ENERGY: Asian Needs Likely to Have Major Geopolitical Consequences

By Jim Lobe Reprint | | Print |

Jim Lobe

WASHINGTON, Feb 16 2001 (IPS) - Asia’s growing energy needs over the next 20 years are likely to have profound geopolitical consequences, according to a three-year study by a bipartisan commission released here this week by the Center for Strategic and International Studies (CSIS).

Competition for existing reserves in Asia region could boil over into armed conflict between states, while increased dependence by China on Mideast oil may prompt Beijing to forge military relationships with countries there which “would be of concern to the United States and its allies”, according to the three-volume report.

Due to its own growing reliance on foreign energy supplies, the United States itself will be vulnerable to any major disruption in either global supply or demand, it says.

As a result, Washington should avoid using unilateral sanctions against key oil-suppliers, such as those which currently apply to Iran, Iraq, and Libya; stop blocking pipeline construction from the Caspian region and Central Asia through Russia and Iran; and promote investment in energy- producing countries, according to the report.

Regional energy integration through the construction of electricity grids or pipelines between consumers and producers could also produce new political alignments that could help maintain stability among key power blocs.

As a major energy producer, Russia may become more closely linked with both the European Union (EU) and China; while Central Asia is likely to find itself in a similar position with China; and Bangladesh with India, according to the commission’s findings.

The increased importance of Middle Eastern oil in global energy supplies over the next 20 years will also require the United States to maintain a strong military presence in both the Gulf and near critical “choke points” through which oil tankers will travel on their way to Asian markets, according to the report, ‘The Geopolitics of Energy into the 21st Century’.

That will create “opportunities for co-operation – and for tension – with both exporters and importers,” it says.

The report, released as President George W. Bush is still making appointments to key policy posts, reflects the views of a number of different interests which already enjoy influence in the new administration, already referred to by some as “oilagarchy”, due to the past ties of Bush, Vice President Dick Cheney, and National Security Adviser Condoleeza Rice to the oil industry.

The commission was co-chaired by former Democratic Sen. Sam Nunn, who hails from the pro-defence, conservative wing of his party, and James Schlesinger, who has served as secretary of defence and energy under Republican presidents.

Congressional co-chairs included Sen. Joe Lieberman, another conservative Democrat who ran as the party’s vice-presidential candidate in last November’s election, and Sen. Frank Murkowski, a Republican who has long championed opening the Arctic National Wildlife Refuge to drilling by US oil companies in order to reduce US dependence on foreign oil and sell Alaska oil to energy-hungry Japan.

Other participants included senior energy officials in the US government and executives from major oil companies, such as Aramco Services Co, Halliburton Company, Exxon Mobil, Texaco, Arco, Shell International, and British Petroleum.

The CSIS, one of Washington’s more prominent foreign-policy think- tanks, receives strong financial support from the corporate sector, particularly from multinational oil companies and big military contractors.

Global demand for energy, according to the report, is projected to rise by more than 50 percent over the next 20 years, but most of the increase will take place in the developing world, especially in Asia. In order to keep up with demand, producers will have to substantially increase supplies over the period.

“Central to the geopolitics of energy during 2000-2020,” according to the report, “is the fact that energy demand will be met in essentially the same ways it was met at the end of the twentieth century,” with fossil fuels – oil, gas, and coal – accounting for 88 percent of the global share in 2020, up from 86 percent in 2000. The major difference will be the increasing share of that claimed by natural gas at the expense of oil and coal.

Development of oil and gas reserves is considered sufficient to keep up with demand until well after 2020, the report says, stressing, however, that a key policy objective on the part of all major actors is to assure a steady, reliable supply.

This may not be easy, however, because all but a few of the major oil-exporting countries, especially those in the Gulf, Africa, and Latin America “exhibit characteristics that could make (them) vulnerable to domestic political instability severe enough to cause (their) oil production to be diminished substantially”.

While the United States can and should, with European and Asian financial assistance, patrol the sea lanes to protect oil supplies, new international agreements are needed to protect pipeline systems and electrical grids.

“Governments must find ways to work with the private sector to minimise the vulnerability of all energy infrastructures to sabotage or terrorist attack,” the report says.

As the world’s most important producer of oil, the Gulf, and especially Saudi Arabia, will be the cornerstone of successful efforts to ensure a reliable oil supply. The region, in fact, must expand oil production almost 80 percent over the 20 years, as the relative share of global production currently held by North America and Europe drops.

In pursuit of that target, Iran and Iraq – against which Washington currently has far-reaching oil-related sanctions – must also increase their production, according to the report. If US companies hope to participate in that expansion, sanctions against the two countries, as well as Libya, should be dropped, the report suggests.

At the same time, the share of global oil production by the countries of the former Soviet Union is likely to increase from nine percent last year to almost 12 percent. While Caspian oil will be an important addition to the total production, it will not be pivotal.

Europe and Asia will be the biggest consumers of Gulf oil, while Europe’s need for natural gas will be covered mostly by Russia, setting up what the report calls a “worrisome dependence”.

The study stresses that neither nuclear power nor renewable sources of energy are likely to claim a greater share of world energy supplies than they do now by 2020. Industrialised countries should provide cleaner and more efficient technologies to developing countries in order to reduce consumption and greenhouse-gas emissions which contribute to global warming.