Proven reserves of natural gas are also minimal in the Visegrad countries, with a combined total of 7.7 Tcf, as of January 2006. Poland, with roughly 75 percent of the Groups total, has an estimated 5.8 Tcf of natural gas reserves, with Hungary at 1.2 Tcf. Slovakia and Czech Republic contain 530 billion cubic feet (Bcf) and 140 Bcf, respectively. In 2003, Poland produced 200 Bcf, which met 38 percent of its domestic natural gas demand. Hungary produced 100 Bcf, accounting for almost a fifth of its demand. Slovakia produced only 10 Bcf and the Czech Republic just 5 Bcf. As the Visegrad countries strive to meet EU membership criteria, natural gas is becoming increasingly important to the regions energy mix. Increased consumption of natural gas, as an alternative to coal, is considered to be a key component of the regions plan to meet the stricter EU environmental regulations. In 2003, natural gas represented approximately 22.3 percent of the Groups total primary energy consumption, up from 16.1 percent in 1993. In 2002, Slovakias per capita natural gas consumption was the highest among the Visegrad Group countries, with Hungary a close second. Russia supplies most of the Visegrad groups natural gas requirements via the Yamal and Brotherhood pipelines. Poland and the Czech Republic import small amounts of natural gas from Germany and Norway. About 80 percent of Hungarys natural gas imports come from Russia through part of the Brotherhood pipeline. Hungary also imports natural gas via the Gyor-Baumgarten pipeline, which is connected to Western Europes natural gas grid. The following companies are responsible for operating each countrys national pipeline grid: Transgas (Czech Republic); Mol (Hungary); Polish Oil and Gas Company (POGC) (Poland); and Slovensky plynrensky priemysel (SPP) (Slovakia).

The Visegrad countries have total proven oil reserves of approximately 222 million barrels, with 102 million barrels of that located in Hungary, as of January 2006, according to the Oil and Gas Journal. Poland has proven reserves of 96 million barrels, while the Czech Republic and Slovakia have only 15 and 9 million barrels, respectively. Total oil production in the Visegrad region is minimal, averaging 105,460 bbl/d in 2005. Hungary is the largest producer of oil in the Group, with approximately 45,190 bbl/d, followed by Poland with 33,550 bbl/d, the Czech Republic with 15,240 bbl/d, and Slovakia with 11,480 bbl/d.In 2005, the Visegrad countries met only 12.4 percent of their total oil demand of 853,540 bbl/d from domestic production, making them heavily dependent on imports. Most of the imports came from Russia via the Friendship pipeline. Poland also receives limited amounts of oil from the Naftoport terminal at Gdansk. The Czech Republic imports oil from Russia, as well as from other sources, via the Ingolstadt-Kralupy nad Vltavou-Litvinov (ILK) pipeline, which allows the land-locked country to import crude oil from the Italian port of Trieste via the Trans-Alpine pipeline (TAL). The ILK pipeline, operated by Mero CR, has enabled the Czech Republic to reduce its reliance on Russian oil.

The Visegrad countries are neither large producers nor consumers of energy. Coal is the single abundant fossil fuel in the region, with only Poland and the Czech Republic having significant quantities. In 2003, coal accounted for 45.3 percent of the Visegrad countries total primary energy consumption. The Visegrad countries import most of their crude oil and natural gas requirements, mainly from Russia. This dependence on Russian natural gas and oil imports has also been a point of contention for these countries, particularly Poland, which experienced a natural gas supply cut-off in February 2004. Furthermore, as the Visegrad countries privatize their energy markets in line with EU directives, some government officials have argued against giving up control in state energy companies, claiming that privatization not only could compromise national energy security, but also increase Russian-based companies control through acquisition. During the past decade, the Visegrad countries have diversified their energy supplies to reduce their dependence on Russia by connecting national oil and natural gas networks to Western Europe. The strategic importance of the Visegrad countries, however, lies largely in the crude oil and natural gas pipelines which traverse the region on their way to Western Europe.

On May 1, 2004, the Visegrad countries became members of the European Union.The Visegrad countries are important transit centers for energy exports from Russia to Western Europe. The region is heavily dependent on oil imports, mostly from RussiaIncreased consumption of natural gas is key to meeting EU environmental standardsCoal is the dominant fuel in the region, but is declining in market shareGovernments in the region have been liberalizing their electric utility sectors.

Indonesias economic growth surpassed expectations in 2004, and accelerating growth has continued into 2005. Indonesias real gross domestic product (GDP) grew at a rate of 5.1 percent in 2004, up from 4.9 percent in 2003. Real GDP growth is forecast to be 5.5 percent for 2005, although imbalances in the macroeconomic picture, such as increasing budget deficits caused by oil price subsidies on the local market, could lead to future problems.
Tension exists between the central government in Jakarta and leadership at the regional level. The distribution of oil and gas revenues between the central government in Jakarta and regional governments in areas which produce oil and gas has been regularly disputed. Since Indonesias transition to democracy in 1999, the countrys regional governments have been pressing for a greater share of oil and gas revenues.
While Indonesia is still a member of the Organization of Petroleum Exporting Countries (OPEC), it became a slight net importer of oil in 2004, and its oil production has continued to decline. The current government is reportedly considering leaving OPEC, but no decision to do so has been announced.

According to the Oil and Gas Journal, Saudi Arabia contains 261.9 billion barrels of proven oil reserves, around one-fourth of proven, conventional world oil reserves. Around two-thirds of Saudi reserves are considered light or extra light grades of oil, with the rest either medium or heavy. Although Saudi Arabia has around 80 oil and gas fields (and over 1,000 wells), more than half of its oil reserves are contained in only eight fields, including Ghawar (the worlds largest oil field, with estimated remaining reserves of 70 billion barrels) and Safaniya. Ghawars main producing structures are, from north to south: Ain Dar, Shedgum, Uthmaniyah, Hawiyah, and Haradh. Ghawar alone accounts for about half of Saudi Arabias total oil production capacity.Saudi Arabia is the worlds leading oil producer and exporter, and its location in the politically volatile Gulf region adds an element of concern for its major customers, including the United States. Saudi Arabia maintains crude oil production capacity of around 10.5-11.0 million bbl/d, and claims that it is easily capable of producing up to 15 million bbl/d in the future and maintaining that production level for 50 years. In June 2005, Saudi Aramcos senior vice president of gas operations, Khalid al-Falih, stated that Saudi Arabia would raise production capacity to more than 12 million bbl/d by 2009, and then possibly to 15 million bbl/d if the market situation justifies it. Falih added that by 2006, Saudi Arabia would have 90 drilling rigs in the Kingdom, more than double the number of rigs operating in 2004. One challenge for the Saudis in achieving this objective is that their existing fields sustain 5 percent-12 percent annual decline rates, meaning that the country needs around 500,000-1 million bbl/d in new capacity each year just to compensate. Aramco estimates that the average total depletion for Saudi oil fields is 28 percent, with the giant Ghawar field having produced 48 percent of its proved reserves. Aramco also claims that, if anything, Saudi oil reserves are underestimated, not overestimated. Some outside analysts, notably Matthew Simmons of Houston-based Simmons and Company International, have disputed Aramcos optimistic assessments of Saudi oil reserves and future production, pointing to -- among other things -- more rapid depletion rates and a higher water cut than the Saudis report.

With one-fourth of the worlds proven oil reserves and some of the lowest production costs, Saudi Arabia is likely to remain the worlds largest net oil exporter for the foreseeable future. During January-May 2005, Saudi Arabia supplied the United States with 1.5 million barrels per day of crude oil, or 15%, of U.S. crude oil imports during that period.With oil export revenues making up around 90-95 percent of total Saudi export earnings, 70-80 percent of state revenues, and around 40 percent of the countrys gross domestic product (GDP), Saudi Arabias economy remains, despite attempts at diversification, heavily dependent on oil (although investments in petrochemicals have increased the relative importance of the downstream petroleum sector in recent years). The combination of relatively high oil prices and exports led to a revenues windfall for Saudi Arabia during 2004 and early 2005. For 2004 as a whole, Saudi Arabia earned about $116 billion in net oil export revenues, up 35 percent from 2003 revenue levels. Saudi net oil export revenues are forecast to increase in 2005 and 2006, to $150 billion and $154 billion, respectively, mainly due to higher oil prices. Increased oil prices -- and revenues -- since the price collapse of 1998 have significantly improved Saudi Arabias economic situation, with real GDP growth of 5.2 percent in 2004, and forecasts of 5.7 percent and 4.8 percent growth for 2005 and 2006, respectively. For fiscal year 2004, Saudi Arabia originally had been expecting a budget deficit. However, this was based on an extremely conservative price assumption of $19 per barrel for Saudi oil -- and assumed production of 7.7 million bbl/d. Both of these estimates turned out to be far below actual levels. As a result, as of mid-December 2004, the Saudi Finance Ministry was expecting a huge budget surplus of $26.1 billion, on budget revenues of $104.8 billion (nearly double the countrys original estimate) and expenditures of $78.6 billion (28 percent above the approved budget levels). This surplus is being used for several purposes, including: paying down the Kingdoms public debt; extra spending on education and development projects; increased security expenditures  due to threats from terrorists; and higher payments to Saudi citizens through subsidies. For 2005, Saudi Arabia is assuming a balanced budget, with revenues and expenditures of $74.6 billion each.

In addition to expanding upon the domestic pipeline infrastructure, China is looking to establish transnational natural gas pipelines with several neighboring countries. In February 2005, Kazakhstans state-owned KazMunaiGas (KMG) was reportedly conducting a feasibility study of a natural gas pipeline to China in partnership with CNPC. If such a pipeline were built, KMG officials have said that it could be operational by as early as 2009 and also supply natural gas from Turkmenistan and Uzbekistan. Another proposed international pipeline project would link the Russian natural gas grid in Siberia to China, and possibly South Korea, via a pipeline from the Kovykta natural gas fields near Irkutsk. The cost of the project has been estimated at $12 billion with a total planned capacity of 2.9 Bcf/d, of which China would consume 1.9 Bcf/d and Kogas, South Koreas main natural gas company, would consume 1 Bcf/d. Both CNPC and Kogas signed letters of intent for the project in November 2003, although several independent analysts have expressed doubts that the project will come to fruition. During talks between Russian President Putin and Hu Jintao in April 2006, the two leaders reportedly agreed to move ahead with the proposed Kovykta pipeline by 2011, although as of July 2006, no formal decision has been made on whether or not to proceed with the project.

Historically, natural gas has not been a major fuel in China, but its share in the countrys energy mix is increasing. Oil & Gas Journal (OGJ) estimates that Chinas domestic proven reserves of natural gas stood at 53.3 trillion cubic feet (Tcf) as of January 2006. Other sources have put reserves much higher. Cedigaz estimates that China held 83 Tcf of proved natural gas reserves as of January 2006. EIA figures show that China consumed 1.3 Tcf of natural gas in 2004, almost doubling the level of natural gas consumption from five years prior. In 2004, natural gas accounted for only around 3 percent of total energy consumption in China, although this figure is expected to rise in the coming years. Until recently, natural gas was used primarily as a feedstock in chemical fertilizer production and an energy source at oil and gas fields.

According to OGJ, China had 6.2 Mmbbl/d of crude oil refining capacity as of January 2006. Sinopec and CNPC are the two dominant players in Chinas oil refining sector. The expansive sector is undergoing modernization and consolidation, with dozens of small refineries shut down in recent years and larger refineries expanding and upgrading their existing facilities. Domestic price regulations for finished petroleum products have hurt Chinese refiners because of the large difference between current high international oil prices and low domestic rates. According to the BP Statistical Review of World Energy, refinery utilization in China increased from 67 percent in 1998 to 94 percent in 2004. As China seeks to bring additional refining facilities online to meet growing demand for finished petroleum products, BP forecasts that the country will increase refining capacity by 1.8 Mmbbl/d between 2004 and 2008, a 32 percent increase in total capacity.