Prime Minister Abdullah Ahmad Badawi today urged Asian countries to engage in "energy diplomacy" to secure the region's huge energy requirements as oil prices hit historic highs.

Abdullah said that because Asia is expected to account for most of the growth in future energy demand, the race to secure energy resources among national oil companies would become more intense.

"Under these circumstances, it would seem that a viable strategic option for Asia lies in a political commitment to cooperate in energy diplomacy," he told some 1,200 participants at the two-day Asia Oil and Gas Conference.

Abdullah said the purpose of energy diplomacy would be to lessen reliance on energy supplies from outside the region and reduce dependence on stockpiling which would in turn decrease pressure on oil prices.

"It is highly possible that through constructive energy diplomacy, dependent countries such as Japan and South Korea will rely less on current practices of oil and gas stockpiling, which will then remove critical pressure points affecting price levels," he said.

Abdullah said the paranoia surrounding high consumption growth and falling reserves has prompted the stockpiling of oil and gas.

Ample oil supply

On the issue of future demand, he said Asia's robust economic growth meant the region would need to ensure a secure supply of energy.

Abdullah said that by 2020, Asia would need up to 33 million barrels of oil per day, or 30 percent of global oil consumption.

Currently, the Asian region consumes about 24 million barrels per day out of total global demand of 84 millions barrels, he said.

At the opening of the conference, Hassan Marican, president and chief executive officer of Malaysia's national oil company Petronas said there was an ample supply of oil in the world.

"The world is not running out of oil and oil will continue to remain as the fuel of choice. What is needed is the development of new technolgy and human capital to find and develop the reserves to fulfil future demands," he said.

Hassan attributed the sharp rise in oil prices to a failure in anticipating demand and a lack of investment in refining infrastructure.

"We must admit that we failed to anticipate the capacity shortages that exist throughout the entire value-chain," he said.

Oil prices fell in Asian trading Monday ahead of an expected decision this week by the Organisation of Petroleum Exporting Countries to increase output by 500,000 barrels per day, dealers said.