More than 1,000 oil and gas industry leaders and politicians are gathering in Kuala Lumpur to ponder challenges facing world oil supply against a backdrop of rising prices, at a major conference starting today.

The annual Asia Oil and Gas Conference will see delegates from 40 countries meet over three days, including Royal Dutch/Shell Group chief executive Jeroen van der Veer and Association of Southeast Asian Nations secretary-general Ong Keng Yong.

A session on political and economic scenarios is likely to dominate discussions as delegates contemplate supply disruptions and continuing instability in Iraq.

Key among the panellists is Iran's Deputy Energy Minister, Reza Amrollahi. Iran holds the world's second-largest oil and gas reserves, but economic sanctions by the United States and domestic energy sector contract regulations have seen limited production from the nation.

Delegates will also discuss the state of the world's oil reserves and present and future oil markets.

Current prices too high

The conference comes ahead of a June 15 meeting of the Organisation of Petroleum Exporting Countries (Opec) in Vienna, which is expected to discuss increasing output in response to rising oil prices, which are hovering above US$52 per barrel.

Opec last week called for lower prices, suggesting that a "gesture" needed to be made to increase either real production or output quotas at an upcoming gathering of the cartel.

Its president Sheikh Ahmed Fahd al-Sabah voiced concerns that current global oil prices were too high.

"Prices should be lower than actual prices by between five and eight dollars" per barrel, Sheikh Ahmed, who is also Kuwait's oil minister, was quoted as saying in Brussls by Kuwait's official news agency Kuna .