal on 28–29 September 2006 at the Institute of Southeast Asian Studies, Singapore. I would also like to thank my colleague, Mr Mark Hong, Energy Programme Coordinator, for his ideas and input into the process of assisting to conceptualize the conference and publishing the book.

It is only recently that people have begun to realize the many linkages between the countries surrounding the Bay of Bengal, which are usually perceived as merely the foyer to the vital Straits of Malacca. This dismissive view began to change when major oil discoveries were made onshore as well as offshore along the littoral states. Gradually, energy experts realized that this region could be one of the last great oil and gas provinces left relatively unexplored.

Thus this book serves as a useful eye-opener to the great energy potential of this region, even as oil and gas demand are ever increasing. In addition, the Bay occupies a strategic position squarely across the energy SLOC's connecting the Middle East and African energy producers with the great Asian markets in Southeast Asia and Northeast Asia. China and others have realized the vulnerability of the choke-points along the Malacca Straits and have devised various by-passes, such as pipelines from Myanmar to Yunnan and across northern Malaya.

This book thus discusses these strategic implications as well as the various national energy potential of the littoral states, the potential for regional cooperation. In doing so, the chapter writers shed light on a little-studied region, and thus add to our store of knowledge and understanding. ISEAS has launched an ISEAS Energy Series of books devoted to building knowledge on Southeast Asian and Asian energy issues. We hope that this book, the third in the series, will help to add to international understanding of a vital resource.

This book is the outcome of the Conference held at the Institute of Southeast Asian Studies (ISEAS) in Singapore in September 2006 to discuss energy and energy-related issues in the Bay of Bengal region. The region can be described as comprising the countries around and in the proximity of the Bay of Bengal. With a combined population exceeding 1.5 billion, the energy requirements of this region are enormous and are expected to grow exponentially. While the potential for energy resource availability is high, the investments for their exploration or extraction had so far been marginal. Prospects for renewable and sustainable energy also needs to be fully examined. There are other issues as well, such as transportation security, role and responsibility of the private sector including multinationals. The energy scene in the Bay of Bengal region therefore merits extensive study.

Energy is a principal concern and preoccupation today. In fact, most discourses on international relations these days touch upon energy security. While there is competition among many nations to acquire assets of energy, there is also interest to initiate dialogues with energy as the main focus. Pipeline diplomacy has assumed increasing importance. Energy, especially the hydrocarbons, appears to be leading to a sense of interdependence in the world.

Besides discussing the overall energy position in the region and its potential, the book features perspectives on a few countries of the region with regard to energy availability, energy security or energy trading capacity.

While energy-related issues are marked by their universal relevance and importance, it is instructive to see how they apply in the regional or subregional context, including in the Bay of Bengal region. The book analyses some of these issues, such as renewable energy, “corporate social responsibility”, or maritime security of energy transportation, both in their basic concept as well as the contextual importance to the region.

I am thankful to all the contributors who spared their time and shared thoughts and suggestions on a relatively unexplored topic. It is hoped that the information and analyses they provided on the subject would be a useful basis for the study and practical application on the issue of energy in the Bay of Bengal region.