The era of 'cheap oil' is over and the world now faces an energy crisis as emerging economies and developed nations compete for scarce resources, the prime minister said today.

Prime Minister Abdullah Ahmad Badawi told an Asian oil and gas conference that oil producers needed to invest on an "astronomical scale" to meet the world's insatiable needs, and that consumers might have to help foot the bill.

"Following the current slim excess capacity situation faced by the industry, the tussle for energy resources could become more acute and may even develop into a global energy crisis," he said in an opening speech.

"While future demand growth is expected to come mainly from emerging economies... high demand from industrialised and mature market economies is also expected to exert further pressure on the already tight supply."

Abdullah said the world was unlikely to see crude oil prices retreat from current levels of US$70 per barrel, to the US$20-25 mark where they sat four years ago or even the US$45-50 level of two years ago.

"On the contrary, what we have been hearing is not pleasing at all, as some market analysts and observers predict that it is possible for oil prices to reach as high as US$100 per barrel or higher in the near future," he said.

New refineries

The Malaysian leader said the energy industry needed to spend some US$5 trillion over the next 20 years on oil and gas exploration and development, to sustain existing production and meet new demands.

Another US$00 billion was required to build new refineries "that will, to a certain extent, address the current constraint in capacity that has become one of the main contributors to higher oil prices", he said.

"In the future, it may be inevitable that even consumers will have to bear some of these obligations and risks."

Abdullah said that instead of short-term measures like stockpiling, the world should ensure energy security by working collaboratively to develop new resources by tapping unexplored regions and using new technologies.

"The challenge of global energy security is truly multi-dimensional. It goes to the core of national interest. There is no quick and lasting fix," he said.