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Table of Contents 1. INTRODUCTION ................................................................................................................ 2 1.1. 1.2. 1.3. Concept of Energy Security ......................................................................................... 2 Definition of Energy Security ........................................................................................

2 Energy Availability........................................................................................................ 4 Energy Availability in Malaysia .............................................................................. 5

1.3.1. 2.

DISCUSSION ..................................................................................................................... 7 2.1. Natural Disaster ........................................................................................................... 7 Solution................................................................................................................. 8

2.1.1. 2.2.

Transportation.............................................................................................................. 9 Solution................................................................................................................. 9

2.2.1. 2.3.

Political .......................................................................................................................10 Solution................................................................................................................13

2.3.1. 2.4.

Economy.....................................................................................................................15 Solution................................................................................................................16

2.4.1. 3. 4.

CONCLUSION ...................................................................................................................17 REFERENCE .....................................................................................................................18

1.

INTRODUCTION

1.1.

Concept of Energy Security Energy security refers to a resilient energy system. This resilient system would be

capable of withstanding threats through a combination of active, direct security measures such as surveillance and guards and passive or more indirect measures such as redundancy, duplication of critical equipment, variety in fuel, other sources of energy, and reliance on less vulnerable infrastructure. Energy security depends on the availability of diverse energy resources produced in sufficient quantities and at reasonable prices. Besides that, security is defined as measures that protect against criminal acts intended to intimidate the civilian population, influence government policy or affect the operation of government by disruption. Usually, energy security takes more focus on accidents and natural disasters (Kansas Energy Security Act, 2003).

1.2.

Definition of Energy Security Then, the energy security is related with the supply of energy. Furthermore, there are

several definitions that can be related with this supply of energy security. All of these definitions include the idea of avoiding sudden changes in the availability of energy relative to demand. However, the definitions show strong differences in the impact measure that is used for the benefits of increased continuity and the level of discontinuity that is defined as insecure. The first definition of security is the continuity of energy commodity supplies (Department of Energy and Climate Change, 2009). This concept is keys to all other definitions of energy security. The same concept is also used in technical analyses. Technical studies describe the general concept of low interruption risks as reliability. Besides, reliability is composed of two sub concepts. One of the concepts is system adequacy, which describes the ability of a system to meet the aggregate power and energy requirement of consumers at all times. The other concept is system security, which describes the ability of a system to withstand disturbances (Makarov, Member, and Moharari. 1999).

Next, the second definition of security is to distinguish between secure and insecure levels of continuity. Energy security can be defined in terms of the physical availability of supplies, in order to satisfy demand at a given price (International Energy Agency, 2001). The concept behind this definition seems that apart from supply interruptions security is only impaired of the shortage of energy leads to prices above a certain threshold, while the price volatility below that threshold is not relevant. Besides, security is affected when supplies are reduced or interrupted in some places to an extent that causes a sudden, significant and sustained increase in prevailing prices (Mabro, 2008). It can be seen that the additional criteria filter out smaller discontinuities for the security of a country. The use of severity filters makes the concept of security very imprecise and difficult to measure. Continuity and price levels that are considered as insecure by one country could be completely sufficient for another country. Other than that, the third definition extends the scope of the impact measure. Instead of measuring the continuity of prices and quantities on the commodity market, they extend the impact measure to the price and continuity of services, the impacts on the economy and in some case the environment. Security of energy refers to the ability of a countrys energy supply system to meet final contracted energy demand in the event of a gas supply disruption (Noel and Findlater, 2010). By defining security in terms of service availability it introduces a weighting of potential commodity supply disruptions according to their impact on the continuity of energy services. Depending on the resilience such as cars, heat pumps, light bulbs and computers which are used to convert commodities into services, a disruption of commodity supplies may or may not lead to disruptions of service supplies. In simple word, energy security is all about security. Any interruption that may happen on steady and plenty flow of energy would massively harm a nations economic output, political stability and the personal well being of its citizens. Not only private households, but also the business sector and even public authorities and government agencies are in the dire need of energy to function (Robert, 2008). Hence a satisfactory supply with energy is a pre requisite for economic growth and also for the legitimacy within a political entity. In an international context, security is about the ability of states and societies to maintain their independent identity and their functional integrity. Economic welfare and individual safety and the stability of a political system can be seen as core values of every society, thus energy insecurity comprises a major threat, or better risk to those values (Andrews, 2005).

Apart from that, security of supply is an important goal of energy policy in many countries around the world. The confusion about energy security is also reflected in political actions. In U.S., the focus of energy security has traditionally been on the reduction of vulnerability to political extortion, which has lead politicians to call for energy where the vision of energy independence and rising shares of renewable energy. On the other hand, in Brazil, where the vision of energy independence has already become a reality, there were periods when politicians advocated an increasing share of fossil fuel imports and decreasing shares of renewable energy to promote energy security (Bohi and Douglas, 1996). For some the goal of energy security is the protection of the poor against commodity price volatility. Others highlight the importance of protecting the economy against disruptions of energy service supplies, by allowing the prices of commodities to rise during periods of scarcity. For some people the goal of energy security is the reliable provision of fuels and the role of nuclear energy is one of enhancing security. For others, energy security is concerned with a reduction of hazards from accidents and proliferation and the expansion of the nuclear industry is a potential threat to energy security.

1.3.

Energy Availability From the prospect of energy availability, Asia and the Pacific are rich in energy

resources. More than 50 percent of the worlds proven resources of natural gas and coal, 25 percent of oil reserves, and close to 60 percent of uranium reserves (United Nations Energy Database, 2007).

Figure 1.1: Energy Availability in The World

The region of Economic and Social Commission for Asia and the Pacific (ESCAP) is also well endowed with renewable energy resources. It has 40 percent of the worlds total hydroelectric technical potential and about 35 percent of its annual solar and high temperature geothermal energy potential. It also has substantial potentials of biomass and wind energy. In 2005, the ESCAP region accounted for 46 percent of the worlds total primary energy production. The largest contributions were in primary solid fuels, including non-commercial solid fuels, for which the region contributed more than 60 percent of global energy production, and gaseous fuels, in particular natural gas, for which the region contributed 40 percent of global production. In the case of primary electricity and primary liquid fuels, the region accounted for just 30 percent of global production, though over the period 1992 to 2005 productions of these grew faster than the global production. Overall, primary energy production in the ESCAP region grew almost 3 percent per annum in 1992 to 2005, faster than the world average of just over 2 percent per annum

1.3.1. Energy Availability in Malaysia

Figure 1.2: Energy Availability in Malaysia

Oil reserves are estimated about 400 metric ton for 10 years of production. Besides, gas reserves are far more important. Then, Malaysia also has a renewable energy potential which can be obtained from waste of industry of the palm oil and wood. Furthermore, Malaysia is oil exporting country with exports between 18 and 22 metric tone per year since 1993. The refining capacity is 0.51 barrel per day. For gas industry in Malaysia, around half of the gas produced is exported, which is 54% in 2006, mainly as LNG (85%). In addition, Malaysia is the third larger LNG exporter in the world behind Algeria and Indonesia. In 2006, exports in Malaysia reached about 31Gm3, primarily bound for Japan (52%), South Korea (25%), Taiwan (16%) and Singapore (6%). In the prospect of energy demand, natural gas represents about 35% of the total consumption whereas oil is experiencing a steady decline. Besides, the importance of other energy sources, such as coal and so on is still low. In addition, the electricity sector is the first consumer of gas, which is about 48% and the rest being consumed almost exclusively in the industrial sector. Electricity growth is particularly high, which is about 5.8% per year over last five years. In final energy consumption, oil products represent a declining share of 60% whereas gas continues to rise and reached 17% in 2006.

2.

DISCUSSION There are many challenges to the consuming country, in order to cater the supply and

demand. The top challenges are natural disaster, transportation, political and economy. 2.1. Natural Disaster Another challenge to energy security is disasters, it not totally discrete events. Their possibility of occurrence, time, place andseverity of the strike can be reasonably and in some cases accurately predicted bytechnological and scientific advances. Disasters are mainly of two types which are natural disasters and manmade disasters. The impacts of natural disasters on energy systems have extensive impact for infrastructure development, the economy, public health, general quality of life, and even peaceful coexistence of communities, regions, and countries. For every country, energy security is a critical issue on which the provision of goods and services to an expectant population depends. Energy facilities and operating systems are the modern economies through powering of physical infrastructure and civil or industrial support services. The wealth, health, and stealth of nations generally correlate with energydependent industrialization. Tragedy of natural disaster that impact energy security as examples is Hurricane Katrina and Gulf Coastin September of 2005, Hurricanes Katrina and Rita decimated the U.S. Gulf Coast, affecting oil production, importation, refinement, and distribution. Roughly 94% of the oil production in the Gulf of Mexicos Outer Continental Shelf shut down as a result of the hurricanes (7% of total U.S. consumption). The storms also damaged the Gulf Coast ports, prevented U.S. imports of 2.5 million barrel per day (Mbd), and forced the shutdown of seven refineries in Texas and Louisiana. Finally, electrical power disruption shut down oil pipelines from the Gulf Coast area to the East Coast and Midwest. As a result of these supply disruptions, crude oil prices jumped from about $55 to more than $65 per barrel in 2005. The Deepwater Horizon disaster, which occurred on the evening of 20 April 2010, was a manmade disaster. The oil spills are of the worst man-made disasters when it comes to man and animals as well as environment. The oil is released in form of liquid of petroleum hydrocarbons. These spill typically are cause by man made errors or carelessness, especially when they occur in oceans. There are several other causes for spills, such as equipment malfunctions, however proper maintenance should eliminate most of these occurrences.

Effect from these oil spills for animals, particularly birds is when oil from oil spills permeates into the structure of the plumage of birds thus reducing their insulating ability. Oil spills can also affect others animals such as sea otters, whales, fish and sea life. These oil spills can also dramatically affect local communities and their economic that rely on fishing and tourism.

Figure 2.1: Birds affected from oil spill

Figure 2.2: Platform collapsed Causes by Hurricanes Katrina and Rita

2.1.1. Solution Based on effects of their damages on the economy and environmental systems, energy facilities need to be protected adequately from natural and technological disasters and a. The full range of preventive and mitigative actions and systems needs to be implemented such as National Policy on Disaster Management (NPDM). These fall into the following categories such as regulations, reasonable policies, technical guidance systems, education, market incentives, and environmental management systems. As part of technical guidance systems, innovative systems for foundation improvement and structural strengtheningin the sea and on characteristically unstable coastal need to be studied before build new platform to sustain from any possible damage. Realtime hazard prediction systems and automatic structural response systems also need to be developed and used. As result from hurricane Katrina, dramatic action has been done to cater the supply and demand of oil and gas in United State. The Department of energy was forced to tap into the nations emergency oil reserves and the department agreed to release 30 million barrel of crude

oil from the Strategic Petroleum Reserve (SPR). The International Energy Agency (IEA) also encouraged its members to up their output to increase supply to United State. 2.2. Transportation Transportation is a very important factor. For the transportation of oil and natural gas, the energies are transported by pipelines and the shipping. By that reason, it is a must to secure the transportation from being disturbed and disconnected. 2.2.1. Solution Pipeline is the most way to transport the energy from one country to another one. For example, there are two large pipelines project which are the $4.6 billion Baku-Tbilisi-Ceyhan (BTC) oil pipeline exporting petroleum from the Caspian Sea near Azerbaijan and then traversing parts of Georgia and Turkey; and parts of the $14.2 billion Trans-ASEAN Gas Pipeline (TAGP) Network connecting the gas reserves of Indonesia, Myanmar, and Thailand with each other and Singapore (Sovacool, 2011). One of the ways to secure the energies transportation by pipeline is to make a regular maintenance on the pipelines. Regular maintenance can ensure the transportation continuity. Maintenance also had been questioned about the party which will be responsible. Most of the parties will avoid taking part of the maintenance. As the consuming country, it has to take the responsible for the continuity of the energy supplying. Other than that, in order to ensure the producing country supply the energies to the consuming country, the consuming country must build up the pipelines without makes the producing country involve in terms of cost. This way will give more benefit to the consuming country which it can control the transportation of the energy. In the other of view, at the contras side, all the costs are rely on the consuming country. Shipping is another method of transportation. Design of the ship is not same as the regular ship. It has a very good safety consideration, which can reduce the possibility of any accident to occur. In order to secure the supplying of energy, the consuming country must make a lot of oil and gas tanker, to transport the energy from the far producing country. Other than that, the consuming country must reduce the pirate attack on the tanker, to reduce profit loss. For example, the hijacking of the ACHILLE LAURO, in October 1985 by agents of the PLO, alerted the world to the terrorist threat to shipping, and the suicide attack on USS COLE while bunkering at Aden demonstrated the potency of what has been described as 9

the maritime equivalent of the truck-bomb used against the US Marine Corps barracks in Beirut in 1983 (King, 2005). Piracy is a threat to the transportation of the energy. If the piracy is not overcome, the supplying of the energy will be disturbed and disconnected. Lastly, the operators which conduct the transportation by pipelines or shipping must be from the experience person. By hiring the experience operators, the flow of the work can be easily done. All of them know their role and know how to manage to maintain the flow of the energy.

2.3.

Political One of the factors or challenges in order to secure energy is political aspect. There are

two types of political whereas political stability and also political relation among producing and consumer countries. Poor governance and political instability can affect global energy security. On the supply side, importing nations will remain dependent to a large extent on oil coming from politically unstable parts of the world. The Persian Gulf was one of the example and from suppliers such as Iran, Russia, and Venezuela that may actively oppose the interests and policies of trilateral countries. (Hope Sherwin, 2008). The power, influent and condition of politics play a major factor which can affect the oil pricing. The oil price is at a very volatilecondition of the global market when the political disruption or instability of politic. The scenario for instability politic was happened on October 1973. The Arab Oil Embargo towards United States of America (USA) and other countries in the western world prove on how the political scenario could lead to the change on oil pricing (Jay Hakes, 2008). In the year of 1973 as a reciprocate to the western world that support Israel when being attacked by Syria and Egypt, the Yom Kippur war make the OPEC countries (mostly the Arab countries and Iran) take a drastic act by cutting down the supply of crude oil to USA and other western countries. On that year, the Arab Oil Embargo make the world crude oil supply drop about 5 million barrels per day, the net loss of 4 million barrels per day extended through March of 1974 and represented 7 percent of the free world production. It was caused the oil price quadrupling increase which from the flat of $3.00 to $12.21-$13.55 per barrel.

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Besides that, another scenario of politics which bring a massive impact to crude oil price when instability of political aspect is the sequence of civilian reformation of Egypt, Libya and Bahrain. For Egypt case, the shutdown of Suez Canal was totally disturbed the transportation of crude oil which connecting Mediterranean Sea and Red Sea. Thus, it make the price phenomena that affect on world market when oil price rose to $ 114 per barrel whereas the crude oil being transport to USA and European. Other than that, crisis of Libya and Bahrain getting worst because this country was one of the world oil supply country. As quote by Clifford Krauss (2011) in his article Why the disruption of Libyan Oil has led to a Price Spike although Libya produced just 2 percent of the worlds oil supply but it is some of the world's most sought-after highest quality crude or also known as Libyas sweet crude oil. It was export 85 percent of oil to Europe and only 5 percent to the U.S. According to Bahrain experts said that the surging of crude oil price can be stop by stabilize the political atmosphere in Bahrain. The political activity and stability play a vital role in fluctuation of the crude oil price neither to the country nor to the global price. Today, the basis of much of our concern about energy security is that oil dependence indirectly influences the policies and politics of importing countries such as Japan, Germany, and France to favor oil-possessing nations of the Middle East that are unfriendly to the United States (John Deutch, 2004). Another factor that enhances energy security is political relationship. Although Malaysia is one of the exporter countries for oil and natural gas, the source of oil and natural gas still depends on other countries. Therefore politic relation is important in order to ensure energy is secured. Malaysia itself has done a relation with producing countries especially in Middle East area. One of the Middle Easts countries that cooperate with Malaysia is Iran. Political relations between Iran and Malaysia began in 1975. Iran is the third biggest partner of Malaysia in Mideast. One of the agreements that had been signed was in June 2008. Iranian Offshore Oil Company and a Malaysian oil company signed cooperation agreement worth $ 5 billion to develop the Persian Gulf Oilfield. Based on this agreement, the deal to develop the oil field in Bushehr province will soon finalized by the Iranian and Malaysian sides and the executives work will begin (ZibaFarzinnia, 2008).

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Figure 2.3: Top 10 Australian imports from Malaysia, A$ million, 1998 to 2004 (Sources:Nicholas Coppel, 2005)

Based on the figure above showed that Australia has depends on Malaysia to supply crude petroleum and it was kept increased from 1998 to 2004. It has showed the politic relation between Australia and Malaysia. The first meeting of the Joint Trade Committees was held in 1986. These talks provide an opportunity for both sides to discuss bilateral, regional and global trade issues of mutual interest. They provide information and advice for businesses active in Australia and Malaysia and play an important role in promoting strong networks in the respective private sectors. It clearly showed that, Australia depends on Malaysia in producing crude petroleum in order to secure their energy by changes with opportunity of business. Malaysia is one of the countries in the world produced oil and natural gas and become as the supplier to the consumer countries. As supplier, Malaysia is constantly tries to meet the huge demands of domestic and international energy sector. However, as energy cost remains to increase from year to year whilst fossil fuels depleting, sustaining stable development for Malaysia is getting very expensive. Thus, it is important for the government to establish energy security in the most manners towards ensuring sustainability in development.

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2.3.1. Solution In order to cater the problem about the security of energy, Malaysia has a few policies that government will be introduced and implemented. Throughout the years, the government of Malaysia has formulated numerous energy-related policies in order to ensure the longterm reliability and security of energy supply for sustainable social-economic development in the country. The various energy policies included the National Energy Policy (1979), National Depletion Policy (1980) and Fuel Diversication Policy (1981, 1999). The National Energy Policy has three primary objectives; supply, utilization and environmental. First objective is to ensure the provision of adequate, secure and costeffective energy supply by developing indigenous energy resources which is both nonrenewable and renewable, using least cost options and to diversify supply sources from within and outside the country. The second objective is to promote the efficient utilization of energy and discourage wasteful and non-productive patterns of energy consumption within the socio-cultural and economic parameters. Last but not least, the objective is to ensure that factors pertaining to environmental protection are not neglected in the pursuit of the supply and utilization objectives (A. Rahman Mohamed, K.T. Lee, 2006). Besides that, the continuity of supplying energy will be ensured when the consuming countries can make a union among all the consuming countries. By being a union, the negotiation or agreement can be easily to be done with the producing countries. One of the examples for political relation is Japan. Japan is one of the examples of advance country that rely on imports of oil, gas, coal and many other energy sources. Their dependence towards this energy sources are understandable as they have limited sources of their own. However, this situation has become a burden for Japan to continue develop in years to come because of several issue pertaining to oil prices that can shake the Japans economy. In order to solve the limited supply of energy sources, Japan government has started to implement ways of ensuring a healthy energy efficiency as well as steady energy security plan to ensure that their dependence towards energy sources stated above minimized. A lot of policies implement new technology such as hybrid cars, and solar panel, and subsidizing houses to have their own solar panel in order to generate power to their homes had been taken by Japan to ensure the continuous supply of energy are not only depend on fossil fuels.

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Besides that, explorations via joint venture with other company or also known as political relation between other countries are one of the steps taken by Japan in order to maintain supply of the primary energy resources. For example Japanese companies are involved in Kuwait and Saudi Arabia in some major upstream projects. Kuwait and Saudi Arabia Neutral Zone: Khafji and Hout fields - Japanese-owned Arabian Oil Company (AOC) once held a 40% stake in exploration for the Khafji and Hout oil fields in Kuwait and the Neutral Zone. Subsequent concession expirations have left the AOC with a limited, technical role and a 100,000 bbl/d purchase contract from Khafji field until 2023 (EIA, 2011). By having an agreement or political relationship, energy security in Japan has been secured for a certain period. Energy security generally refers to ensuring adequate and reliable energy supplies at reasonable prices in order to sustain economic growth (Balat, 2010). In order to secure the energy supply, one of the methods is by the geopolitical relationship. Geopolitical country is refers to the countries which supply the oil and gas. There are many histories that involve the relationship between three countries, which are the producing county, intermediate country and consuming country, regarding the energy transportation. For the example, the history between the transportation of natural gas from Russia to Ukraine which involve the cross border transportation. At that situation, the agreement for the transportation is not satisfy all the parties and the Russia cut off the transportation due to its right. The intermediate country is a country which not wants the supplying of the energy but involve due to the transportation of energy between consuming country and producing country. If the consuming country wants to secure the supplying of the oil and gas, it must make a good relationship between the producing country and the intermediate country. Lastly, the good way to secure the energy supply is the consuming country makes a national oil and gas company. The national oil and gas company will make many of exploration around the world to ensure the supplying of the energy. For example, the Arctic region is not belong to any country yet and can be drill to find any oil and gas reservoir.

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2.4.

Economy Economic is one of the challenges to the energy security. Economic stability of a country

is very important to make sure the secure of energy in the country itself and also for the importer countries. This because economy needs energy to produce goods and deliver services and the size of an economy is highly correlated with how much energy it uses (Brown et al., 2010a; Warr and Ayres, 2010). Oil has been a key element of the growing economy that brings to the development country. Since 1845, oil production has increased from nothing to approximately 86 million barrels per day (Mb/d) (International Energy Agency, 2010), which has permitted living standards to increase around the world. World As happen today year 2012 living standard has been increase because of global development, advanced technology development, improvement in education and others. In 2004 oil production growth stopped, while energy growing in countries like China and India continued increasing their demand. This situation result to increased global oil

pricespikethatcontributedtothesubsequenteconomiccontraction. Since 2004 world oil production has remained within 5% of its peak despite historically high prices (see Figure 1). World liquid fuel production include crude oil, lease condensate, natural gas plant liquids, other liquids, refinery processing gains and losses as defined by the EIA (Hirsch, 2010).

Figure 3: Oil production stopped growing in 2004 while demand continued to increase.

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Figure 4: Global annual new gross production (positivebars), annual decline (negativebars) and net new oil production capacity (thin line) (UK Industry Task Force on Peak Oil and Energy Security, 2010).

The consequence of these challenges is the available supply is decreases year by year. As figure 2 shows, net production capacity will decline due to the difficulty in finding new reserves at an accessible cost while the existing capacity is steadily depleted.Just as occurred in 2004, by 2011 there is again no new net capacity while the world economy, oil demand, has resumed growth. After 2014, it appears that global oil production will begin its decline (see the second report of the UK Industry Taskforce on Peak Oil and Energy Security (UK ITPOES, 2010). 2.4.1. Solution Economic challenges also refer on how to cater the supply and demand of oil and gas that keep increasing. As has been discuss above due to depletion of oil and gas production year by year, extremes oil and gas exploration at deepwater, ultra-deepwater or other place that have fragile condition have been done to find new reserve that have commercial oil and gas in order to cater world demand for industry, transportation, electricity generation and more. Others way to cater the supply and demand of oil and gas is by gradually implement renewable energy such as photovoltaic (PV) panel and energy from hydropower plant, biomass power plant (palmoil waste), wind turbines and ocean energy (tidal current power plant) (Koh and Lim, 2010). Nowadays, renewable energy has been commercialized because it more environmental and can sustained for long period. For example in Malaysia, source of renewable 16

energy was utilized from oil palm because Malaysia is the largest producer of oil palm and this can secure the source of energy.

3.

CONCLUSION Based on the statistic, the demand of oil and gas had increased every year with the

production of the oils are already at the high rate. The oils must be distributed around the world. When the oils cannot be supplied, a lot of problem can occur. For example, the price of oils will increase and by that situation, all the end products from the oil are also increase. Other than that, all the economic activity will be slowing down and the worse is the countrys economy will collapse. In order to cater the energy supply, there are many challenges that have to be concerned to the consuming country. There are four challenges had been discussed which are the natural disaster, transportation, political and economy. Each of the challenges must be concerned to avoid any of the energy supply interrupted and disconnected.

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Hirsch, R. (2010). The impending world energy mess. Association for the Study of Peak Oil and Gas presentation in Washington D.C 8 (October), 2010.

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