The following report looks at one of the most dynamic areas of economic activity in the world-the Asia-Pacific region, specifically southeast Asia's tiger economies: Malaysia, Thailand, Singapore and Brunei. It also casts glances at the vast energy issues facing China, their mighty northern neighbor. The area witnesses spiraling demand, huge infrastructural projects, a frenzy of exploration activity and a plethora of opportunity. A cursory glance at world history will reveal that most countries in the region were under the yoke of Britain as a colonizer during the 19th and 20th centuries and/or under Japanese occupation between the 1930s and the end of World War II. Britain's colonial expansion required stable supply lines. The British purchased the island of Singapore in 1824, which rapidly developed into an important shipping hub. The opening of the Suez Canal in 1869, and the steamship-a technological revolution of the time-assured Singapore's continued prosperity. The defeat of Japan at the end of the second World War guaranteed a continuation of British presence, maybe even a prolongation thereof. From the many protectorates that Britain then formed, federations emerged. The federation of Malaysia gained independence in 1948. Singapore broke away from the federation and became a republic in 1965. Brunei acquired full independence from Britain in 1984. Most legal structures in the region bear the unmistakable print of British presence. American presence also has to be considered, with diplomatic exchanges between the U.S. and Siam (Thailand) beginning in 1833. Siam was already an old country by any standard, having been established around the 13th century. By the middle of the 1800s, Siam had forged commercial and diplomatic ties with most Western powers. Some have argued that this is why it was never colonized. After World War II, communist revolutions broke out in Vietnam, Laos and Cambodia. As a result, Thailand maintained very close relations with the U.S., and the U.S. has invested much to protect Thailand as a strategic partner in the region. The great ethnic and religious diversity found in the region pre-dates this history by hundreds (if not thousands) of years of immigration, trade and commerce between the various local communities and empires. Studies have shown that modern-day Thailand was a center of metallurgic trade and manufacture as early as 4000 BC. Moslem Arabs ruled Malacca in the 15th century, and traded there with the Indians and the Chinese. Then came the Portuguese, followed by the Dutch, and then the British. Recent history has merely crystallized borders. The Asian oil industry dates from the early 20th century. Discoveries were first made in Malaysia and Brunei, and then, much later, in Thailand. Singapore has maintained its obvious geographic advantage, and developed a strong refining capacity to accommodate crude oil imports. Today, Singapore is the second busiest port in the world. Thailand, Malaysia and Brunei enjoy combined reserves estimated at more than 7 billion barrels of oil and 102.1 trillion cubic feet of gas. Commerce and trade are yet again shaping a new course for the region. The rise and fall of the Tigers In 1967, the foreign ministers of Indonesia, Malaysia, the Philippines, Singapore and Thailand signed into life the Association of Southeast Asian Nations (ASEAN). This association's principal aim is to promote cooperation in all fields-economic, social, cultural and educational-and to foster and promote regional growth and stability. The founding document reflects "the collective will of the nations of Southeast Asia to bind themselves together in friendship and cooperation and, through joint effort and sacrifices, secure for their peoples and for posterity the blessings of peace, freedom and prosperity." Economic cooperation and diversification gained momentum in the 1980s. Economies moved from traditional trades such as tin and rubber to the manufacture of textiles, machinery, electronic goods, electrical appliances, cars, chemicals, pharmaceuticals and more. The countries of the ASEAN block became known as the Asian Tigers, a term used to highlight their fierce economic growth. Thailand's economy averaged nearly 10% growth per year until 1996, as did Singapore and Malaysia. Yet all was not well. Excessive spending by governments, coupled with financial speculation and poorly managed lending by banks, wreaked havoc on the regional economies. Investors and lenders pulled the plug. Whereas capital inflow to Asian countries had reached around 6.3% of their gross domestic product (GDP) in 1995, capital outflow was 5.2% of their GDP by 1998. The Asian financial crisis was in full effect. On the road to recovery Structural reforms and tighter regulatory frameworks in the banking sector have been good medicine. The surge in global economic activity in 1999 and 2000 also contributed to the health of ASEAN economies. By 2002, Thailand's economy was again growing at a solid annualized rate of 6.6%. Singapore is now America's 11th-largest trading partner, recently overtaking Brazil. Malaysia is the world's 18th-largest net exporter, and on the fast track to the next economic paradigm shift, the "knowledge society." Brunei has also been moving to diversify its economy, and is planning to attract US$6.7 billion of foreign direct investment (FDI) within four years. The ASEAN group has doubled in size. Literacy in Brunei, Malaysia, Thailand and Singapore average more than 90%. The effect of the SARS virus on regional economies has turned out to be smaller than previously expected. The Asian Development Bank (ADB) recently announced that regional growth reached an annualized rate of 5.6% in the second half of 2003, and is expected to be around 6.3% in 2004. The rise of China's economy in the last few years also bodes well for the economies of the ASEAN block. "The emergence of China is driving fundamental changes in the way people do business in the region," says John Perry, chief executive officer, the Brunei Economic Development Board. Many opportunities and challenges lie ahead for regional economies. The key opportunity is China's energy needs, which have risen by leaps and bounds during the past five years. China's energy demands are now second only to those of the U.S. Even the most conservative estimates lead to the inevitable conclusion that China will be the biggest energy consumer by 2020. Southeast Asia is uniquely positioned to take advantage of this opportunity. Moreover, the robust economic forecasts also point to a likely increase in regional energy consumption. Thailand, Malaysia, Singapore and Brunei have a combined population of more than 100 million. Sustained economic growth-combined with ever-improving educational opportunities, expanding industry and infrastructure, and higher standards of living-mean that the region's own energy requirements will need to be increasingly coordinated. As shipments of crude from the Middle East are set to increase, greater refining and processing capacity will have to be built. In turn, this will benefit the development of peripheral industries, such as petrochemicals. In sum, the prospects for energy investors are excellent for the years to come. Strategic challenges Thailand, Malaysia, Singapore and Brunei each have unique strategic assets. Be they natural resources or geography, a distinct pattern is emerging: strategic planning based on hydrocarbon resources. Prepare for a massive upsurge in activity with excellent prospects for investors. Here are the key issues to look for: Malaysia expects to run out of oil within 20 years. Brunei has put a ceiling on its production levels in an effort to maximize its production period. Production of mature fields has reached marginal recovery in Thailand, and a lot of money is being spent trying to increase the profitability of these operations. New technology and new ventures are going to make the difference. Recent offshore discoveries suggest huge potential. But the terrain is notoriously difficult, and territorial claims overlap in crucial areas. Resolution of these issues and investment in E&P activity could mark a second dawn for the entire industry. Investment in infrastructure has been extensive throughout the region: LNG plants and trains, pipelines, refineries, and shipyards. National companies and service companies are redrawing the map of large-scale projects. Investors and partners will be needed. The Malacca Straits pose security concerns, which can be addressed by investing in the right place. Thailand and Brunei are cooking up a storm of investment opportunities with plans to alter the traditional supply lines from the Middle East to China and the Far East. Take a look at what 21st century supply lines will look like. The articles that follow, made up of extensive interviews and research in the region, examine these issues in detail and portray one of the most exciting and rapidly developing areas of development in the hydrocarbons industry.