With Canada's complex and costly extraction and high transportation costs, the enduring low oil prices have hit the country particularly hard. Furthermore, possible alleviative measures such as pipeline and LNG terminal expansion face not only domestic but also U.S. opposition. TransCanada’s recent acquisition of the US-based Columbia Pipeline Group Ltd however, should allow it to export more easily to the U.S., and hopefully represents a step towards further cooperation between the U.S. and Canada in the North American energy market.
According to the US Energy Information Administration, 35 percent of gross US oil imports in 2014 came from OPEC countries. OPEC's role in supplying US oil consumption, as well as the organization's history of taking collective action to manipulate the price and supply of oil, make it a prime subject for study. Given OPEC's relevance to US energy security, how can we begin to predict how OPEC may interact with the oil markets of the future, as well as respond to shifting production and consumption trends within those markets? This article studies past OPEC production strategies, synthesizes a theory of OPEC production tendencies from past market interactions, and then applies these derived principles of OPEC production strategies to the contemporary global market.
International attention has been focused on the military confrontation in Syria and Iraq, where a Western-Arab coalition and the Russian led Syria-Iran coalition are cutting down the infrastructure of ISIS. The Russian military operation is strengthening Assad’s overall position while bringing rebel forces and ISIS to the point of defeat. Meanwhile, a new Islamist extremist front has emerged; North Africa is on the brink of disaster. While the West and Russia have focused on Syria after initial military successes in Iraq, it looks as if the world has forgotten to pay attention to the ongoing military build-up of extremist forces in Libya.
Japan fell into the following trilemma after the Fukushima Accident: first, without restarting nuclear reactors, reprocessing lacks enough justification; second, without having the reprocessing plant in operation, restarting nuclear reactors will only produce more spent fuel that does not have a final destination; and third, without having the MOX fuel plant and reactors using MOX fuel in operation, reprocessing alone will add more plutonium to the existing stockpile that is already overwhelming. Technical difficulties that relate to every pillar of the trinity in the Japanese national project bogs the central government down to a stalemate. Eunjung Lim analyzes, explains the backstory, and charts a possible path forward.
The recently released World Energy Outlook (WEO) 2015 hints that India is moving to the center stage of global energy system. Considering that the IEA has devoted an entire section of the WEO 2015 to India which carries a detailed assessment on India’s current energy scenario, the outlook for its future demand and supply and a discussion on the implications for India’s energy development, India’s growing importance on the world energy scene is apparent. Commander Kapil Narula examines the implications.
The explosion of diplomatic warfare between Saudi Arabia and Iran, caused by the execution of 47 prisoners by Riyadh, has come for some as a surprise, but the writing has been on the wall for some years. The current diplomatic row, fueled by Riyadh’s decision to execute Saudi Shi’ite Sheikh Nimr al Nimr, together with 46 others, and the ransacking by Iranian protesters of the Saudi Embassy in Tehran, is just a sign of the internal and external conflicts in both countries. Since the execution of the Shi’ite sheikh, tension between Saudi Arabia and Iran has reached the boiling point. Cyril Widdershoven discusses.
Poland remains the sole defender of coal in the EU arena and is often perceived as a potential obstacle on the way to a green energy Europe. A close examination of the Polish energy industry clarifies the roots of this stance and the likelihood it will be maintained over a long-time horizon.
At the crossroads of the east-west and north-south transportation corridors, Baku has succeeded in becoming the Eurasian Mecca for energy traders. Nowadays, Azerbaijan is the sole country in the region that extracts, refines, transports and negotiates its resources to the European market. In this sense, national resources have guaranteed not only economic growth and self-sufficiency, but also political independence. How will the Iran’s deal affect Azerbaijan and its oil and gas policy? Read on.
Reuniting the Libyan militias has been the West’s only endgame for Libya since the oil-rich country slid into a civil war following the 2011 removal of Muammar Qaddafi by a select coalition of NATO countries led by Britain, France, and the United States. But this outcome does not seem to be getting any closer. Indeed, things have gotten much worse. Gal Luft discusses an alternative.
Recent years have witnessed a grave deterioration in energy relations between Russia and the European Union (EU). The gas issue is an important one tied up in Russia’s ongoing attempts at recalibrating Eurasian pipeline strategy and EU’s own endeavors to open up new supply routes. The Caspian Sea region has hence become the focal point of heated discussions in the face of heavy energy disagreements between Russia and the EU. While Azerbaijan and Turkmenistan are considered potentially vital partners for European energy consumers, Russia engages in greater assertive policies protecting its national interest in the region. The continuing EU-Russian rivalry over alternative gas supply projects not only widens the gap between Brussels and Moscow but also affects energy strategies of the Caspian countries trying to avoid becoming a battle ground between the two key actors. Elkhan Nuriyev assesses risks, challenges and prospects.
The discovery of the Italian energy company ENI of a giant gas field off the coast of Egypt has transformed the East Mediterranean energy play overnight. The newly discovered field called Zohr could hold a potential of 30 trillion cubic feet of gas – the largest discovery in the region, thirty percent larger than the Israeli Leviathan field which held the title until today. Zohr’s entry into the scene is a true game changer. It delivers a painful blow to both the Israeli and Cypriot economies and more specifically to the gas partners, Delek Drilling and Noble Energy, which until now have held the only discoveries in the region.
The fracking miracle that flooded the North American market with surplus natural gas also led to a spike in oil production and contributed to the fall in global oil prices. Since oil and gas prices are linked in Asia and elsewhere the collapse in oil prices led to an even sharper decline in LNG prices. As a result American gas is no longer desired abroad, certainly not in Asia – the fastest growing market for gas, no matter how many export permits are granted. The U.S. should therefore consider alternative uses for its gas.
China is expanding its influence westward with the “New Silk Road” project, which will prominently feature natural gas projects and maritime trading. If completed, the project will connect Pacific to Atlantic, and be the largest infrastructure undertaking ever built. This project has the possibility of creating millions of jobs, providing security in Central and South Asia, as well as giving a way for energy resources to flow to new consumers in developing regions.
Indonesia is well endowed with natural resources, but similar to other developing countries, poor government policies have not utilized this wealth efficiently. Inefficient government energy policies and rising consumption coincided with Indonesia’s declining oil industry. Peter Maslanka examines opportunities and challenges facing Indonesia’s energy sector, and evaluates the policies that have been implemented to strengthen its energy sector. Also examined area the risks that exist to keeping these policies from being successful. Last, provided are a number of policy prescriptions for Indonesia to meet its growing energy needs.
With the development of the Aphrodite offshore natural gas field and the potentially game-changing East Med pipeline, the Eastern Mediterranean can and should play a vital role in ensuring European energy security. Turkey does not recognize Cyprus as a sovereign country and is attempting to block Cypriot oil and gas exploration, claiming the share of Turkish Cypriots in any hydrocarbon wealth. The large-scale undertaking brings many economic and political benefits to all the countries involved, including Turkey. However, the project is not likely to be realized without Turkey’s participation, and such cooperation is not likely without the US and EU pressure on Ankara.
With escalation on and near Russian soil, Western Europe is searching for an alternative gas and oil supplier; Kazakhstan may be the likely candidate. Kazakhstan is in the midst of modernizing, and is enthusiastically looking for opportunities to participate in the global economy. The country is among the top 15 in the world when it comes to essential oil reserves and has expressed willingness to develop these reserves. Kazakhstan also partnered with China in the creation of large energy cooperation projects which are part of the New Silk Road.
Even though there are vast, cheap reserves of oil and gas in the Middle East and North Africa (MENA), political instability remains as the main barrier to exploration and production. The current oil slump has hurt investment worldwide, nevertheless the recovery period appears to favor investment in North America, the Caspian, and Africa. The OPEC report issued in late May noted that “generally speaking, for non-OPEC fields already in production, even a severe low price environment will not result in production cuts, since high-cost producers will always seek to cover a part of their operating costs.”
There is no lack of voices warning against the dangerous implications of the nuclear agreement the Obama Administration is advancing with Iran. The opposition has mostly focused on the destabilizing geopolitical impact of a nuclear Iran and what it means for the security of the U.S. and its allies. But there is one less obvious casualty – the North American oil and gas industry.
As the military clash in Ukraine and the conflict between Russia and the West escalates, U.S. government top energy officials and leading experts on the South Caucasus energy and politics assembled at a Washington DC conference on “Security and Energy Implications for the South Caucasus after Ukraine.” The January 28th event was cosponsored by the Kennan Institute of the Wilson Center and the newly formed Center for Energy, Natural Resources, and Geopolitics (CENRG) at the Institute for the Analysis of Global Security.
When the Ukraine crisis broke out threatening to compromise Europe's energy supply from Russia, many American politicians and pundits called for the United States to expedite exports of liquefied natural gas, or LNG, to help bolster European energy security. Never mind that the United States won't have its first LNG export terminal in operation until late 2015 at the very earliest; that much of its approved gas exports are already committed to long-term contracts in Asia; and that Ukraine as well as most European countries under the Kremlin's boot do not have the terminals for receiving LNG. The United States is under no obligation to bolster Europe's energy security just because Europe, in its fixation on climate change, has for years undermined its own energy security and brought upon itself its current predicament. Gal Luft elaborates.
This week's meeting of Asia-Pacific energy ministers in Beijing is a good opportunity for countries on both sides of the Pacific to address perhaps the most unifying challenge in Asia: energy insecurity. For all their differences and historical grievances, Asian countries share the need to strengthen energy security while addressing the environmental challenges that come from fast-growing consumption. Asia's energy landscape today is a cluster of segregated markets. A change may be in order. Gal Luft elaborates.
It is easy to see why the recent Russia-China pipeline deal, encompassing some $400 billion of gas over 30 years, would make policymakers on both sides of the Atlantic cringe, especially since it comes just days before the G-7 leaders meet in Brussels to discuss how to isolate Russia. But while there are many reasons for the West to dislike the gas deal, it may not as bad as it seems. In fact, it may offer some unforeseen benefits – even for the United States. Gal Luft explains.
In this Appendix to a Note on European gas supply diversification, Lord Howell writes that the UK fracking issue is being oversold and politically mishandled.
China’s interest in the South China Sea and its potential sub-sea fossil fuel resources has implications for nations across the region and beyond. Answering when and how these interests may manifest themselves in concerted foreign policy actions exercised by China or other littoral states in the region is a major analytical objective of Part I of this two part article series focused on the nexus between natural resources and potential military action in the South China Sea neighborhood.
While Asia has quickly become a major magnet of global oil demand, less noticed have been Asian efforts to develop regional oil hubs. This article explores the challenges and benefits to Asia of developing significant oil storage capacity and the complexities of launching benchmarks (markers) against which regional trading and price adjustments can be made.
On March 26th, European leaders asked US President Obama to help in licensing the export of US derived shale gas to the continent. Such a request comes at a difficult time for all concerned. Tough and potentially costly decisions will have to be made in terms of directing America's natural gas to its best end-use. Gal Luft points out there has been an absence of significant discussion about how America's shale gas revolution can benefit one of the US economy's most important sectors-transportation.
A team of researchers lead by mathematician Dr. Rui Carvalho at the Centre for Mathematical Sciences, University of Cambridge, have come up with a model that demonstrates how Europe can bolster its natural gas resiliency through cooperation and access to each others’ energy markets. Natural gas pipelines, and moreover the networks they create, are expensive to build and even more so to operate if not utilized at or near capacity. Therefore these researchers set about the task of calculating how in times of conflict or crisis European economies could weather a major disruption in gas supplies without adding new capacity. The result was the publication this month of their research in a report entitled, “Resilience of natural gas networks during conflicts, crises and disruptions.”
Recent and ongoing security breaches at companies operating critical energy infrastructure have everyone concerned. There is a long way to go towards harmonizing and regularizing network security protocols across industries as Dr. Vincent Berk, CEO of FlowTraq a network security solutions provider, recently pointed out in an interview concerning cybersecurity with the Journal of Energy Security.
One of the least explored but increasingly important areas of critical energy infrastructure protection concerns offshore oil and gas installations. The international regulatory framework provides a number of countervailing measures that can be used by states to protect offshore installations and respond to attacks and security incidents involving these installations. Mikhail Kashubsky who is with the Centre for Customs and Excise Studies in Australia explores the international regulatory aspects of offshore installations security in the second part of a three-part series for the Journal of Energy Security.
Whether it’s called ‘Green Energy’, ‘Smart Energy’, or ‘Operational Energy’ NATO Member and Partner States have learned a lot about the implications of rising power and energy demands in military operations and how emerging technologies can make the warfighter more effective and efficient. This complex endeavor ranges across a wide range of fields from battery technologies, electric vehicles, and improving the built environment for the solider just to mention a few working examples. This article discusses the role of the NATO Science and Technology Organization in leading this effort, what they are looking at today, in providing scientific and technological leadership for tomorrow.
Within the next six months, Algeria will be facing its next round of presidential elections. The stakes are high for incumbent President Abdelaziz Bouteflika and even higher for this hydrocarbon nation. The country's energy future is dominated by Sonatrach its national energy champion that has struggled in recent years to keep its oil and gas flowing at rates that can sustain economic growth, exports, and steadily increasing domestic demand for natural gas that powers Algeria's electricity grid. 2013 has not been kind to this North African country, surrounded by instabilities in Mali, Tunisia, Libya and further afield in Egypt. First there was the attack at the In Amenas gas facility that caused the international community to pause and ponder, however briefly, security in this vast state. But fundamental changes in energy markets are also challenging the country to develop its own significant reserves of shale gas, tight oil, and above all sunshine which if captured could secure Algeria's energy future for decades to come.
Turkmenistan, lead by its ever eager President Berdymukhamedov, forged ahead in October with its plans to put itself at the center of the energy security debate in Central Asia. It first hosted a meeting with the OSCE in the capitol city Ashgabat as another step to put itself front and center on security discussions within a UN context. Turkmenistan’s Deputy Prime Minister Rashid Meredov in September proposed not one but five meetings in 2014 to cover energy (and other issues like transport) explaining, “[energy security] is one of the most important components of stable world economy, its protection against distortions and disruptions," and further proposed the establishment of a new UN "universal international law tool kit" to form the legal basis for the international supplies of energy resources with a corresponding UN structure to enforce implementation of these provisions. Realistically the proposed efforts can also be seen as a flanking maneuver to ward off Russia’s ongoing influence in the republic and as a push-back to growing Chinese influence over its gas resources as contributor Anthony Rinna details in the following article.
When energy forecasters talk about future energy production and prices, people listen, especially if the modelers come from or represent vaunted organizations such as the International Energy Agency or the US Energy Information Administration. Although these are learned, serious people, relying on their long term forecasts - projections going out 10 or 20 years - is largely a mistake because they are almost always wrong, as suggested by a comparison of the Department of Energy’s 2005 forecasts to the actual outcomes. The piece offers explanations for why such forecasts are mistaken and explores the implications of society’s over-reliance on them.
Militarizing oil interests and assets is not something that oil companies openly attest or subscribe to based on their interests in maintaining their public, reputational value. However actions speak larger than words. The government of Ecuador has an interesting relationship with foreign oil companies as JES contributor Nicolai Due-Gundersen points out in his analysis of Iraq’s oil law and the potential inroads this law could provide to private military contractors (PMCs) in continuing their security activities in Iraq. In the meantime, Iraq has created an ‘oil police’ that Due-Gundersen maintains is the key to limiting the latitude of PMCs working in the Iraqi oil sector.
One of the least explored but increasingly important areas of critical energy infrastructure protection concerns offshore oil and gas installations. The threat environment encompasses potential attacks from terrorists and other disgruntled groups to sabotage carried out by employees of oil and gas companies themselves. Mikhail Kashubsky who is with the Centre for Customs and Excise Studies in Australia explores the threat environment for these installations in the first past of a three-part series for the Journal of Energy Security.
The future of natural gas in Europe is a conundrum. While natural gas demand is soaring in the US and across Asia, demand has actually declined in Europe. Will a turn-away from natural gas dampen the EU's appetite for modernizing its critical energy infrastructure? Is Europe turning to coal to displace gas in power generation and if so is the European Carbon Market actually contributing to this fuel switch? First time contributor to the Journal of Energy Security, Jozef Badida, examines Europe's gas future within this complex context.
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U.S. Senator Richard G. Lugar
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R. James Woolsey, Former CIA Director
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Robert C. McFarlane, Former U.S. National Security Advisor
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