Singapore's location near the Malacca Straits has made it the most important shipping hub in Asia, alongside Hong Kong. The Malacca Straits link the Indian Ocean and the Pacific Ocean. Otherwise put, it links major oil-producing countries from the Middle East with the major oil-consuming markets of the Far East. Southeast Asia's rapid industrialization and economic development during the past 20 years have resulted in vast increases in energy consumption. Singapore has therefore been a key transit point for global oil trade. The Port of Singapore is the world's busiest in terms of tonnage, and constitutes the heart of the country's economic well being. The country has, until now, managed to leverage economic advantages inherent in its geography with great success. Industries such as electronic components and biotechnology have flourished, and contributed to the diversification of the economy. Singapore has also become an important financial center. More pertinently, Singapore has developed a massive refining capacity to accommodate crude oil imports. It enjoys one of the largest refining capacities in the world-around 1.4 million barrels per day. These two factors-location and large refining capacity-have until now provided Singapore with virtually assured revenue. Shipping is not likely to diminish, energy demands are set to grow, and refining capacity is being used to power the growth of a large petrochemical industry. By all accounts, Singapore has sunny days ahead. Or does it? Dire straits The Malacca Straits is one of the world's great "choke points" for oil transit. It is the shortest sea route between three of the world's most populated countries: India, China and Indonesia. More than 50,000 ships transit through the straits each year, and China's ever-growing energy needs are likely to make that number grow. Currently, the straits see more than 15 million barrels of crude oil transit every day. Liquefied natural gas (LNG) carriers also use this route daily. At its narrowest point, near Singapore, the Malacca Straits are only 1.5 miles wide. This creates a natural bottleneck with good potential for collisions or spills. Piracy is also a concern, being far from uncommon in the Singapore Straits. Should any of these lesser problems occur, grounding of tankers would be the most likely result-a costly affair, but not insurmountable. Closure of the straits, however, would have far more wide-reaching consequences, such as huge worldwide increases in the cost of freights and energy shortages in much of Asia. An ever-growing concern is international terrorism. The Bali bombing in 2002 put Indonesia on the map of "high security-risk" countries. Insurance costs have increased accordingly for tankers docking in Indonesia. Various scenarios are being considered, under which terrorists could hijack an oil tanker or an LNG carrier and use it as a giant bomb to be launched at nearby Singapore, or anywhere else within reach for that matter. While this represents the most alarmist scenario, countries surrounding the straits are taking no chances. Malaysia and Singapore have stepped up naval patrols, and have reportedly begun to escort some tankers. But ultimately, if the Malacca Straits are to sustain increased traffic, more far-reaching measures will have to be found. The rising traffic and security concerns make Singapore's economy, which is so vitally dependent on maritime trade, quite vulnerable in the long term. Part of the solution Thailand possesses two strategic assets that could radically alter the global supply equation. The first of these is location: Thailand's western coasts are passing points for all tankers from the Middle East en route to Singapore. The second is its infrastructure: Thailand benefits from a good basic infrastructure, from refining to pipelines, which could be expanded to accommodate larger volumes. Consider also that Thailand links Indochina and China. It is a central point between Indonesia and southern China, and its ports are closer to China than either Singapore's or Malaysia's. In short, Thailand has the potential to fundamentally alter energy dynamics in the region and beyond. Thailand's energy minister Prommin Lertsudeji, is spearheading the government's efforts to market an ambitious plan to turn the country into a regional processing and transportation hub for the oil industry. The plan includes several projects: a marine maintenance and repair facility on the western coast, complete with docking facilities; increased refining capacity (a new refinery was inaugurated in January 2004); the establishment of a tax-free zone; and several new pipelines, the most important of which would link western and eastern Thailand, and by extension, the entire Mekong area and Southern China. By building adequate infrastructure, Thailand could also become a regional stockpiling center for crude oil. The potential benefits of the project are enormous. Once the marine facilities and refining capacity have been prepared, Thailand will provide an immediate alternative to the Malacca Straits. That, by itself, will already be a considerable achievement. Another huge benefit will be the opportunity to further develop the downstream and petrochemical businesses. This will increase domestic demand for oil, create jobs and strengthen the economy. Another potential benefit could be Thailand's development into a regional oil stockpiling center. This would bring added energy security to the region. But the chief benefit of this ambitious project is undoubtedly access to China. China on a silver plate China is the world's fastest-growing economy. It is now second only to the United States in terms of energy consumption. But the gap is narrowing inexorably. If Thailand manages to implement its energy plans, it could well take over Singapore as the destination of choice for transit of crude oil supplies. Moreover, if Thailand can become a regional stockpiling center, it will also become Southern China's immediate "oil basket." The Association of Southeast Asian Nations (ASEAN) region already enjoys considerable pipeline infrastructure, from Indonesia to Singapore, from Singapore to Malaysia, from Malaysia to Thailand. Future pipelines linking China with Thailand will therefore also provide a stable and cost-efficient export route for Indonesia's abundant oil and gas resources.