The race to secure energy supplies is very much on

Jul 15, 2004 02:00 AM

by Syed Rashid Husain

In a world faced with galloping consumption of fossil fuel, the race to secure energy supplies is very much on. The tussle to acquire and ensure energy supplies is taking place all across the globe.
In the Caspian Sea region, European, Russian, Chinese and American governments and oil companies are battling for a stake in the big oil fields of Kazakhstan and Azerbaijan. The presence of US forces in the region bordering Afghanistan, on the pretext of providing security support to the Kabul government, is also being watched by many including Russia, with weary eyes.

In Africa, the United States is building a network of military bases and diplomatic missions whose main goal is to protect American access to oil fields in volatile places such as Nigeria, Cameroon, Chad and tiny Sao Tome -- and, as important, to deny that access to China and other energy thirsty nations.
With the Chinese demand now surpassing 6 mm bpd, and expected to double by the end of 2020, oil security has assumed top priority in Beijing. Faced with this, Chinese firms have not only been tapping more domestic oil sources but have also been energetically pursuing a "go-out" strategy, looking for new and stable sources of oil in the international market.

In the run-up to the Iraq war, Russia and France clashed with the United States over whose companies would have access to the oil in post-Saddam Hussein Iraq. Less well known is the way China has sought to build up its own oil alliances in the Middle East.
In 2000, Chinese oil officials visited Iran. China Petroleum & Chemical Corp. (Sinopec) was in talks with Iran to buy LNG and as per press reports the two sides were also considering a Chinese stake in Iranian oil projects. Iran is known to be seeking (foreign) investors to explore for crude oil in three fields in the northern and southern Azadegan and Kushkhosseineh.

In the meantime, China and Japan are currently locked in a diplomatic battle over access to the big oil fields in Siberia.China recently replaced Tokyo as the No. 2 oil consumer and importer of the world.
After giving up its share in the neutral zone between Saudi Arabia and Kuwait, Japan is entirely dependent on oil imports to meet its needs. According to some reports, it is now desperately lobbying Moscow for a 2,300-mile pipeline from Siberia to coastal Japan. But fast-growing China sees Russian oil as vital for its own "energy security" and is pushing for a 1,400-mile pipeline south to Daqing.

The competition has become so intense that Japan has offered to finance the $ 5 bn pipeline, invest $ 7 bn in the development of Siberian oil fields and throw in an additional $ 2 bn for Russian "social projects."
The energy rivalry does not bode well for the region. The diplomatic tussles only hint at what we’ll see in the Middle East, where most of the world’s remaining oil lies. Even with the new Russian and African oil, worldwide oil production outside the Middle East is barely keeping pace with demand. The region could hence continue to remain the battle ground for influence among the powers to be, looking desperately for stable energy supplies.

Source: Arab News
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