We will line up, once again, to engage the debate over the evils of energy production. In the wake of the mine explosion and the disaster in the Gulf it is inevitable and not altogether a bad thing. The arguments tend to narrow to ideology, both sides. The inherent problem with the “ideological reaction” is that it has a proclivity to ignore surrounding facts and realities outside of a limited reality. To the good, both sides hae some orientation to seeing the energy issue as a security issue as well as an energy issue. It may be an appropriate point of context to look beyond our shores from both points of view
It’s easy to look to the Middle East and Venezuela as oil producers that don’t care for us overly much, and we should. There is however much, much more going on.
Since January 1, 2010 Russia has been involved in seven significant energy deals: one related to the development of an existing oil field, two exploration deals with Venezuela and Uzbekistan; a proposal to build a nuclear plant in Colombia. A deal to buy three Venezuelan owned German based refineries. “Serious discussions” are ongoing concerning energy development in Yemen. Additionally, the Russians announced deals, commencements or significant progress on three major pipeline deals with Bulgaria, China and Belarus.
Prior to January 1, 2010 the Russian pace was similar with a major focus on Central Asia and the development of delivery capabilities. It’s also worth note that arms deals frequently surround Russian energy deals as it has in Venezuela.
Venezuela, facing the reality of their own “competence gap” in the oil fields and on the heels of nationalization has turned to Russian, Iranian and Chinese partners. There have been five big energy deals for the Venezuelans since January.
China has been busy as well. Internal decision making in China, as released by China, focused on a recommendation to extend Chinese reach regarding energy supplies and to move to secure those supplies. Recommendations included use of the Chinese foreign currency reserves to execute the recommendations. They also announced a plan to consolidate all Chinese energy companies to function as a consortium. Reverse OPEC!
China was involved in six big deals. China executed a $60 Billion dollar deal with Australia to purchase natural gas. A development deal with Brazil executed between state owned oil companies. The Chinese also announced the removal of a major hurdle in the construction of a Sino – Russian pipeline. Venezuela got a $900 Million loan, half in Chinese currency, redeemable against oil exports to China. Egypt got a $2 Billion refinery deal in cooperation with the Chinese.
But that’s not all. Argentina announced two new exploration projects, one a deep water facility, off their coast. Iran made supply and investment commitments in Azerbaijan and Uganda. Uzbekistan got a deal with Russian LUKOIL for exploration.
Busy, busy, busy; but this list is not guaranteed comprehensive!
In that time frame I saved not a single significant release related to US energy efforts other than talks with Uzbekistan over “energy cooperation” and overtaking Russia as the world’s number one producer of natural gas. No deals, no exploration, no pipelines, no refineries, no infrastructure. In fact we managed to tick off Azerbaijan, where we were also seeking “energy cooperation”. The Azerbaijanis made their deal with the Russians.
One former Super Power and one soon to be Super Power are busy the world over; they identify, secure, develop, finance and provide infrastructure to secure their relative positions and perceived self interest. We on the other hand lack any focus on carbon based fuels other than that required to handle us today. “Green” options and development are fine, IF you have a plan to get from here; dependence, to there; self sufficiency. Oil and gas are those bridges to the green future and we appear to have exited the game in favor of China and Russia.
Russia has not hesitated to use a variation on the “politics of oil”, a la the Arab oil embargo in the 70’s. Europe, Central Asia, former Republics have all felt the threat or the sting of reliance on Russian energy supplies. When political push came to shove those supplies were a stick to insure the Russian position prevailed. Russians are not shy about their view of self interest, and they’re still angry.
China recognizes the necessity of an economic bridge consisting of oil and gas to however they see their energy future. Their economy is as sensitive to energy supplies and expense as any economy on earth. Chinese behaviors would indicate that they see the energy transition consisting of decades. Does anyone think that China would not move aggressively to protect what they consider critical supply lines and sources? We have defined such things as in our security interests. The Chinese will eventually apply the definition of security interests associated with energy as well. This will define an entirely new sphere of Chinese influence and activity!
The energy issues are global, they’re political and they are certainly about how key nations view what the future balance of power will be based on. (no pun intended) It could well be based on the ability to produce, transport and potentially deny energy supplies. Who can or is positioning themselves to be able to do that? At best we’ve doubled the jeopardy, going from one, OPEC; to two adding Russia.
Those convinced of the “evils” of domestic energy production might consider, for just a moment, the other potential evils afoot in the game.
(source material: Stratfor)