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Home Archive July 2010 Issue

July 2010 Issue

China, China, Everywhere

Not  a day goes by without some inauspicious report regarding Chinese, and writ large, emerging market energy demand.  The most recent, and ominous, announcement by the IEA this month reports that China has eclipsed the US as the world’s largest energy consumer.  While this issue of the JES did not set out to focus on China in particular, it seems that across every corner of the globe China has moved evenly, decisively, and consistently to secure upstream resources for its eventual downstream consumption.  In the oil patch, where producers have been unable to replace depleted reserves with new finds (or in the case of OPEC to produce more), this is decidedly significant for international oil markets: putting upward pressure on prices—even in this lingering period of global economic malaise—and challenging the integrity of long-term established energy relations between neighboring states.  For the US, this is nowhere more apparent than in US-Latin American energy relations, covered in this issue by Dr. Nancy E. Brune, an energy security specialist at the imminent US Sandia National Laboratory.

Deconstructing how energy security policies are composed and implemented, even in China, contributors Llewelyn Hughes and Sean J. Kreyling put forward a succinct framework for analysis.  Their findings suggest that even in states perceived as unitary actors like China, energy policy takes into account multiple variables which must be first understood before ‘energy security’ policies can be taken for granted as such. 

In India, that ‘other’ emerging energy behemoth, the evolving nature of India’s natural gas sector may provide succulence in satisfying the  demand for energy by this growing population and economy.  However, Shebonti Ray Dadwal of India’s Institute for Defence Studies and Analysis in New Delhi points out that even if the gigantic new natural gas deposits of Krishna-Godavari basin play out well, and even if shale gas can be developed on the sub-continent, the country will ultimately have to look elsewhere to satisfy future domestic gas demand.  For years, India and Turkmenistan have been seeking cooperation in the gas trade to this end.  But while sluggish  negotiations continue on projects such as the Turkmenistan-Afghanistan-Pakistan-India pipeline, China has stepped into Central Asia in a meaningful way.  As a result, today hydrocarbons from Kazakhstan and Turkmenistan are flowing east to China and not south to India.   The same malaise on moving forward with project development can be said for Europe’s Black Sea region, where progress has stalled on new transit routes for bringing Central Asian gas to Europe, while Chinese success is apparent in the form of completed pipelines, pump stations, and throughput.  It is important, not the least for the reason of security of supply, that Russian capture of downstream assets be slowed across the Black Sea region.  A modicum of diversity in Europe’s natural gas supply away from Russia remains elusive, while Russia’s  Gazprom must be more than pleased that Central Asian (read Turkmen) gas flows east without challenging its dominance of Western European markets.  Sohbet Karbuz of the Paris-based Observatoire Méditerranéen de l'Energie covers the challenges  in the Black Sea and delineates how to kick-start enhanced energy cooperation between the US and EU with its Black Sea partners.   Contributors Andrej Nosko and Petr Lang provide a positive case study on how the landlocked Czech Republic has lessened its dependence on Russian gas and in doing so strengthened its national political and economic independence.   

Diversifying away from China and Russia, this issue of the JES is rounded off with three salient articles that examine the impact of the discovery of a huge natural gas field off of Israel’s Mediterranean coast and how Hizballah is manipulating the find for political saber-rattling, the role of Iran in India’s energy security calculus, and the propensity of oil rich Arab Gulf States to diversify their economies away from oil dependence through the advent of their sovereign wealth funds (SWFs) with a view towards what impact this may have on global oil supply.    

Best Regards,
Kevin Rosner,
Editor, Journal of Energy Security

editor@iags.org

 

Lessons from Prague: How the Czech Republic Has Enhanced Its Energy Security

Lessons from Prague: How the Czech Republic Has Enhanced Its Energy Security

In an era of hand-wringing about growing energy dependency on Russian gas across the European landscape, the Czech Republic provides some important, working examples of how this landlocked country has enhanced its own energy security. Some of these steps have included the diversification of energy and power infrastructure, adding alternative nuclear capacity, and diversifying source supply.  While more work certainly needs to be done, the country provides a positive example of how national determination and the willingness to place a premium on security over short-term cost considerations can bolster national sovereignty through strengthening national energy security. 

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Hizballah Takes Aim At Israel's Natural Gas Discovery

The specter of a potential new outbreak of violence between Hizballah and Israel has been raised with the discovery of a new natural gas field off of Israel's coast.  While resource conflicts have sometimes lead to outbreaks of violence between competing interests (states), the situation in the Eastern Mediterranean is a different asymmetric row between a state (Israel) and a decidedly non-state actor, Hizballah.    

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Losing the Energy Battle: How and Why the US and EU Need to Engage the Black Sea Region

Losing the Energy Battle: How and Why the US and EU Need to Engage the Black Sea Region

The Black Sea region is hard for many to pinpoint yet one of the most vitally important regions to European energy security.  While states across the region over the past decade have transformed into NATO and EU Member States, Western interests have failed to expand the region’s energy infrastructure by bolstering important projects; the BTC and SCP projects now completed are the only exceptions.  While Western interests have been 'negotiating' the Nabucco concept, China has completed Central Asian export projects from Kazakhstan and Turkmenistan.   Concurrently, Russia's energy imperialism is growing unimpeded as its expands its interests across the Black Sea region to the dismay of Western interests.  Where the region is headed, why it is important, and what needs to be done is covered by JES Contributor Sohbet Karbuz.

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The Role of Natural Gas and Central Asia in Indian Energy Security

The Role of Natural Gas and Central Asia in Indian Energy Security
India's gas outlook is currently upbeat with new finds and potential shale gas prospects in the hopper.  However, JES Contributor Shebonti Ray Dadwal of India's Institute for Defence Studies and Analysis predicts that in the long term India will in all likelihood have to import gas, assuming that the gas market develops as envisaged and the price suits India. New Delhi has long sought a role in Central Asia’s energy sector for strategic considerations, but has met with little success so far. 
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Understanding Resource Nationalism in the 21st Century

Understanding Resource Nationalism in the 21st Century

A frequent topic in energy security circles is the relationship between international oil companies (IOCs) and national oil companies (NOCs) and what makes them tick.  However, in carrying through such an analysis, one needs to scratch beneath the surface and examine the regulatory, budgetary, commercial and national security environments in which both sets of companies must operate.  Contributors Llewelyn Hughes and Sean J.  Keyling offer a highly nuanced analysis of the policy environments that US oil and fuel companies operate within, using two case studies involving China's 2005 bid for Unocal and the evolution of ethanol as a transportation fuel in the US.  In doing so, they offer a fresh framework for analysis that inclusively addresses how the energy security debate stretches far beyond national security objectives and is impacted by a set of more local or regional policy issues.  

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Beyond Oil: Global Energy Security & Sovereign Wealth Funds

While net energy consumers seek to diversify away from oil, authors Sven Brehendt and Joesph Helou maintain that Arab oil producers in the Persian Gulf are also seeking long-term diversification strategies that would lead them away from oil dependence.  But what are the long term implications of growing Gulf State wealth in the form of sovereign wealth funds (SWFs) on oil market security for Western consumers?  Will the advent of SWF's impact the oil supply policies of producing states?  Moreover, what impact does this wealth have on the foreign policy behavior of Arab Gulf States, and does the fact of this expanding wealth-power base have implications on the national and collective security of oil importing nations?

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Energy Security Multipolarity: Iran's Role in India's Energy Calculus

Energy Security Multipolarity: Iran's Role in India's Energy Calculus

'The world's largest democracy', India, seeks to shore-up its national energy security along a tight-rope of deepening relations with Washington on the one hand and Chinese energy expansionism in its own backyard on the other.  Dr. Harsh V. Pant bores down into the complexities of energy, bi-lateral Iranian-Indian relations, and the role of China in complicating Indian energy security. 

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Latin America: A Blind Spot in US Energy Security Policy

Latin America: A Blind Spot in US Energy Security Policy

Failure of the United States to adequately engage its Latin American partners, on whom American consumers depend for a full one-fourth of their oil supply, is the Achilles heel not only of American foreign policy, but of its energy policy as well.  Contributor, Dr. Nancy Brune of Sandia National Lab, lays out what are some of the cascading effects of America's 'unfocused engagement' with our neighbors.  These effects include creeping Russian, Iranian and Chinese influence in countries of importance to US national security interests, not the least of which where energy is concerned.

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