Energy - key to growth and a better environment for Asia-Pacific nations By Lee R Raymond Chairman and Chief Executive Officer Exxon Corporation World Petroleum Congress Beijing, People’s Republic of China October 13,1997 : Remarks by Lee R. Raymond Chairman and Chief Executive Offcer, World Petroleum Congress Beijing, People’s Republic of China~ October 13,1997 - As Given f%xon Corporation It’s a pleasure to be back in Beijing and an honor to address the World ‘P+oleum Congress. It’s entirely fitting of world culture. -~ China seeking that we meet in this seat of ancient For centuries, commercial and other opportunities. as the Silk Road. traveling salesman, treasures and tales that astonished the predecessor Esso’s kerosene silk - traveling In rhe 13th century, history’s ago, William Herbert Libby, representing oil and its clear white Today, popular. Jersey Chinese families to try light proved an instant largest customer The company was known Exxon and the world petroleum We earn that title by providing to Venice with stoves. success, kerosene lamps that by the name “Keepers industry are still “Keepers energy to light the way to economic 1 and by in the Far East. To build sales, Libby gave away small, inexpens’Ne became widely most famous returning to Exxon, came here to persuade 1910 China had become Exxon’s of trails that ail of Europe. in their lamps and cooking The odorless along a network Marco Polo, took this road to Cathay, More than a century Standard, and, source people from far parts of the Earth have come to l%e Remans came here seeking became known civilization of Light.” of Light.” progress, higher standards of living and hope for a brighter future for people around the. world. Nowhere is that progress I’ve traveled _~ constantly to thii impressed throughout more evident than in the Asia-Pacific part of the-world often in recent years, and I’m by the commitment to economic growth that’s to Seoul - the signs of growth Homes, apartments power plants ever before. and office under construction. center of gravity The people of this region, population, are unmistakable. buildings that’s gaining Factories, representing some 40 percent new and better-paying and greater opportunities shifting the of the world’s jobs, more and better for the next generation. are the human face on the economic force in Asia. that progress in the region demonstrate, and on the move than should almost double, I know all of us here today want to see This transformation have to remember refineries the East. Their smiles and looks of hope and optimism transformation going up. erxnorny toward have a lot to smite about: goods and services, to Shanghai. More cars, trains and airplanes In 15 years, this region’s global economic consumer prevalent the region. All across this region - from Bangkok to Beijing, Jakarta Singapore region. is not automatic. there is no guarantee growth. 2 continue. As recent economic But we diffjculties when it comes to economic :’ In fact, some arQUE?that the easy growth inputs has already occurrod. and will require strong boosts in pmductiviry regularory growth But I do agree that sustained on sound fundamentals policies, capital and kbor They say that the road ahead will be more difficult I see no reason why economic in the future. from increasing - education incentives to keep Asian economies can’t continue growth and training, to invest, strongly growing. in this region is only possible when a strong it is built work ethic, sound and many other factors that don’t come easily or cheaply. We might also remind ourselves economic that this region’s ties with other parts of the world. economically interdependent Advances computer on strong than it was a few years ago. betier tools for communicating opportunities depends the world is much more such as fiber optic cable, oommunfcations have created As a result, Today, growth and challenges satellites and conducting flow more quickly and the business. from one area of the world to another. Political growth. barriers change has also prayed an important As more and more governments have fallen, fostering role in laying a foundation have turned to market a rising tide of international principles, investment trade and commerce. One result of these changes development has increased is that the area of the world open for energy by more than one-third. 3 for .. ’ . That’s ven/ good news indeed because, and higher standards ‘inextricably higheet linked. standards Today, from fossi majority, of living require energy. The countries as we all know, economic Energy use and economic vvith the highest economic of living are also those with the highest growth energy most of that energy, both in Asia and in the world fuels - about 85 percent. Of these, oil and natural with coal also being a major player. where coal remains the dominant That’s prudent elimination future. economic Their use is essential as a whole, comes especially true here in China, drastically cur-rail and 1’11have more to say about alternatives which are for the both for economic growth and for the is itself the worst polluter. to develop and apply technology and and Doing that will require a great deal, from both government industry. specifically reliance fossil fuels energy us to use fossil fuels in ways that are efficient sound. and the petroleum on the horizon, and this region’s of this, we must continue that enable environmentally increasing available of poverty, looking use per capita. nor practical. In recognition expertise reasons, to suppry most of the world’s foreseeable and the But let me state at this point my belief that such proposals With no readily will continue are fuel source. our use of fossil fuels for environmental neither growth gas supply 6s I know there are some people who argue that we should that in a moment. growth at oil, demand on, imports, despite in the region has grown efforts 4 to develop indigenous vigorously, supplies. China itself, with importer growth in the world, became a net in 1995. I do expect some moderation region as economies volume rates among the highest increase in the rate of oil demand become larger, more sophisticated that is expected, growth in all of the and efficient. I do not see how growing imoort But with the dependence can fie avoided. in anticipation : Chinese of this, it appears and other Asian companies parts of the wor!d. to maintain Asia stiI1 has numerous ,major effort to unlock Increasingly, deep waters include becoming But this change and, if possible, should increase areas with this is a difficult the Sakhalin isbds with srrategies more active hydrocarbon for the benefit task, often complex are changing, in exploration with in other not cause us to lose sight of the need local production these resources or harsh terrain, that supply and reserves. potential. of consumers. involving geological But it will take a seismic and drilling formations. Examples in cff Russia and the Tarim Basin in China. Developing application such resources at an affordable cost is going to require the ,. of the very best technology and practices known to the industn/. Private petroleum achieve further prospective companies progress resources One resource have those tools. ‘Lsfor governments for development with great potential using it will require some visionary And so, an essential to accelerate by private gas. and the applicatjon 5 up of industry. for Asia is natural thinking the opening step to But producing and of new and as yet .. Vast resources Guinea, of gas exist off Natuna Island in Indonesia, and along the Northwest Others may develop : And, of course, Shelf of Australia, along the Asia-Pacific there are major gss deposits ~~ issues are how to get this gas to markets, determined Today, In the United most gas is transported west of the region as well. at reasonable once it is natural gas, LNG. COSI. pipelines - as it will in Could the same not take place in Asia? are greater here, the markets less developed, may yet lead the way to a pipeline The key markets to this region as liquefied in the years ahead. The distances Sakhalin, coast as far north as Russia. States and Europe, most gas moves through South America high-strength to name a few. and how to develop that the gas can be produced in Papua New grid serving the countries steel and other technology may make but technology of this region. pipelineSfeasible from Natuna or as far away as Turkmenistan. On the demand side, we estimate that oil for transportation and industrial use in the region will grow by nearly 10 million barrels per day by 2010. equivalent fo about 40 new large refineries Of course, along with demand comes the need for improved refineties and chemical integrated into single sites as we’re seeing in Singapore, *or instance. of change at Increasingly, products, and better processes, Finding new and better ways to produce, is nof new to the petroleum which the need for petroleum business. new plants are refine and market oil in the midst What is new is the remarkable fuels and products 6 That’s over that period - 3 per year. chemicals pace New is accelerating in Asia. Such conditions are creating opportunities for a synergy the region and private petroleum strengthen process of economic the whole Clearly. energy private resources ~. i&fineries companies, companies with the potential just a few of the contributions areas, building technological have been economic just a few years ago. technology the growing multiple to market are opportunities. or training to develop resources that would not It can also lend to significant Time will not have to be spent in from scratch - they’re already available without pains. Of course, intellectual and efficient tested and proven in other expertise This can make it practical developing safe, reliable, Developing new and better products areas of the world. and educationat to speed and we can make. We also bring hard-won employment of development. and bringing plants, governments such as E3xon have a lot to offer. in new and difficult and chemical between all of this will require and technicsl. management skills. and strong technological Private them, countries Projects petroleum with challenging will be key elements companies must be willing of capital - financiaf, will likely be large and compfex, Familiarity support massive outlays environments, of a successful offer all of these essentials. to provide incentives requiring flexibiIity, venture. But to draw on that cause companies to want to invest. This is particularly world. Competition true now, with so many new opportunities among countries eager to develop 7 petroleum throughout reserves the is at an all-time high. Resources are being stretched make the huge investments that will encourage businesses Governments vigorously : protects physical to intervenein competitor over another to promote a fair contest in setting energy property on a level playing standards. ~incompatible with that objective. focuses representatives beautiful city of Kyoto, .fapan. to decide on legally fuels causes global warming. goal should binding Many people - politicians certainty. 8 deveiopment a clean oil use - is will meet in the agreements Clearly, that would all of US that will be made. say they are necessary is a rock-solid be on the issue of global climate the use of oil and other fossil fuels. of the agreements avoid the to one over want from some 160 nations have a big stake in the decisions believe that global warming Governments’ that fossil fuel use - especially In December, Proponents one that They should can make to economic change. here today rights. People the world about the environment of cutting climate, field. governments and some are concerned have the effect to provisions markets in ways that give advantage - or one fuel over another. environmentat concern companies need to offer tax-and-take a stable investment and intellectual environment, Today, To attract to bring their best people and technology. key contribution rational nations also need to provide ~. temptation Another needed, to the limit because burning and the public alike But it’s not. fossil is Let me briefly Does burning reasonable address three fossil fuels cause global warming? scientific In answer basis for predicting to the first question, Earth’s temperature : swings. have Is the Earth really warming? And do we now have a future temperature? we know that natural occurred throughout history fluctuations in the - with wide temperature The ice ages are a good example. In fact, one some of today’s .~ of a key questions; new period of prophets cooling occurred from 1940 to 1975. of doom from global warming were predicting the coming ice age. Some measurements suggesr about half a degree centigrade that the Earth’s average temperature since the late 19th century. measurements have shown earth is cooler today than it was 20 years ago. no warming Yet sensitive trend since the late 1970s. We also have to keep in mind that most of the greenhouse from natural sources, dioxide, and, atmosphere especiarly water is due to human activities to radically affect understanding vapor. of this, only four percent Leaping that it will in the 197Os, climate - 96 percent dioxide of the climate In fact, the is from carbon entering the comes from nature. cut this tiny sliver of the greenhouse defies common sateike effect comes Less than a quarter of the carbon has risen pie on the premise sense and lacks foundation in our current system. 9 . _ - _- Forecasts replicate of future Earth’s ~inaccurate. warming past climate come from computer and predict the future. None can do it without Even then, five degrees ~. ~degrees. 1390’s significant modeling researcher “The more Su’ence, understand and officials To achieve are talking would give political continue would by a vast international This heavy way we live. growth, Companies be seriously Currently, of punishing, in.carbon leaders pause. bureaucracy You would Unfortunately, it is needed in Kyoto. dioxide emissions have to resort to energy responsible most advocates rationing to no one. This could high energy taxes. burden of taxes and regulation economic is far from air tight- to insist that agreement governments the imposition Indonesia three you learn. the more you understand that you don’t the kind of reduction about, administered would of two to very much.” that all the uncertainty in slower increases said in the May issue of the presfigious So the case for so called global warming include temperature Where to next year? magazine, hasn’t, adjustments. by the year 2700. Last year’s models say one to Celsius As one ctimate think They are notoriously overriding models were predicting models that try to would lost jobs and a profound in industrialized take its toll in many ways - and unpleasant nations that compete developing nations, impact on the in world markets handicapped. most proposals exclude and many other countries here in the Far East. 10 including The rationale China, is thar these countries are trying to grow eoonomically and need to consume fossil fuels to do SO. Of course, this is true. But excluding reductions will not prevent them from being hurt. economies of industrialized nations So ali of us would about the Their exports suffer from these proposals. proposals how climate unlikely whether in the 21st century the issue better, that the temperature affeoted policies a when studies on indicate its are enacted now of 20 That means we we have time. years from know It is highly will be significantiy now. to impose very costly regulations their total impact and and undefined. are not prepared to act in concert. In fact, in the U.S. the impact [ot we really don’t in the middle of the next century when their need has yet to be proven, nations expressing and beyond. and fortunately, It also means it’s bad public policy restrictions The U.S. Senate recognized under consideration. will change need to understand wilt s@fet as the 95-O in favor of a resolution What should we do? First, let’s agree there’s about the slow. that fact this summer when it voted concern countries from developing the administration the economy in the impact will Before we make choices debaxe on the science, costs and benefits. 2010 of says it is futile to attempt reducing CO, emissions to determine - although many be vast. about global climate an analysis policies, of the risks, and a careful we need an open consideration So far, this has not taken place, and until it has, I of the hope that 11 _. ,~ .- .^... 1 the governments strang[e of this region will work with us to resist policies economic fostering environment pressing growth. economic growth will require a broader understanding than many environmental environmental not global climate growth, problems activists allowed and environmental progress. Princeton with economic nation’s environment community growth.” improved evidence instead, continues, and, to a lesser extent, This growing in the politics commercial of degradation. fossil fuels. New enjoy both economic that environmental growth the economies A recent quality study at deteriorates it found thaf after an initial decline, a grew. improvement is economic of this region will reliance on petroleum need to growth. import And more oil, imports will cause a major eastward Nations may form new alliances, others on gecFpolitica1 considerations. be strong to make these exclusive OFrestrictive, reversing more openness the use gas. of energy. interests, are related f0 povem/, support this idea. as its economy So rhe real secret to environmental as this growth The most . found “no steadily environmental countries to of the will require economic not curtailing, increasing, industrialized in the economic University nations these problems Such use doas not mean inevitable technologies have seem to appreciate. of the developing Addressing change. and that will necessitate Studies that could and harmony. 12 shift some based on The temptation may recent trends toward c I hops that such factionalism functioning of an increasingly And this requires will not be the case. interdependent world economic practice energy cooperation, and that they da so both in times of prosperity .~ snme people say that, a western model. of goods, SeNiCes not raised. It atso requires that nations follow and energy system. that barriers to trade and to the free movement and people be dismantled, Finally, We need the smooth not selfishness - and Of crisis. in pursuing economic development, Asia mUSt I believe that the region must find its own way. countries in the Eu~ I also believe that the most direct path is the one many region and around the world have chosen over the past 20 years - the free market approach. This approach has many antecedents, including the Chinese philosopher Lao-Tzu . He wrote cook a in the sixth century small fish It would opportunity be - do not and the international working standards together, a great nation as you would this region were deprived of by misguided petroleum community restrictions industry, and the governments the regulations. of this great - to ensure that this does not happen. we can lay a solid foundation of living that will benefit around the world. the people of prosperity It is up to all of Us -the region, “Govern overdo it.” tragic indeed if for continued B.C.: for continued prosperity BY and rising not only the people of Asia, but also people And the petro!eum industry, convened at this Congress, will play a key role. 13 -.-_ ._ .,. --.-