10/05/13 By STEVEN R. HURST
– An unmistakable sense of unease has been growing in capitals around the world as the U.S. government from afar looks increasingly befuddled — shirking from a military confrontation in Syria, stymied at home by a gridlocked Congress and in danger of defaulting on sovereign debt, which could plunge the world’s financial system into chaos.
While each of the factors may be unrelated to the direct exercise of U.S. foreign policy, taken together they give some allies the sense that Washington is not as firm as it used to be in its resolve and its financial capacity, providing an opening for China or Russia to fill the void, an Asian foreign minister told a group of journalists in New York this week.
Concerns will only deepen now that President Barack Obama canceled travel this weekend to the Asia Pacific Economic Cooperation Forum in Bali and the East Asia Summit in Brunei. He pulled out of the gatherings to stay home to deal with the government shutdown and looming fears that Congress will block an increase in U.S. borrowing power, a move that could lead to a U.S. default.
The U.S. is still a pillar of defense for places in Asia like Taiwan and South Korea, providing a vital security umbrella against China. It also still has strong allies in the Middle East, including Israel and the Gulf Arab states arrayed against al-Qaida and Iran.
But in interviews with academics, government leaders and diplomats, faith that the U.S. will always be there is fraying more than a little.
“The paralysis of the American government, where a rump in Congress is holding the whole place to ransom, doesn’t really jibe with the notion of the United States as a global leader,” said Michael McKinley, an expert on global relations at the Australian National University.
The political turbulence in Washington and potential economic bombshells still to come over the U.S. government shutdown and a possible debt default this month have sent shivers through Europe. The head of the European Central Bank, Mario Draghi, worried about the continent’s rebound from the 2008 economic downturn.
“We view this recovery as weak, as fragile, as uneven,” Draghi said at a news conference.
Germany’s influential newspaper Sueddeutsche Zeitung bemoaned the U.S. political chaos.
“At the moment, Washington is fighting over the budget and nobody knows if the country will still be solvent in three weeks. What is clear, though, is that America is already politically bankrupt,” it said.
Obama finds himself at the nexus of a government in chaos at home and a wave of foreign policy challenges.
He has been battered by the upheaval in the Middle East from the Arab Spring revolts after managing to extricate the U.S. from its long, brutal and largely failed attempt to establish democracy in Iraq. He is also drawing down U.S. forces from a more than decade-long war in Afghanistan with no real victory in sight. He leads a country whose people have no interest in taking any more military action abroad.
As Europe worries about economics, Asian allies watch in some confusion about what the U.S. is up to with its promise to rebalance military forces and diplomacy in the face of an increasingly robust China.
Global concerns about U.S. policy came to a head with Obama’s handling of the civil war in Syria and the alleged use of chemical weapons by the regime of President Bashar Assad. But, in fact, the worries go far deeper.
“I think there are a lot of broader concerns about the United States. They aren’t triggered simply by Syria. The reaction the United States had from the start to events in Egypt created a great deal of concern among the Gulf and the Arab states,” said Anthony Cordesman, a military affairs specialist at the Center for International Studies.
Kings and princes throughout the Persian Gulf were deeply unsettled when Washington turned its back on Egypt’s long-time dictator and U.S. ally Hosni Mubarak during the 2011 uprising in the largest Arab country.
Now, Arab allies in the Gulf voice dismay over the rapid policy redirection from Obama over Syria, where rebel factions have critical money and weapons channels from Saudi Arabia, Qatar and other Gulf states. It has stirred a rare public dispute with Washington, whose differences with Gulf allies are often worked out behind closed doors. Last month, Saudi Foreign Minister Saud al-Faisal warned that the renewed emphasis on diplomacy with Assad would allow the Syrian president to “impose more killing.”
After saying Assad must be removed from power and then threatening military strikes over the regime’s alleged chemical weapons attack, the U.S. is now working with Russia and the U.N. to collect and destroy Damascus’ chemical weapons stockpile. That assures Assad will remain in power for now and perhaps the long term.
Danny Yatom, a former director of Israel’s Mossad intelligence service, said the U.S. handling of the Syrian crisis and its decision not to attack after declaring red lines on chemical weapons has hurt Washington’s credibility.
“I think in the eyes of the Syrians and the Iranians, and the rivals of the United States, it was a signal of weakness, and credibility was deteriorated,” he said.
The Syrian rebels, who were promised U.S. arms, say they feel deserted by the Americans, adding that they have lost faith and respect for Obama.
The White House contends that its threat of a military strike against Assad was what caused the regime to change course and agree to plan reached by Moscow and Washington to hand its chemical weapons over to international inspectors for destruction. That’s a far better outcome than resorting to military action, Obama administration officials insist.
Gulf rulers also have grown suddenly uneasy over the U.S. outreach to their regional rival Iran.
Bahrain Foreign Minister Sheik Khalid bin Ahmed Al Khalifa said Gulf states “must be in the picture” on any attempts by the U.S. and Iran to open sustained dialogue or reach settlement over Tehran’s nuclear program. He was quoted Tuesday by the London-based Al Hayat newspaper as saying Secretary of State John Kerry has promised to consult with his Gulf “friends” on any significant policy shifts over Iran — a message that suggested Gulf states are worried about being left on the sidelines in potentially history-shaping developments in their region.
In response to the new U.S. opening to Iran to deal with its suspected nuclear weapons program, Israeli Prime Minister Benjamin Netanyahu told the U.N. General Assembly that his country remained ready to act alone to prevent Tehran from building a bomb. He indicated a willingness to allow some time for further diplomacy but not much. And he excoriated new Iranian President Hassan Rouhani as a “wolf in sheep’s clothing.”
Kerry defended the engagement effort, saying the U.S. would not be played for “suckers” by Iran. Tehran insists its nuclear program is for peaceful energy production, while the U.S. and other countries suspect it is aimed at achieving atomic weapons capability.
McKinley, the Australian expert, said Syria and the U.S. budget crisis have shaken Australians’ faith in their alliance with Washington.
“It means that those who rely on the alliance as the cornerstone of all Australian foreign policy and particularly security policy are less certain — it’s created an element of uncertainty in their calculations,” he said.
Running against the tide of concern, leaders in the Philippines are banking on its most important ally to protect it from China’s assertive claims in the South China Sea. Defense Secretary Voltaire Gazmin said Manila still views the U.S. as a dependable ally despite the many challenges it is facing.
“We should understand that all nations face some kind of problems, but in terms of our relationship with the United States, she continues to be there when we need her,” Gazmin said.
“There’s no change in our feelings,” he said. “Our strategic relationship with the U.S. continues to be healthy. They remain a reliable ally.”
But as Cordesman said, “The rhetoric of diplomacy is just wonderful but it almost never describes the reality.”
That reality worldwide, he said, “is a real concern about where is the U.S. going. There is a question of trust. And I think there is an increasing feeling that the United States is pulling back, and its internal politics are more isolationist so that they can’t necessarily trust what U.S. officials say, even if the officials mean it.”
EDITOR’S NOTE — Steven R. Hurst, The Associated Press’ international political writer in Washington, has covered foreign affairs for 35 years, including extended assignments in Russia and the Middle East.
AP writers Brian Murphy in Dubai, United Arab Emirates, Robert H. Reid in Berlin, Hrvoje Hranjski in Manila, Gregory Katz in London, Josef Federman in Jerusalem, Rod McGuirk in Canberra, Australia, and Sarah DiLorenzo and David McHugh in Paris contributed to this report.
Senior officials in the Obama Administration sent a message to Tehran in the past few days, according to which the U.S. does not intend to join Israel‘s side if it decides to attack the Iranian nuclear installations on its own, reports Israel’s second-largest paper, Yediot Aharonot.
According to the report, the U.S. sent the message to Iran in order to avoid an Iranian response military response that would target U.S. installations in the Gulf region.
The message was reportedly conveyed to Iran through two European countries that serve as a conduit of communication between Iran and the U.S. in times of crisis.
Nationalist newspaper Makor Rishon has accused Yediot Aharonot of working with the Obama Administration against the Netanyahu government’s planned strike on Iran.
According to the New York Times, senior U.S. officials have argued that Israel is “trying to corner” Obama into a military commitment that he does not yet need to make.
- U.S. Tells Iran: We Won’t Join Israeli Attack (raptureimminent.wordpress.com)
- ‘Time is Running Out’ on Iran, Netanyahu Told Visiting U.S. Rep. (raptureimminent.wordpress.com)
- White House Denies Secret Deal with Iran (judgementofamerica.wordpress.com)
This week the SubseaIQ team added 7 new projects and updated 29 projects. You can see all the updates made over any time period via the Project Update History search. The latest offshore field develoment news and activities are listed below for your convenience.
N. America – US GOM
Aug 2, 2012 – McDermott has received a contract by the Discovery system for offshore facilities in the Gulf of Mexico. The project is to deliver new junction facilities for Discovery’s Keathley Canyon connector pipeline system with a 3,300-ton, four-leg platform in 350 feet (107 meters) of water. The unmanned platform will provide pipeline junction facilities for incoming deepwater pipelines from the Hadrian South and Lucius fields and four outgoing shallow-water pipelines to shore. Fabrication is expected to commence this summer in Louisiana with offshore installation commencing in 3Q2013.
Project Details: Lucius
Aug 1, 2012 – Stone Energy reported that the Parmer appraisal well, which was spud during the second quarter of 2012, is expected to reach total depth in the third quarter of 2012.
Project Details: Parmer
Aug 1, 2012 – Eni plans to commence drilling on the deepwater Phinisi well in the first quarter of 2013 using the Deepwater Pathfinder (UDW drillship). The water depth of the site is 6,837 feet (2,084 meters) and is targeting oil and gas.
Project Details: Phinis
MidEast – Persian Gulf
Jul 30, 2012 – China National Petroleum has pulled out of developing Phase 11 of Iran’s offshore South Pars gas field, reported Dow Jones newswires. The firm, which had delayed the project for more than 1,130 days, has already withdrawn all of its workers from the southern Iranian port city of Assaluyeh, the onshore part of South Pars gas field in the Persian Gulf, Mehr said, citing information from the oil ministry.
Project Details: South Pars
Asia – SouthEast
ExxonMobil Finds More Pay Offshore Vietnam
Jul 30, 2012 – ExxonMobil has encountered additional hydrocarbons in its third well offshore Da Nang, Vietnam. The well 118-CVX-3X, on the Ca Voi Xanh field, was drilled by the Seadrill West Aquarius (UDW semisub). The well has been plugged, and the rig has left the site.
Jul 27, 2012 – Lundin Petroleum has completed the Tiga Papan-5 well in Blocks SB307 and SB308 offshore Sabah, Malaysia. The Tiga Papan-5 well targeted an un-appraised fault block of mid-Miocene aged sands at the Tiga Papan unit, which was successfully tested in 1982 by the Tiga Papan 1 well. The well penetrated the target reservoir interval but proved to be water-bearing. The well will be plugged and abandoned as a dry hole. Offshore Courageous (350′ ILC) jackup will now move to drill the Barangan prospect located in Block SB303.
Project Details: Tiga Papan
Europe – North Sea
Aug 2, 2012 – Proserv has received a contract from Maersk Oil UK to provide electro-hydraulic multiplex subsea control systems along with its associated topside and subsea interface systems for the development of the Flyndre and Cawdor project. Maersk Oil is developing a 16-mile-long (25-kilometer-long) subsea tie-back to the Clyde platform, which the fields will connect to. The development is scheduled to commence production in 2013.
Project Details: Flyndre and Cawdor
Aug 2, 2012 – Apache has completed a horizontal well on the Bacchus field which has increased production to 12,900 bopd. The well, Bacchus West, penetrated Jurassic-aged Fulmar reservoir sandstones and logged 889 feet (271 meters) of net pay in three sections. The well currently is producing about 8,500 barrels of oil per day. The first well on the field, Bacchus South, commenced production in May 2012 and reached levels of about 6,000 bopd. Currently the well is producing nearly 4,400 barrels per day. Bacchus is subsea tied-back to the Forties Alpha platform. The Rowan Gorilla VII (450′ ILC) jackup will relocate to the Aviat shallow gas discovery for appraisal drilling.
Project Details: Forties
Aug 2, 2012 – Dana Petroleum reported that the Platypus gas appraisal well in the Southern North Sea has recorded a test flow rate of 27 MMcf/d on a 96/64-inch choke. The ENSCO 80 (225′ ILC) jackup drilled the well to a total measured depth of 14,175 feet (4,321 meters). A drill stem test was completed and the well is being suspended for use as a future production well. Platypus is located in Block 48/1a in the UK southern North Sea. It was discovered in 2010 when well 48/1a-5 encountered the gas bearing Lower Leman Sandstone reservoir.
Project Details: Platypus
Aug 1, 2012 – Faroe Petroleum has selected PetroMarker a contract for an EM survey on their Grouse prospect. Grouse is located in UK License P1853, which lies north of the Shetlands, in an area close to existing infrastructure. The EM survey will be executed with the newly mobilized Normand Baltic at the end of June.
Project Details: Grouse
Aug 1, 2012 – Wintershall, operator of Production License 370, has completed the drilling of wildcat well 33/6-4 on the Kakelborg prospect in the Norwegian North Sea. The well, which is dry, did not encounter reservoir rocks in the Lista formation. The objective of the well was to prove petroleum in reservoir rocks from the Paleocene Age. The well was drilled to a vertical depth of 5,950 feet (1,814 meters) below the sea surface, and terminated in the Jorsalfare formation in the Shetland group in the Upper Cretaceous. Well 33/6-4 was drilled by the Borgland Dolphin (DW semisub) drilling facility.
Project Details: Kakelborg
Jul 30, 2012 – Ithaca Energy is moving forward with development on the Stella and Harrier fields by awarding Technip a contract to carry out all subsea engineering work in the Greater Stella Area. The EPIC (engineering, procurement, installation and construction) contract includes the detailed design and pipelay of a 20-mile (32-kilometer), 10-inch oil export pipeline and a 38-mile (61-kilometer), 10-inch gas export pipeline to the fields’ production platform, along with various other subsea work. The contract is scheduled to be completed in the second half of 2013. The Greater Stella Area development is located on the UK Continental Shelf around 175 miles (282 kilometers) east-southeast of Aberdeen, Scotland, in a depth of approximately 300 feet (91 meters).
Project Details: Stella/Harrier
Jul 27, 2012 – Statoil has commenced exploratory drilling on well 16/2-12 targeting the Geitungen structure. The main objective of well 16/2-12 is to prove the presence of oil-bearing Jurassic sandstones similar to the Johan Sverdrup discovery. The planned total depth of the well is 6,759 feet (2,060 meters) and will be drilled by the Ocean Vanguard (mid-water semisub). Drilling should take about 40 days.
Project Details: Geitungen
Africa – Other
Aug 2, 2012 – BG Group has made a Cretaceous gas discovery at the Papa-1 well in Block 3 offshore Tanzania. The well encountered a 292-foot (89-meter) gas bearing column in the Upper Cretaceous; and based on the preliminary data available, the operator estimates that it holds 0.5-2.0 Tcf in place. A detailed core and petrophysical analysis will confirm the scale of the discovered resource. The well was spud on May 29, 2012 in 7,172 feet (2,186 meters) of water and was drilled by the drillship Deepsea Metro I (UDW drillship) to a total depth of 18,189 feet (5,544 meters) subsea in 57 days.
Project Details: Papa
Aug 1, 2012 – Eni announced that a discovery has been made in the eastern part of Area 4, offshore Mozambique, at the Mamba North East 2 exploration prospect. The new discovery adds at least 10 Tcf of gas in place to Area 4, confirming at least 62 Tcf of gas in-place already discovered, bringing the resources, exclusively located in Area 4, to at least 20 Tcf plus of gas in place, stated the operator. Mamba North East 2, where Eni will conduct a production test, was drilled in 6,542 feet (1,994 meters) of water and reached total depth of 17,602 feet (5,365 meters). The well is located approximately 6 miles (9 kilometers) east of Mamba North East 1 and approximately 14 miles (23 kilometers) from Mamba South 1, 37 miles (60 kilometers) off the Capo Delgado coast. The well encountered 656 feet (200 meters) of gas pay in stacked multiple high-quality Oligocene, Eocene and Paleocene sands. The discovery has proved the existence of hydraulic communication with the Oligocene reservoir in Mamba North East 1 and with those of the Eocene age in Mamba North East 1 and Mamba South 1, through a unique gas column of 1,509 feet (460 meters). Lastly, Mamba North East 2 has identified a new exploration play in the Paleocene located exclusively in Area 4.
Project Details: Mamba South/North
Africa – West
Aug 1, 2012 – Tap Oil announced plans to commence drilling on the Starfish prospect in 1Q13. Starfish is considered a well-defined, large ‘Jubilee style’ Upper Cretaceous fan play at comparable burial depths to the producing Jubilee reservoir. It has recoverable oil potential of 500 million to 1.2 billion barrels at the P50 to P10 range.
Project Details: Starfish
Jul 30, 2012 – Chevron announced that its subsidiary will proceed with the development of the Lianzi field located in a unitized offshore zone between the Republic of Congo and the Republic of Angola. Located 65 miles (105 kilometers) offshore in approximately 3,000 feet (900 meters) of water, the Lianzi field will be developed via a subsea tie-back to the existing Benguela Belize Lobito Tomboco (BBLT) platform located in Angola Block 14. The $2 billion development will include a subsea production system and a 27-mile (43-kilometer) electrically heated flowline to transport the oil from the field to the BBLT platform. First oil is expected in 2015. Once completed, the project is expected to produce a maximum of 46,000 barrels of oil equivalent per day. Chevron Overseas Congo Limited is operator of the Lianzi field and has a 31.25% interest, along with Total (36.75%), ENI (10%), Sonangol (10%), SNPC (the Republic of Congo National Oil Company 7.5%), and GALP (4.5%).
Project Details: BBLT
Jul 30, 2012 – Chariot Oil & Gas has commenced exploratory drilling on the Nimrod prospect offshore Namibia. The company said that the well is the second in its four-to-five well drilling program in the region. The well is being drilled by the Ocean Rig Poseidon (UDW drillship). The firm has previously reported that Nimrod is estimated to contain around 4.9 billion barrels of potential gross mean prospective resources. The drilling location is around 50 miles (80 kilometers) offshore Namibia in 1,180 feet (360 meters) of water and has an estimated total drilling depth of approximately 11,000 feet (3,353 meters). Drilling and logging operations are expected to take approximately 60 days.
Project Details: Nimrod
S. America – Other & Carib.
Aug 1, 2012 – Borders & Southern announced that well 61/25-1 (Stebbing) has been successfully plugged and abandoned, bringing an end to the Company’s current two well drilling program. The Leiv Eiriksson (UDW semisub) drilling rig will now be assigned to Falkland Oil and Gas for its two well program at Loligo, after which it will be demobilized.
Project Details: Loligo
- Recap: Worldwide Field Development News Jul 6 – Jul 12, 2012 (mb50.wordpress.com)
- Recap: Worldwide Field Development News Jul 20 – Jul 26, 2012 (mb50.wordpress.com)
- Recap: Worldwide Field Development News Jul 13 – Jul 19, 2012 (mb50.wordpress.com)
- Superior Energy Reports Solid Operating Results (USA) (mb50.wordpress.com)
- Houston, TX: Oceaneering Reports Record Second Quarter Results (USA) (mb50.wordpress.com)
- PHOTOS: Express installing subsea manifolds ” Helix Currents (mb50.wordpress.com)
- Technip Announces Operating Income Results (France) (mb50.wordpress.com)
Posted by Michael Klare at 7:42am, May 10, 2012.
There has been much discussion recently about the Obama administration’s “pivot” from the Greater Middle East to Asia: the 250 Marines sent to Darwin, Australia, the littoral combat ships for Singapore, the support for Burmese “democracy,” war games in the Philippines (and a drone strike there as well), and so on. The U.S. is definitely going offshore in Asian waters, or put another way, after a decade-long hiatus-cum-debacle on the Eurasian continent, the Great Game v. China is back on.
While true, however, the importance of this policy change has been exaggerated. At the moment, as it happens, the greatest game isn’t in Asia at all; it’s in the Persian Gulf where, off the coast of Iran and in bases around the region, the U.S. is engaged in a staggering build-up of naval and air power. Most people would have little idea that this was even going on, since it rarely makes its way into the mainstream and even less often onto front pages or into the headlines. The Washington Times, for instance, has been alone in reporting that, for the U.S. military, “war planning for Iran is now the most pressing scenario.” It adds that the “U.S. Central Command believes it can destroy or significantly degrade Iran’s conventional armed forces in about three weeks using air and sea strikes.”
Most of the time, however, you have to be a genuine news jockey or read specialist sites to notice the scale of what’s going on, even though the build-up in the Gulf is little short of monumental and evidently not close to finished. It’s not just the two aircraft carrier task forces now there, but (as the invaluable Danger Room website has reported) the doubling of minesweepers stationed in Bahrain, as well as the addition of minesweeping helicopters and coastal patrol boats that are being retrofitted with Gattling guns and missiles. Throw in new advanced torpedoes for Gulf waters and mini-drone subs; add in newly outfitted units of F-22s and F-15s heading for bases in the Gulf to make up “the world’s most powerful air-to-air fighting team.” And don’t forget the major CIA drone surveillance program already in operation over Iran (and undoubtedly still being bolstered).
And then, of course, you would have to add in what we don’t know about, including — you can be sure — the strengthening of special operations activities in the region. It’s the perfect build-up for a post-presidential-election war season. After a failed war in Iraq that left that country ever more firmly allied with Iran and another failing war in Afghanistan, you might think that the Pentagon would want to back off. Well, think again. To adapt the famed mantra of Bill Clinton’s 1992 presidential run, “It’s the oil heartlands of the planet, stupid.” And as TomDispatch regular Michael Klare, author of a new, must-read book, The Race for What’s Left: The Global Scramble for the World’s Last Resources, points out, we’re now entering an era when “war” and “oil” may become synonymous. (To catch Timothy MacBain’s latest Tomcast audio interview in which Klare discusses global energy conflicts, click here or download it to your iPod here.) Tom
Oil Wars on the Horizon
by MICHAEL T. KLARE
Conflict and intrigue over valuable energy supplies have been features of the international landscape for a long time. Major wars over oil have been fought every decade or so since World War I, and smaller engagements have erupted every few years; a flare-up or two in 2012, then, would be part of the normal scheme of things. Instead, what we are now seeing is a whole cluster of oil-related clashes stretching across the globe, involving a dozen or so countries, with more popping up all the time. Consider these flash-points as signals that we are entering an era of intensified conflict over energy.
Six Recent Clashes and Conflicts on a Planet Heading Into Energy Overdrive
From the Atlantic to the Pacific, Argentina to the Philippines, here are the six areas of conflict — all tied to energy supplies — that have made news in just the first few months of 2012:
* A brewing war between Sudan and South Sudan: On April 10th, forces from the newly independent state of South Sudan occupied the oil center of Heglig, a town granted to Sudan as part of a peace settlement that allowed the southerners to secede in 2011. The northerners, based in Khartoum, then mobilized their own forces and drove the South Sudanese out of Heglig. Fighting has since erupted all along the contested border between the two countries, accompanied by air strikes on towns in South Sudan. Although the fighting has not yet reached the level of a full-scale war, international efforts to negotiate a cease-fire and a peaceful resolution to the dispute have yet to meet with success.
This conflict is being fueled by many factors, including economic disparities between the two Sudans and an abiding animosity between the southerners (who are mostly black Africans and Christians or animists) and the northerners (mostly Arabs and Muslims). But oil — and the revenues produced by oil — remains at the heart of the matter. When Sudan was divided in 2011, the most prolific oil fields wound up in the south, while the only pipeline capable of transporting the south’s oil to international markets (and thus generating revenue) remained in the hands of the northerners. They have been demanding exceptionally high “transit fees” — $32-$36 per barrel compared to the common rate of $1 per barrel — for the privilege of bringing the South’s oil to market. When the southerners refused to accept such rates, the northerners confiscated money they had already collected from the south’s oil exports, its only significant source of funds. In response, the southerners stopped producing oil altogether and, it appears, launched their military action against the north. The situation remains explosive.
* Naval clash in the South China Sea: On April 7th, a Philippine naval warship, the 378-foot Gregorio del Pilar, arrived at Scarborough Shoal, a small island in the South China Sea, and detained eight Chinese fishing boats anchored there, accusing them of illegal fishing activities in Filipino sovereign waters. China promptly sent two naval vessels of its own to the area, claiming that the Gregorio del Pilar was harassing Chinese ships in Chinese, not Filipino waters. The fishing boats were eventually allowed to depart without further incident and tensions have eased somewhat. However, neither side has displayed any inclination to surrender its claim to the island, and both sides continue to deploy warships in the contested area.
As in Sudan, multiple factors are driving this clash, but energy is the dominant motive. The South China Sea is thought to harbor large deposits of oil and natural gas, and all the countries that encircle it, including China and the Philippines, want to exploit these reserves. Manila claims a 200-nautical mile “exclusive economic zone” stretching into the South China Sea from its western shores, an area it calls the West Philippine Sea; Filipino companies say they have found large natural gas reserves in this area and have announced plans to begin exploiting them. Claiming the many small islands that dot the South China Sea (including Scarborough Shoal) as its own, Beijing has asserted sovereignty over the entire region, including the waters claimed by Manila; it, too, has announced plans to drill in the area. Despite years of talks, no solution has yet been found to the dispute and further clashes are likely.
* Egypt cuts off the natural gas flow to Israel: On April 22nd, the Egyptian General Petroleum Corporation and Egyptian Natural Gas Holding Companyinformed Israeli energy officials that they were “terminating the gas and purchase agreement” under which Egypt had been supplying gas to Israel. This followed months of demonstrations in Cairo by the youthful protestors who succeeded in deposing autocrat Hosni Mubarak and are now seeking a more independent Egyptian foreign policy — one less beholden to the United States and Israel. It also followed scores of attacks on the pipelines carrying the gas across the Negev Desert to Israel, which the Egyptian military has seemed powerless to prevent.
Ostensibly, the decision was taken in response to a dispute over Israeli payments for Egyptian gas, but all parties involved have interpreted it as part of a drive by Egypt’s new government to demonstrate greater distance from the ousted Mubarak regime and his (U.S.-encouraged) policy of cooperation with Israel. The Egyptian-Israeli gas link was one of the most significant outcomes of the 1979 peace treaty between the two countries, and its annulment clearly signals a period of greater discord; it may also cause energy shortages in Israel, especially during peak summer demand periods. On a larger scale, the cutoff suggests a new inclination to use energy (or its denial) as a form of political warfare and coercion.
* Argentina seizes YPF: On April 16th, Argentina’s president, Cristina Fernández de Kirchner, announced that her government would seize a majority stake in YPF, the nation’s largest oil company. Under President Kirchner’s plans, which she detailed on national television, the government would take a 51% controlling stake in YPF, which is now majority-owned by Spain’s largest corporation, the energy firm Repsol YPF. The seizure of its Argentinean subsidiary is seen in Madrid (and other European capitals) as a major threat that must now be combated. Spain’s foreign minister, José Manuel García Margallo, said that Kirchner’s move “broke the climate of cordiality and friendship that presided over relations between Spain and Argentina.” Several days later, in what is reported to be only the first of several retaliatory steps, Spain announced that it would stop importing biofuels from Argentina, its principal supplier — a trade worth nearly $1 billion a year to the Argentineans.
As in the other conflicts, this clash is driven by many urges, including a powerful strain of nationalism stretching back to the Peronist era, along with Kirchner’s apparent desire to boost her standing in the polls. Just as important, however, is Argentina’s urge to derive greater economic and political benefit from its energy reserves, which include the world’s third-largest deposits of shale gas. While long-term rival Brazil is gaining immense power and prestige from the development of its offshore “pre-salt”petroleum reserves, Argentina has seen its energy production languish. Repsol may not be to blame for this, but many Argentineans evidently believe that, with YPF under government control, it will now be possible to accelerate development of the country’s energy endowment, possibly in collaboration with a more aggressive foreign partner like BP or ExxonMobil.
* Argentina re-ignites the Falklands crisis: At an April 15th-16th Summit of the Americas in Cartagena, Colombia — the one at which U.S. Secret Service agents were caught fraternizing with prostitutes — Argentina sought fresh hemispheric condemnation of Britain’s continued occupation of the Falkland Islands (called Las Malvinas by the Argentineans). It won strong support from every country present save (predictably) Canada and the United States. Argentina, which says the islands are part of its sovereign territory, has been raising this issue ever since it lost a war over the Falklands in 1982, but has recently stepped up its campaign on several fronts — denouncing London in numerous international venues and preventing British cruise ships that visit the Falklands from docking in Argentinean harbors. The British have responded by beefing up their military forces in the region and warning the Argentineans to avoid any rash moves.
When Argentina and the U.K. fought their war over the Falklands, little was at stake save national pride, the stature of the country’s respective leaders (Prime Minister Margaret Thatcher vs. an unpopular military junta), and a few sparsely populated islands. Since then, the stakes have risen immeasurably as a result of recent seismic surveys of the waters surrounding the islands that indicated the existence of massive deposits of oil and natural gas. Several UK-based energy firms, including Desire Petroleum and Rockhopper Exploration, have begun off-shore drilling in the area and have reported promising discoveries. Desperate to duplicate Brazil’s success in the development of offshore oil and gas, Argentina claims the discoveries lie in its sovereign territory and that the drilling there is illegal; the British, of course, insist that it’s their territory. No one knows how this simmering potential crisis will unfold, but a replay of the 1982 war — this time over energy — is hardly out of the question.
* U.S. forces mobilize for war with Iran: Throughout the winter and early spring, it appeared that an armed clash of some sort pitting Iran against Israel and/or the United States was almost inevitable. Neither side seemed prepared to back down on key demands, especially on Iran’s nuclear program, and any talk of a compromise solution was deemed unrealistic. Today, however, the risk of war has diminished somewhat – at least through this election year in the U.S. — as talks have finally gotten under way between the major powers and Iran, and as both have adopted (slightly) more accommodating stances. In addition, U.S. officials have been tamping down war talk and figures in the Israeli military and intelligence communities have spoken out against rash military actions. However, the Iranians continue to enrich uranium, and leaders on all sides say they are fully prepared to employ force if the peace talks fail.
For the Iranians, this means blocking the Strait of Hormuz, the narrow channel through which one-third of the world’s tradable oil passes every day. The U.S., for its part, has insisted that it will keep the Strait open and, if necessary, eliminate Iranian nuclear capabilities. Whether to intimidate Iran, prepare for the real thing, or possibly both, the U.S. has been building up its military capabilities in the Persian Gulf area, deploying two aircraft carrier battle groupsin the neighborhood along with an assortment of air and amphibious-assault capabilities.
One can debate the extent to which Washington’s long-running feud with Iran is driven by oil, but there is no question that the current crisis bears heavily on global oil supply prospects, both through Iran’s threats to close the Strait of Hormuz in retaliation for forthcoming sanctions on Iranian oil exports, and the likelihood that any air strikes on Iranian nuclear facilities will lead to the same thing. Either way, the U.S. military would undoubtedly assume the lead role in destroying Iranian military capabilities and restoring oil traffic through the Strait of Hormuz. This is the energy-driven crisis that just won’t go away.
How Energy Drives the World
All of these disputes have one thing in common: the conviction of ruling elites around the world that the possession of energy assets — especially oil and gas deposits — is essential to prop up national wealth, power, and prestige.
This is hardly a new phenomenon. Early in the last century, Winston Churchill was perhaps the first prominent leader to appreciate the strategic importance of oil. As First Lord of the Admiralty, he converted British warships from coal to oil and then persuaded the cabinet to nationalize the Anglo-Persian Oil Company, the forerunner of British Petroleum (now BP). The pursuit of energy supplies for both industry and war-fighting played a major role in the diplomacy of the period between the World Wars, as well as in the strategic planning of the Axis powers during World War II. It also explains America’s long-term drive to remain the dominant power in the Persian Gulf that culminated in the first Gulf War of 1990-91 and its inevitable sequel, the 2003 invasion of Iraq.
The years since World War II have seen a variety of changes in the energy industry, including a shift in many areas from private to state ownership of oil and natural gas reserves. By and large, however, the industry has been able to deliver ever-increasing quantities of fuel to satisfy the ever-growing needs of a globalizing economy and an expanding, rapidly urbanizing world population. So long as supplies were abundant and prices remained relatively affordable, energy consumers around the world, including most governments, were largely content with the existing system of collaboration among private and state-owned energy leviathans.
But that energy equation is changing ominously as the challenge of fueling the planet grows more difficult. Many of the giant oil and gas fields that quenched the world’s energy thirst in years past are being depleted at a rapid pace. The new fields being brought on line to take their place are, on average, smaller and harder to exploit. Many of the most promising new sources of energy — like Brazil’s “pre-salt” petroleum reserves deep beneath the Atlantic Ocean, Canadian tar sands, and American shale gas – require the utilization of sophisticated and costly technologies. Though global energy supplies are continuing to grow, they are doing so at a slower pace than in the past and are continually falling short of demand. All this adds to the upward pressure on prices, causing anxiety among countries lacking adequate domestic reserves (and joy among those with an abundance).
The world has long been bifurcated between energy-surplus and energy-deficit states, with the former deriving enormous political and economic advantages from their privileged condition and the latter struggling mightily to escape their subordinate position. Now, that bifurcation is looking more like a chasm. In such a global environment, friction and conflict over oil and gas reserves — leading to energy conflicts of all sorts — is only likely to increase.
Looking, again, at April’s six energy disputes, one can see clear evidence of these underlying forces in every case. South Sudan is desperate to sell its oil in order to acquire the income needed to kick-start its economy; Sudan, on the other hand, resents the loss of oil revenues it controlled when the nation was still united, and appears no less determined to keep as much of the South’s oil money as it can for itself. China and the Philippines both want the right to develop oil and gas reserves in the South China Sea, and even if the deposits around Scarborough Shoal prove meager, China is unwilling to back down in any localized dispute that might undermine its claim to sovereignty over the entire region.
Egypt, although not a major energy producer, clearly seeks to employ its oil and gas supplies for maximum political and economic advantage — an approach sure to be copied by other small and mid-sized suppliers. Israel, heavily dependent on imports for its energy, must now turn elsewhere for vital supplies or accelerate the development of disputed, newly discovered offshore gas fields, a move that could provoke fresh conflict with Lebanon, which says they lie in its own territorial waters. And Argentina, jealous of Brazil’s growing clout, appears determined to extract greater advantage from its own energy resources, even if this means inflaming tensions with Spain and Great Britain.
And these are just some of the countries involved in significant disputes over energy. Any clash with Iran — whatever the motivation — is bound to jeopardize the petroleum supply of every oil-importing country, sparking a major international crisis with unforeseeable consequences. China’s determination to control its offshore hydrocarbon reserves has pushed it into conflict with other countries with offshore claims in the South China Sea, and into a similar dispute with Japan in the East China Sea. Energy-related disputes of this sort can also be found in the Caspian Sea and in globally warming, increasingly ice-free Arctic regions.
The seeds of energy conflicts and war sprouting in so many places simultaneously suggest that we are entering a new period in which key state actors will be more inclined to employ force — or the threat of force — to gain control over valuable deposits of oil and natural gas. In other words, we’re now on a planet heading into energy overdrive.
This article originally appeared on TomDispatch.
- Tomgram: Michael Klare, Why High Gas Prices Are Here to Stay (tomdispatch.com)
- Easy Oil Vs. Tough Oil (integralpermaculture.wordpress.com)
- WAIT: Does The New Israeli Coalition Mean War With Iran Is More Likely Or Less Likely? (businessinsider.com)
- Iran To Practice Closing Strait Of Hormuz (mb50.wordpress.com)
- Iran May Disrupt Hormuz Shipping, Supporting Oil, S&P Says (mb50.wordpress.com)
- Obama ‘Not Bluffing’ On Iran’s Nuclear Program – RadioFreeEurope/RadioLiberty (rferl.org)
- Afghan betrayal calls into question viability of US military strategy in … – Fox News (foxnews.com)