From today’s Asia Times: Sulawesi Sea row dredges up defenses

Indonesia has sent four F-16 fighter planes and three more warships to join the four already stationed in the oil-rich waters off Borneo Island. The Royal Malaysian Navy has also deployed two warships to the area, further adding to the tensions. Though both governments continue to insist that the dispute over conflicting claims as to who controls the resource-rich offshore area will be resolved diplomatically, the buildup of military forces in the waters continues to be a cause for concern.

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Oil concessions add fuel to the fire
On February 16 Malaysia’s state oil firm Petronas awarded oil-exploration rights in two exploration blocks in the disputed Ambalat area to its own exploration arm along with Anglo-Dutch giant Royal Dutch/Shell. However, Indonesia already had granted a concession to US-based oil giant Unocal Corp in November to pump liquefied natural gas (LNG) from deepwater blocks in that area.

Meanwhile, one wonders why, the US Department of Energy has raised its forecast for oil prices in 2005 to 49$/barrel (its forecast for 2005 made a year ago was 29$/barrel)…

More from Asia Times

When asked about the International Court of Justice’s decision to award sovereignty over the Sipadan and Ligitan Islands to Malaysia, Oegroseno said the judges had stated that the interests of mapping Malaysian sovereignty over the two islands did not have a direct influence on the delineation of the continental shelf. "In other words, the maritime region still belonged to Indonesia," he said.

(…) back in Jakarta, leading legislators were beginning to push for a hardline stance, with Speaker of the House of Representatives (DPR) Agung Laksono urging stern action, including the use of military force if necessary, to "solve" the dispute.

"We will support such moves as we believe the people will also support such a move," Laksono said. The Ambalat block is well inside Indonesian territory and undeniably part of Indonesia, he added.

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Ties between the two predominantly Muslim nations already are being severely tested by a Malaysian crackdown on an estimated 1 million illegal immigrants, some 400,000 of whom come from Indonesia. Malaysia’s controversial operation to round up, whip and even deport the illegal workers has attracted widespread condemnation by rights groups and the governments of affected Asian countries.

(…) Jakarta is unlikely to be the first to back down. If the undoubted goodwill between both leaders and the ongoing high-level talks fail to produce a compromise, the only other option may be to return to the International Court of Justice, particularly given the strong national sentiment in Indonesia’s fractured parliament and the fact that anti-Malaysia sentiment has already surfaced on the streets in Jakarta.

Former People’s Consultative Assembly Speaker Amien Rais has urged the government to make all efforts to continue the fight for Ambalat. "If the government is softhearted and weak, they [Malaysia] will really put pressure on us. So the ball is really in the government’s court," Rais said in Makassar, South Sulawesi, where a small "Front for Crushing Malaysia" center has been set up to defend the country should tensions continue.

The Indonesian military is clearly ready to assume battle positions in the unlikely event that this recent bout of gunboat diplomacy leads to shots being fired in anger. On Monday the navy’s main spokesman, First Admiral Abdul Malik Yusuf, was quoted as saying: "We will not let an inch of our land or a drop of our ocean fall into the hands of foreigners."

See also this earlier article on the international arbitration regarding the Islands.

Meanwhile, the Energy Information Agency (via the FT) is not optimistic:

The report envisaged no sign of slowing demand, despite the relatively high oil price. It predicted an increase in global oil consumption averaging 84.7m barrels a day in 2005, up 200,000 b/d from the February report.

The increase was due to China, where demand is forecast to average 7.4m b/d, up 12 per cent from last year.

Washington is concerned about supplies from non-Opec countries because lower production would increase dependence on Opec oil. It said lower production in Mexico and the North Sea would contribute to a 300,000 b/d decline in non-Opec supply forecasts to 50.7m b/d this year.

What does Congress do? The new energy bill is being pushed again. Sounds like good news? Think again:

Time is now right to pass energy bill, says Bush camp

"American people recognise that we have to do something," Mr Abraham told the FT. "We spent the better part of four years trying to find a consensus deal. I don’t suspect that people are going to want to dramatically depart from the earlier bill."

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While the energy policy drew some criticism for its limited attention to conservation and efficiency measures, it was the sheer scale of the proposed tax breaks and incentives that fuelled most opposition.

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Some political analysts believe the Republicans may opt for a stripped-down bill costing around $12bn, focusing on the supply measures and steering away from the research elements – notably for renewables and for energy conservation – that inflated the costs of the previous proposal.

I find it amazing that the focus continues to be on supply and not on demand.

The supply of oil comes (increasingly, as stated above) from unstable or difficult countries; it is certain that we will face major physical constraints (in a few years or at best in a few decades) from depletion of reserves; the remaining oil fields are going to be the source of tensions and conflicts, between countries as in the above example between Malaysia and Indonesia, or between countries and Western (and Chinese) oil companies scrambling for them.

Meanwhile, demand, pulled by the US and China, is running amok, and yet no effort seems to be done to work on that side of the balance. Why? Why?

Where is the smart politician who will find "pork" in energy conservation?