Energy superpower

About Energy superpower


The term 'energy superpower' has several potential definitions that might be used relating to different contexts.[1] In recent years, however, it has come to be used to refer to a nation that supplies large amounts of energy resources (oil, natural gas, coal, uranium, etc) to a significant number of other states, and which therefore has the potential to influence world markets to gain a political or economic advantage. This might be exercised, for example, by significantly influencing the price on global markets, or by withholding supplies.[2] [3]. The status of "energy superpower" should not be confused with that of "superpower", as the nature of an energy superpower is defined very differently due to the non-military nature of an energy superpower's power base.
Some potential energy superpower states have refrained from the use of their reserves to further the state's direct political influence (Canada), or used their energy money more subtly (Norway), rather than using energy assets for direct political influence like energy superpower Russia.
Energy superpowers project greater power than would be otherwise possible due to their lock on the exportable energy markets, and are becoming increasingly valuable to the global economy. In the global commodities' boom of recent years many of these states have benefited massively from increased production and prices.

Contents
Energy superpowers of the world
Russia
Saudi Arabia
Disputed energy superpowers
Potential energy superpowers
Venezuelan potential for oil production
Canadian potential for oil production
Iranian potential for both gas and oil production
Threats to energy superpowers
See also
Notes

Energy superpowers of the world


There are currently two "recognized" energy superpowers globally, both of whom have the largest reserves and production in their areas of energy they specialize in. Russia has the world's largest reserves of natural gas and is enormously influential on the world stage because of that, while Saudi Arabia has the world's largest conventional oil reserves and highest oil production rates in the world. Actions taken by companies or the government in either state are enough to produce an immediate reaction in the stock market, although the markets have been known to second-guess Saudi Arabia's stated production numbers.
Russia

Main articles: Energy policy of Russia

Russia has the largest known natural gas reserves of any state on earth, along with the second largest coal reserves, and the eighth largest oil reserves.[4] It is the world's second largest oil producer and, from time to time, overtakes Saudi Arabia as the world's number one.[5]
Russia is also the world biggest natural gas producer with 22.3% of global natural gas production and also the biggest exporter with 24.0% of global natural gas export.Key World Energy Statistics. 2006 Edition, International Energy Agency 2006In recent years Russia has identified the gas sector as being of key strategic importance. Many private oil and natural gas companies, most notably Yukos and Sibneft have been consolidated under the control of the state-controlled Rosneft and Gazprom respectively.
Gazprom also has control over all gas pipelines leading out of Central Asia, a region also rich in gas. Russia has used such gas, primarily that from Turkmenistan, on occasions where it has found itself unable to meet all its delivery obligations from its own production. Such circumstances in 2000 led to Gazprom allowing Turkmenistan to use its pipelines to supply gas to the highly-subsidised, low price Russian domestic market - leaving Gazprom free to fulfil its obligations towards European customers.[6] Gazprom sells a 33% of its gas to Europe, accounting for nearly 70% of the company's revenue. The remaining 30% is sold for domestic Russian consumption at highly subsidized prices.
As of 2006, Russia supplies over 25% of Europe's oil and over 40% of its gas. Its energy superpower status has recently become a hot topic in the European Union.[7] Russia's overwhelmingly large reserves of natural gas have helped give it the title without much debate.[8][9].
Russia has recently been accused in the West (i.e. Europe and the United States) of using its natural resources as a policy tool to be wielded against offending states like Georgia, the Ukraine, and other states it perceives as hindrances to its power. At the beginning of 2006 Russia greatly increased the price of gas for the Ukraine following that country's Orange Revolution. It later doubled natural gas prices to the Republic of Georgia following an international incident, apparently in an alleged effort to strongly influence the Georgian leadership's defiance of Moscow.
Russia, in turn, accuses the West of applying double-standards relating to market principles, pointing out that it has been supplying gas to the states in question (ruled by regimes Moscow considers unfriendly) at prices that were significantly below world market levels, and in some cases remain so even after the increases. Russia argues that it is not obligated to effectively subsidize the economies of post-Soviet states by offering them resources at below-market prices. Russia has greatly increased the price of gas for Armenia and Belarus, which, unlike Georgia and the Ukraine, has been closely allied with Moscow and forms a loose union state with Russia.
Despite Russia's vast potential, there are have been concerns voiced by TNK-BP's Viktor Vekselberg that it will run into grave difficulties in the near future.[10] Russia has not opened up any new gas fields since the fall of the Soviet Union, those which are currently in operation are rapidly depleting. This, combined with inefficient plant and ageing infrastructure, have raised concerns that, unless quick action is taken, Russia could find itself unable to meet its commitments without importing additional gas from Central Asia - somewhat ironic given Russia's immense reserves.[11] Such a scenario is not inevitable as Gazprom has access to vast amounts of gas, and according to Gazprom's Alexey Miller intends to singlehandedly explore the Shtokman Field, one of the world's largest natural gas fields.[12]
Saudi Arabia

Saudi Arabia possesses both the world's largest known oil reserves and produces the largest amount of the world's oil. Considered to be the leading state of OPEC, its decisions to raise or cut production almost immediately impact world oil prices. Saudi Arabia is perhaps the best example of a contemporary energy superpower, in terms of having power and influence on the global stage (due to its energy reserves and production of not just oil, but natural gas as well). It is often referred to as the world's only "oil superpower".[13]

Disputed energy superpowers


Canada holds perhaps one of the more ambiguous status' in international relations when it comes to its status as an energy power. Supporters of it being included with Saudi Arabia & Russia will point out that Canada has the world's highest production of uranium, producing over a quarter of the world's uranium in 2006.[14] Canada also ranks number one on earth in energy produced via hydroelectricity, and exports large amounts of electricity to the US from hydroelectric production.[15] Some Canadian institutions have taken to even calling the country an energy superpower, but these claims are almost all predicated on its oil production rates. [16] Canadian Prime Minister Stephen Harper has taken to calling his country an energy superpower in Summer 2006.[17]Harper calls Canada “energy superpower”, by Mike Blanchfield, CanWest News Service, 14 July 2006[18] Currently Canada also ranks 3rd on earth in natural gas production behind Russia and the US, and seventh in oil production.
However, there are a number of critics of this view, who feel that Canada has not really established itself as an actual energy superpower. Critics, like Shawn McCarthy of Toronto-based Globe & Mail feel that in comparison to already existing energy superpowers like Russia, Canada is more like a "energy superstore" compared to Russia, which he says is the "real deal".[19] Still others feel that Canada has not yet achieved the status, but rather is emerging as its production rates in oil grow, like the Oxford Analytica independent scholarly consulting firm.[20] However, even proponents like Oxford Analytica acknowledged the incredible amount of investment that would be necessary to bring this about, and that Canada's growing energy production could precipitate a confrontation between the US and China over access to Canada's energy assets. Canada's potential status as an energy superpower is discussed in further detail below.
Still others like Dr. Raymont of EnergyINet Inc. are concerned that environmental principles will be sacrificed in the pursuit of Canada being an energy superpower, and wish it to set a standard as the world's only "clean" or "responsible" energy superpower.

Potential energy superpowers


In addition to the recognised powers, certain states have large or even enormous energy reserves that have not yet been exploited significantly, and which therefore have the potential to become the energy superpowers in the future.
According to Manik Talwani, a geophysicist at Rice University, there are two countries that are most likely to attain the status of Oil superpower: Venezuela and Canada.Canada: The next oil superpower?, by Manik Talwani. The New York Times 2003 Citing their enormous potential reserves (1.2 trillion potential barrels for Venezuela and 1.6 trillion for Canada's oil sands), Dr. Talwani believes that they have the reserves to become energy superpowers in the next few decades as oil production declines elsewhere. However, as Dr. Talwani notes, both need 100 billion dollars or more to increase their production levels up to those of true energy superpowers.
Venezuelan potential for oil production

Says Dr. Talwani of Venezuela's ability to expand production, quote,
"Of course, expanding heavy oil production to make it a significant part of our energy strategy will require a huge investment. For example, oil companies have estimated that achieving just an additional 200,000 barrels a day of converted Venezuelan heavy oil would take some $3-billion in research and new refining capacity. Extrapolating such figures is hard to do, but a back of the envelope calculation indicates that it could take more than $100-billion to bring Venezuelan daily production up to Saudi levels."
Dr. Talwani said this in 2003, before the large run-up of oil prices between 2004-2006.
Canadian potential for oil production

Canada itself produces today some 1.3 million barrels a day, and is projected to increase its production at least double by 2017. However, it has far larger capital costs associated with expanding production, as shown by the "30 percent increase in average capital costs over the last year has challenged the growing market along with major infrastructure issues", noted by Monsters & Critics' Kristyn Ecochard.[21]
Iranian potential for both gas and oil production

Iran has the third-largest proven oil reserves and second-largest proven gas reserves in the world, which gives it a hybrid status between Russia and Saudi Arabia. If its current relations with United States become less tense, increased foreign direct investment in the energy sector may hold the potential for becoming an energy superpower in the combination of gas and oil energy. British journalist Julian Evans has written that the sooner Iran lets go of its outdated ambitions to be a nuclear superpower, the quicker it can become a modern energy superpower.[22]

Threats to energy superpowers


Recently a new strategy has emerged from al-Qaeda when it comes to fighting the United States. Rather than only targeting the U.S. interests directly in an attempt to cripple it, al-Qaeda now believes that cutting off the supply of energy to the U.S. should be a high priority.[23] In particular, several powerful energy producing states like Saudi Arabia & Canada have had their energy industries listed as targets in al-Qaeda's effort to bleed the U.S. dry. In an apparent attempt to carry out this strategy, several masked men attempted to enter and destroy a section of the Saudi Abqaiq oil refinery. As of yet no attempt to attack energy industry infrastructure has succeeded by a known terrorist group, although Nigeria faces disruption of its energy industry by local rebel forces.
Says Ian MacLeod of the CanWest News Service, "A major supply disruption would send energy prices soaring. Had the Abqaiq attack been successful -- guards fired on cars driven by the bombers, detonating the explosives inside -- some experts say oil prices would have likely broken all records. A catastrophic hit could bring transportation and other parts of the U.S. and world economies to a standstill."
Energy superpowers as a result, while blessed with enormous natural wealth, are beginning to be pegged as targets in the worldwide war on terror. While Saudi facilities are relatively well-protected, there is no consensus as yet as to the seriousness of the threat to other countries nor how well prepared they might be to stop an attack.

See also



★ World energy resources and consumption

★ Oil reserves

★ Russia-Belarus energy dispute

★ Russia-Ukraine gas dispute

★

★ Great Energy Power

★ Energy security

★ Petroleum politics

Notes


1. How Russia's energy superpower status can bring supersecurity and superstability, Civil G8, 2006
2. "Russia Won't Act Like an Energy Superpower": Making Promises that Can't Be Kept, Global Events Magazine, September 15, 2006
3. The Emergence of Russia as Potential Energy Superpower and Implications for U. S. Energy Security, Dusseldorfer Institut fur Aussen-und Sicherheitspolitik, 22.01.2005
4. Russia Energy Data, Statistics and Analysis - Energy Information Administration (US Govt)
5. Russia's oil renaissance
6. Russia takes heat over energy supply, by Judy Dempsey, International Herald Tribune, 12 February 2006
7. Beware Russia, energy superpower, by Philip Delves Broughton, The First Post, 16 October 2006
8. How Sustainable is Russia's Future as an Energy Superpower?, by the Carnegie Endowment for International Peace, 16 March 2006
9. Russia: The 21st Century's Energy Superpower?, by Fiona Hill, The Brookings Institution, 5 October 2002
10. TNK-BP warns of Russian gas shortage in 2007, by Tarmo Virki, SignonSanDiego.com, 24 November 2006
11. What if Russian Gas Runs Low?, by Edward Lucas, The Economist, 23 November 2006
12. Gas from Shtokman to be piped to Europe, press release by Gazprom, 9 October 2006
13. Saudi vows to keep oil flowing, by CNN 31 May 2004
14. Canada's Uranium Production & Nuclear Power. Nuclear Issues Briefing Paper # 3
15. Canada. Energy and power
16. Canada – Energy Superpower in the Global Oil Market Context. CERI 2007 Oil Conference
17. FED - Canada to be 'superpower' in energy, Harper says
18. Canada an emerging energy superpower: Harper, by CTV.ca News Staff, 20 September 2006
19. Russia, pumped
20. Canada To Compete In Oil Market
21. Increasing oil sands production, by Kristyn Ecochard, Monsters & Critics. 14 February 2007
22. The EU should be playing Iran and Russia off againsta each other, by Julian Evans, Eurasian Home, 8 November 2006
23. Al-Qaeda calls for attacks on Canadian oil facilities




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