Energy Security & Geopolitics – Historical Brief and Current Germaneness


"In a world of increasing interdependence, energy security will depend much on how countries manage their relations with one another. That is why energy security will be one of the main challenges of foreign policy in the years ahead. Oil and gas have always been political commodities."
Plot:-
The impact of energy on global security and economy is clear and profound, and this is why in recent year’s energy security has become a source of concern to most countries. However, energy security means different things to different countries based on their geographic location, their endowment of resources their strategic and economic conditions.
In this short review I would try to build a overview of the world's energy system and its vulnerabilities and underlay growing concern over energy security. The underlying intent would be to host a debate about the feasibility of resource conflicts and covers issues such as the threat of terrorism to the global Politics in the energy systems, maritime security, the role of multinationals and non-state actors in energy security, the pathways to energy security through diversification of sources and the development of alternative energy sources.
 This explains the various pathways to energy security and the tradeoffs among them and demonstrates how all these factors can be integrated in a larger foreign and domestic policy framework.
The Brief also focuses on the India – ASEAN narrative based on Energy Security. The role of Asia is going to be ever more important, as the concept of old world Energy based groups are fragmenting due to infusion of Technology on the Non conventional front.
The flow has been to move from a snapshot of earliest discovery of sources of energy, paving way for the birth of oil as the most expensive commodity. Description and datas being used to decode the relevance of oil in modern era of politics and it’s current cachet.

History of Energy:-
Considering the deep reflections of Energy security and it’s issue based prognosis, it is but prudent to have a broad understanding of it’s built up.
Energy since Human inception had it’s form in Fire (200,000 BC) – Passive solar energy used in Greek homes (500 BC) - 644 AD - First windmill, with a vertical axis, is recorded in Iran.
Mankind moved from raw natural forms to Oil based economies in 1859 marked the First US oil well in America was drilled in Pennsylvania.
The same was followed by introduction of renewable in a commercial way in 1868 - First solar power plant in Algiers used to heat water to drive a steam engine.
Otto Hahn, in Germany, discovers the process of nuclear fission for energy in 1939.  The same was followed by Commercial nuclear power in 1951 (electrical power produced in Idaho, USA).
World has also seen in 1986 the worst nuclear meltdown with nuclear fallout occurs at Chernobyl, Ukraine. We have even seen in 2003 the World’s biggest power cut affecting more than 50 million people when a fault in a power company in Canada causes a black-out across the eastern USA and Canada.
Above milestones have been murky, dotted with acts of sabotage and sinister motives. A discerning view would command accolades if we brief on the global politics related to Oil (being the major fossil fuel).

Black Gold and it’s Geopolitical History:-
As we re-visit the history of oil in the region and, in particular, we look at how and when oil began to shape the political strategies of the West. Although we focus on the events of the 20th Century, we can trace the change of political doctrines to the weakening of the British Empire, due to the rise of the German “Kaiserreich”. The two powers competed on expanding their spheres of influence on the world map, until they met on the battlefields of World War I. This is when Mackinder’s theory of a divided Europe and Asia, competing for control of the resource-rich region of the Heartland, began to materialize.
This theory remains valid today and the 20th century bore witness to how wars were fought to gain access to one primary resource: “black gold”.
Considering our modern times, the dynamics of oil and geopolitics surrounding the Mid-east and the west has been historically known as a turbulent one, with great instability and even greater Western military interventionism. Wars and conflicts in the region have been numerous, ever since the 2003 war in Iraq, it became clear that politicians had more sinister motives than “spreading democracy” and advancing freedom. The keyword is oil: it became the focal point of Western policies. Oil became intricately related to the stability of the region, but was also identified as a matter of national security to the West, primarily the United States.
The quest for power relies on control of the Heartland
Access to oil resources and therefore petrodollars, lead to a whirlwind of militarization, which ultimately created a vicious cycle of conflicts concentrated in the Middle East and Persian Gulf region. As described by oil experts, a tight pairing of oil and soldiers characterized the relationship between the Gulf oil producers and their Western partners, particularly the United States: soldiers were used to gain access to oil, oil was used to generate petrodollars, and these petrodollars were spent on military assistance and security to protect the oil fields. The focus on the Middle East region and its resources leads us to revisit Halford Mackinder’s Heartland Theory. Mackinder divided the world into the following territories:
  • The World-Island: Europe, Asia, and Africa, making it the largest and richest territory.
  • The offshore islands, namely the British Isles and the islands of Japan.
  • The outlying islands comprised of North America, South America, and Australia.
The Heartland was at the center of the World Island, stretching from the Volga to the Yangtze and from the Himalayas to the Arctic. At the time, the majority of the Heartland was ruled by the Russian Empire, soon to become the Soviet Union. The World Island, according to Mackinder, contained the largest natural resource reservoirs: Whoever controlled it, would possess over 50% of the world’s resources. Numerous regional powers and empires tried to conquer the region, but all failed, mainly due to geographical impediments; the Heartland was naturally defended by sea and ice in the north, and mountains and deserts in the south.
The Austro-Prussian war of 1866 led to the end of the German Confederation under the Austrian Empire and with the victory of Prussia over France shortly thereafter, the German territories united into the German Kaiserreich under Prussian leadership. This signaled a shift in Europe’s old power balance with a dominating German Kaiserreich. Additionally, Germany’s tremendous speed of industrialization and political ambition to build a railway from Berlin to Baghdad was a direct threat to British supremacy and naval power, as the railroad would offer much faster and cheaper trade routes. This, along with frictions over  territorial  interests,  complex  and  tentative  alliances  and  rising  tensions, soon spread  and built up to WWI, which led to the destruction of the old monarchies of Austria-Hungary, Germany and the Russian Empire under the Tsar.
Already here we can see the beginnings of global powers competing for influence over the Middle East. And although Mackinder did not specifically stress the importance of the Middle East, according to some researchers, the discovery of the abundant oil reserves in the region, after the publication of his article, suggests that the Heartland territory could be expanded to include the oil-rich Persian Gulf .
Striking oil: the rise of the modern dynasties
History teaches us how economic interests and corporate benefits exert a strong influence on state and foreign policy objectives. In our previous reports we highlighted how dynastic families and their corporations had a strong impact on the direction of state policies. The history of oil shows us how achieving these objectives became of paramount importance and has gone so far as to cross state borders. With modern industrialization and technological progress, the West became more and more reliant on oil: to governments and political regimes, oil became synonymous with national security, but to conglomerates and industries (such as car manufacturing) it was an existential prerequisite. Securing access and control over oil reserves became a focal point in war strategies, and to weaken one’s opponent also meant destroying their oil supply.
The origins of today’s economic system can be traced back to a handful of key families in the finance business. These families have created large conglomerates, which played a major role in the development of the international economy of the 20th century. These dynasties that dominated the markets for decades include the Rothschilds, the Nobels, and the Rockefellers and their investments and interests encompass nearly all economic sectors. They were the pioneers that recognized the full potential of oil and they foresaw how far-reaching its impact would become, as a source of energy that would support the growth of industries, as well as state power. By investing in the oil sector and expanding their business, these families paved the way for the creation of the multinational oil conglomerates that we know today.
An illuminating example is that of Standard Oil and became the Shell Transport and Trading Company. Iran also appeared on the radar in the turn of the century, as millionaire William Knox D’Arcy negotiated a concession agreement with the Shah of Persia in 1901, which gave him the exclusive right to prospect for oil in the country. After seven years of failed attempts, finally he struck oil. He partnered with Burmah Oil and together formed the Anglo-Persian Oil Company (known today as British Petroleum), which was to oversee production of Persian oil. The British government controlled 51% of the company’s shares.
Meanwhile, the Middle East was experiencing great transformations as a result of the changing British strategy towards colonialism, on top of which, came the Sykes-Picot agreement between Britain and France during World War I. In this agreement, the Middle East was divided into spheres of influence between the two parties, a manifestation of “divide and conquer”. The Western powers drew the borders to serve their interests, a move that the Arab world viewed as a betrayal. The Persian Gulf was not part of the agreement, as the British were the dominant foreign power in the region for more than a decade. But after the success of the Anglo-Persian Oil Company and the oil discovery in the coastal states, British attention shifted to the mainland.
All the aforementioned oil conglomerates had their eyes set on the Middle East region, competing to gain control of the oil supply. Standard Oil Company of California signed concession agreements with Bahrain in 1929 and Saudi Arabia in 1933, forming the California-Arabian Standard Oil, later to be joined by Texaco (now a subsidiary of Chevron Corporation). In 1944, the company name was changed to Arabian American Oil Co. (Aramco), and in 1948 Standard Oil of New Jersey and Socony-Vacuum Oil (both now ExxonMobil) purchased a combined 40%, while they were also holding shares in Iraq Petroleum Co. In Kuwait, the Kuwait Oil Company (KOC) was established in 1934, a joint enterprise between the American “Gulf Oil” and the British “Anglo-Persian Oil Company”, which later signed its own exclusive concession with Qatar. Meanwhile, in the United Arab Emirates the Petroleum Development (Trucial Coast), a subsidiary of Iraq Petroleum Company (founded by the Anglo-Persian Oil Company and Shell, among others, and currently owned by BP, ExxonMobil, Shell and Total) also signed a 75-year long concession agreement.
The need to reduce external spending due to local economic pressures caused the British government to eventually withdraw from the Gulf by 1968, while maintaining an influential economic presence in the region. The British withdrawal had significant implications on local geopolitics. The Gulf tribal sheikhdoms were new monarchies with little experience in state building. What was left, was a political vacuum and a big question mark over the future of the oil fields. The economic structure of the world’s oil market was facing significant changes as well. For decades, the major oil industry issue had been how to handle oversupply. The international oil companies had since the 1920s agreed to manage oil so as to avoid a price collapse. Producer countries in the Persian Gulf were vulnerable to these conglomerates, who were in control of the entire oil sector: they were the sole buyers, shippers and refiners of crude oil.
The system had its rogue agents, such as Marc Rich, or also known as the “King of Oil”. He was the founder of Marc Rich & Co. AG, later renamed “Glencore”, and a pioneer in creating a spot market for crude oil in the late 60’s, at a time when most of it was bound in long-term contracts for future trades by the big conglomerates.

The oil wars of the 20th century (Challenging the status quo: The Gulf states versus the oil corporations)
The 1953 Iranian coup was a prime example of how far the oil industry interests could reach into national politics. Ever since the original concession to William Knox D’Arcy, followed by a renewed agreement in 1933 for another 60 years, the Iranian oil fields were operated by the Anglo-Persian Oil Company (later renamed to Anglo-Iranian Oil Company, now known as British Petroleum). By 1950, the Iranian public’s discontent with the company’s practices, which were deemed exploitative, was approaching its boiling point and in 1951, the democratically elected Prime Minister Mossadegh, after failed attempts to renegotiate the terms of the concession, moved to nationalize the company’s holdings in Iran, backed by the parliament.
In response, the Anglo-Iranian Oil Company (AIOC) persuaded the other international oil companies to boycott Iranian oil to exert pressure on the country. Production increases elsewhere, including Kuwait and Saudi Arabia, made up for the lost Iranian oil, but AIOC was suffering heavy losses. On a political level, this created a vacuum, and an opportune moment for the Soviet Union. In 1953, fearing that Mossadegh would seek support from the Soviets, U.S. President Dwight Eisenhower decided to take action. The CIA launched Operation AJAX with the support of the British intelligence agency and with the complicity of the Shah. AJAX was a coup d’état that deposed Mossadegh and installed a pro-western government under the Shah’s leadership. Declassified CIA documents also revealed that the operation involved the bribery of Iranian politicians, security and army high-ranking officials, and massive anti-Mossadegh propaganda that helped to instigate public revolt. In return for successfully restoring the Anglo-Iranian Oil Company’s position in Iran, the U.S. demanded an end to its monopoly, and divided the oil fields among a group of international petroleum companies.
Mossadegh’s provocation was only the beginning, to be followed a few years later by another ambitious Middle Eastern leader unafraid to defy the status quo: Muammar Gaddafi, a young officer in the Libyan army, who rose to power after the 1969 Libyan coup. The following year, he informed Occidental Petroleum, a small American oil company operating in Libya, that it would have to increase Libya’s share of the profits from 50% to 55%, and to raise the price of its oil by 30 cents per barrel, which was considered a significant increase from the price level of around USD2.00 per barrel at the time. Occidental resisted but eventually acceded to Gaddafi’s demands after he threatened nationalization. Other producers in Libya followed suit shortly thereafter.
Gaddafi’s challenge to Occidental came at a time of soaring world demand for oil. While in the early 1950s, lost Iranian oil production could be easily replaced, it was no longer possible by 1970 due to limited spare oil production capacity. Oil production in the U.S. peaked in 1970, but oil imports continued to increase. According to Middle East historian, Gregory Gause, world demand and supply of oil had reached a “precarious imbalance”, which further empowered producer governments. After Gaddafi’s victory over Occidental, the Shah of Iran successfully insisted to also increase Iran’s share of the profits from 50% to 55%. Early 1971, the oil companies agreed to extend the 55% profit-sharing arrangement to all Gulf countries, and to increase prices by 35 cents per barrel and on an annual basis thereafter. Moreover, the companies agreed to additional government demands to further increase the price per barrel by 90 cents. By June 1973, the “posted price” (a benchmark price for a particular grade of Saudi oil, from which prices for other grades of oil were set) of Gulf oil climbed to USD 2.90, compared to just under USD 2 per barrel at the beginning of 1970. Accordingly, higher oil prices and greater share of profits contributed to significant increase in the oil revenue of the Gulf states.
In parallel, producer states began to assert more direct control over their own oil industries: the real decision-making power was transferred from the oil companies to the governments. Iraq nationalized the Iraqi Petroleum Company(owned by BP, Shell, Exxon Mobil and Compagnie Française des Pétroles) in June 1972. In Iran, the new regime of Ayatollah Khomeini in 1979 took over operational control of the Iranian fields from the international consortium. Additionally, the Saudi government acquired a 25% share of Aramco in 1973, and in 1980 completed the take over with a 100% stake. Qatar negotiated a similar agreement.

The oil shock of ‘73: The dawn of the petrodollar system
By 1960, the oil-producing countries had improved their own level of technical sophistication and cooperation. That year Iran, Iraq, Saudi Arabia, Kuwait and Venezuela formed the Organization of Petroleum Exporting Countries (OPEC) as a forum for coordinating among themselves in dealing with the oil companies; a move that further empowered the oil producing states. By the time of the Yom Kippur War, they were able to use oil as geopolitical leverage.
OPEC members demanded a new round of negotiations with the oil companies, which started on October 8th 1973, only two days after Egypt and Syria launched their surprise attack on Israel. As we know, the talks had little to do with the ongoing war and more to do with the collapse of the Bretton Woods system and Nixon’s closure of the gold window. Gregory Gause describes how these negotiations went, which began with an initial offer from the oil companies to raise the posted price by 15%; the OPEC negotiators, led by Saudi Arabia, demanded a 100% increase. The negotiations failed and the Gulf ministers of OPEC announced a unilateral decision to raise the posted price of oil by 70%, to USD5.11 per barrel. For decades, the major oil companies had set the oil prices, with no input from producer governments. Now the tables had turned. But more importantly, the power relations in the oil market became linked to the geopolitics of the Arab-Israeli conflict and American relations in the Gulf: Oil became a weapon in the war against Israel.
On October 17, the Gulf oil ministers agreed to immediately cut 5% of their production levels, and to make a further 5% cut every month until Israel withdrew from the territories occupied in the 1967 War. Shortly thereafter, the U.S. announced a USD2.2 billion military package for Israel, and the Israeli army encircled Egyptian forces in Sinai. Then, Libya, Saudi Arabia, together with Kuwait and the UAE announced a complete embargo on oil sales to the U.S., naming it a “principal hostile country”. The effects were of a massive scale: a near 4-fold surge ensued in the oil price from USD2.90 a barrel before the embargo, to USD11.65 a barrel, in January 1974.
According to Gregory Gause, these decisions “sent the world oil markets to an unprecedented panic”. The oil embargo alone did not cause the oil price crisis of 1973-74. However, it was the most dramatic and unexpected element of that crisis. In December 1973, at the peak of the oil production cuts, about 5 million barrels of Arab oil were taken off the market per day. These production cuts, along with the ambiguity over the future of oil supplies, led to unimagined increases in oil prices. The table below shows the spike in oil revenue of Gulf states in 1974.
The 1970s were a difficult time for the American economy. Nixon closed the gold window after the U.S. Treasury could no longer back its currency with gold. While the Nixon administration was looking for a way to resuscitate the dollar, close presidential advisors offered a practical solution. According to leaked documents, then Secretary of State, Henry Kissinger, held a meeting in Bilderberg in the Netherlands with a group of influential men from the world of oil and finance, who recognized that they could use oil to turn the tables on OPEC. They discussed “an energy crisis or an increase in energy costs,” which would allow a 400% increase in oil prices. Anecdotally, the Shah of Iran, when asked by Saudi King Faisal’s representative at the OPEC meeting why he had demanded a 400% price hike, he purportedly replied: “Tell your King, if he wants the answer to this question, he should go to Washington and ask Henry Kissinger.” It became clear that the oil conglomerates managed to make the best out of the situation, by using back channels that encouraged an oil price hike in the short-term and also diverted the long-term U.S. foreign policy to the Middle East. The oil embargo was lifted in March 1974 after the Americans committed to negotiate a disengagement agreement between Syria and Israel. In return, the U.S. embarked on a series of agreements with Saudi Arabia, which reshaped the international financial system into one entirely based on oil, or “the petrodollar system”.
In 1975, Saudi Arabia settled military sales with the United States worth nearly USD2 billion. In parallel, the U.S. carried out contracts and joint ventures with Iran valued at about USD11.9 billion, in addition to Iran signing an accord, with a commitment to spend USD15 billion on American goods and services from 1975 and over the next five years. The U.S. thus successfully secured its position in the region after forging political and economic partnerships with the two largest oil-producing countries in the Middle East, however, risks soon arose once again, with the Islamic revolution in 1979.

The Gulf Wars: Oil and Blood
i) 1980-1988: Iran –Iraq War
Border disputes had long been a point of friction between Iraq and Iran. In the 1975 Algiers Agreement, Iraq made territorial concessions—including the Shatt al-Arab waterway—in exchange for normalized relations. In addition to the border tension, the Islamic revolution of 1979 intensified the already strained relations, and the fall of the Shah created a power vacuum in the Persian Gulf. The uncertainty and instability that came with the Islamic Revolution not only affected the regional system politically, but also caused oil prices to climb to new heights. This was the second oil shock after the oil embargo of 1973.
The Iranian revolution changed the rules of the game in the Middle East. The clergy successfully sidelined other political factions in the community and fully took over the role of a government, including foreign policy. It soon became clear that the objective of the revolution was to Islamize society within Iran and export this ideology to the region through propaganda and media campaigns. It was an offensive against the Western interference in the region, and the pro-Western states whose legitimacy was directly and outright challenged by Khomeini, including Saudi Arabia, who prided itself as the leader of the Islamic world.
While the use of force was not part of the agenda to spread the Islamic revolution, the fragile relations between the two bitter rivals soon devolved into war. Initially, Kurds in northern Iraq took advantage of the instability in Iran and continued their armed attacks against Saddam’s forces. The post-revolution leadership in Iran, however, did not close its borders to Kurds fleeing from Iraq, which constituted an outright violation of the 1975 Algiers Agreement between Iraq and Iran. On top of this, the new leadership in Iran directly challenged Saddam’s leadership by calling on the Shiite community to overthrow him. On September 22nd war broke out after 9 divisions with 100,000 Iraqi soldiers crossed Iranian boarders. Saddam’s objective was to occupy the Iranian province of Khuzestan, which contains the bulk of Iranian oil reserves. According to Middle East historian, Gregory Gause, if Saddam had been successful in his endeavors, he would have been in possession of an oil production capacity amounting to 11 million barrels per day and thereby able to satisfy 20 % of world oil demand at the time.
The war escalated, and both parties recognized the strategic importance of each other’s oil wealth: Saddam ordered the Iraqi Air Force to attack Iranian cities, ports, oil installations and ships. Iran, too, destroyed the enemy’s oil terminals. The damage incurred to the Iraqi oil fields significantly reduced its ability to generate income that was very much needed in the eight-year-long war.
The Arab Gulf monarchies were particularly alarmed by the spread of Islamic fundamentalism in the region, which was fuelled by the Iranian revolution. As a counter-reaction, they formed the Gulf Cooperation Council in 1981, which would provide substantial financial support to Saddam. The war had led oil prices to climb to new highs of USD38 per barrel and it ended with a UN ceasefire resolution. No winner was proclaimed, and the main outcomes were numerous casualties and towering debt for both parties. The war cost Saddam USD450 billion, while the loss stood at USD644 billion for Iran. However, thanks to the financial and military support by the Gulf states, Saddam managed to build up a massive military arsenal which he planned to resort to again much sooner than expected.

ii) 1990-1991: Invasion of Kuwait- Operation Desert Storm
Border conflicts between Iraq and Kuwait were a repeated occurrence since Kuwait’s independence from Britain 1961. In 1990, the impoverished Saddam regime sought help from his GCC partners: Still carrying billions in debt from the Iran-Iraq War, he requested total exemption from his debt repayments to his Arab peers in addition to another USD10 billion in credit, but the GCC heads of state did not grant the request. And so Saddam’s strategic attention turned to Kuwait: He could not afford to repay the enormous sums he had borrowed from the neighboring countries to finance the previous war, and Kuwait persistently declined to forgive the debt. Additionally, Kuwait had massively increased its oil production, keeping prices low and further crippling Iraq’s economy; its refusal to reduce production was viewed as an act of aggression by Saddam. The temptation was clear: in combining both Iraqi and Kuwaiti oil reserves, the Iraqi dictator would become the second- largest crude oil producer in the Middle East.
Meanwhile, the U.S. was preoccupied with other major shifts in the global system, namely the fall of the Berlin wall in 1989 and end of the Cold War. On a regional level, the death of Khomeini helped restore some confidence across the Gulf. No one foresaw Saddam’s plans, except for the United States. Publicly, U.S. Secretary of State, James Baker, had stated that the U.S. “takes no position on the substance of the bilateral issues concerning Iraq and Kuwait”, while asserting his country’s respect for the sovereignty of the nations of the Gulf. On the 24th of July 1990, the U.S. State Department assured the Iraqi leadership that “we do not have any defense treaties with Kuwait and there are no special defense or security commitments to Kuwait”. According to leaked documents, Saddam held a meeting with U.S. ambassador to Iraq, April Glaspie, only a day later. Saddam had made his plans to annex Kuwait very clear, but when he asked Glaspie about the United States’ position on this, she expressed the U.S. was not against a moderate climb in the U.S. oil prices up to USD25 per barrel to support his efforts to rebuild his war-torn and heavily indebted country and even made a striking and controversial statement that can be regarded as a turning point in the war:
“We have no opinion on your Arab – Arab conflicts, such as your dispute with Kuwait. Secretary (of State James) Baker has directed me to emphasize the instruction, first given to Iraq in the 1960s, that the Kuwait issue is not associated with America.”
Saddam believed that he had been given the green light, and that the U.S. would consider Iraq as their partner and leading power in the Gulf, much like Iran in previous years, and that it would support its claims on Kuwait. On August 2nd, 1990 Iraq invaded Kuwait; the Iraqi forces devastated the Kuwaiti army and Saddam declared Kuwait an Iraqi province. Such great control over the oil fields alarmed the other countries of the Gulf: by conquering Kuwait, Saddam would have 40% of the world’s known oil reserves under his control. This was a horrific scenario for Saudi Arabia, but even more so, for the American leadership duo (and oil businessmen) Bush and Cheney. After failed attempts for an inter-Arab solution failed, the Saudi leadership allowed U.S. troops to establish bases on Saudi territory. And so, “Operation Desert Storm” was launched on 17th January 1991. The war ended a month later, with UN sanctions imposed on Iraq and the designation of no fly zones over Kurdish and Shiite territories. Additionally, oil exports were only permitted as part of the “Oil for Food” program, which was designed to serve the suffering Iraqi citizens under the economic sanctions following the war, by allowing the Iraqi regime to buy humanitarian supplies in exchange for oil sales, under the supervision of the United Nations. The program was initiated in 1995 and officially suspended in 2003. This UN scheme, however, came under great scrutiny after accusations of corruption linked to oil sales outside the program. These accusations were connected to members of the Iraqi regime and even the son of the Secretary General of the United Nations, Kofi Annan, who took advantage of his father’s position. Head of the Independent Inquiry Committee, former U.S. Federal Reserve chairman Paul A. Volcker made the following statement to the UN Security Council:
“Our assignment has been to look for mis- or mal-administration in the oil-for-food program, and for evidence of corruption within the U.N. organization and by contractors. Unhappily, we found both.”
According to some reports, Saddam Hussein successfully managed to secure USD1.7 billion in kickbacks from participating companies and USD11 billion in oil-smuggling profits. This program was not only a clear manifestation of poor management, but also a reflection of the corrupt reality of this organization of states and a testament to the dire consequences of bureaucracy and centralization.
Looking back at the the international oil market during the war, the Iraqi invasion of Kuwait and the subsequent UN sanctions caused another production deficit by taking about 5 mbd of Iraqi and Kuwaiti oil off the world market. According to Gregory Gause, the world was on the verge of another oil crisis, if it hadn’t been for the decisions of Saudi Arabia and the UAE to increase production. Saudi Arabia raised its oil production by 3 mbd and the UAE by 400,000 bd, which represented about two-thirds of the losses from the Iraqi invasion. Meanwhile, oil prices soared with Saddam’s invasion, reaching the levels close to USD40 per barrel in September 1990 but, they dropped back to pre-invasion levels, just under USD20 per barrel, by February 1991, when Iraq withdrew from Kuwait.

iii) 2003: Iraq War – “Operation Iraqi Freedom”
Bertram Brökelmann described the 2003 war as “a war for oil and money”, where security interests were blended with economic objectives. The buildup to the war developed since the attacks of 9/11 and a strong pretext was created by “the war on terror”. Iraq was labeled as part of the so-called “Axis of evil”, alongside Iran and North Korea. Saddam was not only labeled a terrorist and supporter of Al Qaeda, he was also accused of stockpiling and using weapons of mass destruction, although the International Atomic Energy’s inspectors found no evidence to support these allegations.
The war on terror and the media’s focus on this angle overshadowed an entirely different strategic objective. The United States suffered from severe oil and natural gas shortages in many parts of the country. As Secretary of Energy Spencer Abraham described it at the National Energy Summit on March 19, 2001:
“America faces a major energy supply crisis over the next two decades. The failure to meet this challenge will threaten our nation’s economic prosperity, compromise our national security, and literally alter the way we lead our lives.”
Dick Cheney founded the National Energy Policy Development Group (NEPDG), an expert group on oil and energy issues back in January 2001. The Group met secretly with corporate lobbyists, as well as the U.S. Secretary of State, Energy and the Treasury. According to Daniel Ganser, energy security, and oil resources in particular, became the focus of the administration’s foreign policy. Ron Paul explains that there was also another reason related to oil behind the war:
“Saddam Hussein demanded Euros for his oil. His arrogance was a threat to the dollar; his lack of any military might was never a threat…There was no public talk of removing Saddam Hussein because of his attack on the integrity of the dollar as a reserve currency by selling oil in Euros. Many believe this was the real reason for our obsession with Iraq. I doubt it was the only reason, but it may well have played a significant role in our motivation to wage war.”
In March 2003, the U.S. and its coalition allies, the United Kingdom, Australia and Poland, invaded Iraq, in the joint mission “Operation Iraqi Freedom”. Under the pretext of fighting terrorism, the USD3 trillion war was portrayed by the U.S. as a war of liberation and democratization. It resulted in 2 million refugees who fled into neighboring states and destabilized their economies as well. This war also wreaked havoc in the oil market: at the beginning of the war, the oil price stood at USD40 per barrel. By 2008, it reached USD 100. Oil production in Iraq, fell steeply from the high of 3.5 million barrels a day in the 1970s, to 1.5 million barrels after the war.
Today, the future of Iraq is still very uncertain – the political system remains fragile and society disintegrated. Due to the political uncertainty, large oil companies held back on investment. Without a doubt, Iraq’s diverse ethnic composition makes it vulnerable to opposing external influences, whether it is Iran, Turkey, Russia or regional states, all competing over political dominance (and existing oil fields) and seeking to benefit from the failed U.S. plan to rebuild the country. This failure, also paved the way for yet another conflict in the region: the rise of the Islamic State of Iraq and Syria (ISIS), which has amplified political and economic instability, and had a domino effect that led to the greatest refugee crisis known to the modern world.

Current Energy situation – Transition from Geopolitical Factor to Nation state Security:-

World is today at cross-roads where issues related to the geopolitics and economy, global threats and the fight for the control of strategic resources play a major role and will shape the future.
We are facing today challenges that range from the globalization effects, the decline of the Nation-State, the emergency of new actors in the international stage to global threats like the terrorism, migrations, the emergency of failed States specially in the Middle East and North Africa, the collapse of order in several areas of the globe. The other major component of the analysis relates to the fight to control strategic resources not only energy or minerals but also water and food.
In what concerns energy, the global landscape is changing. The Arabic Peninsula together with Iran and Iraq holds 70% of the conventional oil reserves and is today in turmoil with the collapse of order in several countries from Syria to Iraq, from Yemen to Libya, creating conditions for the emergency of failed States. This means that the most important region of the world for the supply of oil and gas is politically fragile and involved in deep rooted conflicts that are exacerbated by the terrorism, by the
Dis-engagement of the United States in the region and by the fight between Saudi Arabia and Iran aiming at the regional hegemony. Europe, Japan, China, South Korea are strongly dependent of the energy supply from the Middle East while the United States, due to the shale gas and shale oil revolution, are today less dependent. The implications of the shale revolution in the US are huge and may pave the way for the creation of a new international energy order. The US are today an energy superpower and display three major basins – Bakken in North Dakota, Eagle Ford and Permian in Texas – corresponding each one of them to a Persian Gulf country producing within the American territory.
This is changing drastically the world energy landscape, may convert the US in one of the biggest exporters of oil and gas, undermines the power of OPEC, leads to a new era of more abundant and cheaper energy and is behind the collapse of the oil price since 2014, with deep implications worldwide.
These changes require the development of new concepts to tackle the energy security in the 21st century. This is particularly important for Europe, a continent that displays huge weaknesses due to its huge dependency on external sources for oil and gas supply. Europe holds only 0.8% of the world reserves for conventional oil and 2% of the world reserves for conventional gas (BP, 2016). Europe is very fragile in what concerns its huge dependency on external energy supply. 86% of Europe oil supply comes from Russia, Middle East and Africa. 83% of Europe gas supply comes from Russia, Norway
and Algeria (Eurostat, 2017).
On top of that the energy security is a wide game where a mix of complex factors  intervene ranging from the energy supply to the stability of prices, the environmental sustainability and the de-carbonisation of the economy, the security of the whole energy chain from production to refining to distribution, the need to tackle different threats like the terrorism, the weather extreme events or the cyber-attacks.
Picture 2 depicts some of these key issues. The security of the supply is especially relevant for Europe. The geopolitics of the pipelines and the instability in North Africa is a continuous source of concerns for the Mediterranean countries. A clear example is Portugal that depends for its gas supply 35% from Algeria and 46% from Nigeria (Galp,2016).
On the other hand, East and Central Europe have a huge dependency on Russia for the gas supply and Russia has used before the energy as a geopolitical weapon closing the supply to European countries in 2006, 2007 and 2009.
In what concerns the stability and competitiveness of energy prices Europe has failed in building a common energy market. The European networks of energy advance very slowly and still today the Iberian Peninsula is a sort of “energy island” in Europe with the failure to increment the connections between Spain and France. The lack of a true European Energy Market is a key weakness and a major factor that threatens the Energy Security in the continent. A liberalized and well-regulated single market is a key.

Energy, being a scarce, ill-distributed and expensive good, subject to considerable price fluctuations 3, possesses a number of features that render it able to be used as a powerful economic weapon, with significant repercussions in the perspectives for world growth and the geopolitical interplay among producers, among consumers and between the former and the latter.
As a weapon, it can be used in two ways: by creating a surplus in production or by decreasing that production. In the first case, the goal might be twofold: either to attack the economy of competing countries that are heavily dependent on energy exports, or to render alternative energy sources economically unviable. In the case of the decrease in production, the expectation is to cause market prices to soar. Usually, the cartelisation of energy is more effective in the second scenario.
In both pictures, the geopolitical actor using energy as a weapon must comply with three conditions: it must produce on a global or regional scale in terms of energy exports, in order to be in a position to impact market prices; it needs to possess a strategic multidimensionality that allows it to resist external threats and pressure; and finally, it must enjoy an economy stable enough to internally accommodate the economic losses entailed by its geopolitical game.
Hence to summarize, the current telling issues are:
(a)    Threat of Physical shortage has receded, though not gone.
(b)   Political intimidation a threat in Europe; longer term a threat for Asia.
(c)    Price spikes a recent experience, but hope for moderation going forward.
(d)   Economic development agenda has major issues, including conflict with environmental/climate policies and Natural Resource curse.
(e)   Options for addressing these issues the best in Decades.
Future Energy syndrome
The Key is ‘Spare Capacity’ in the Global Oil Supply. Prior to 1970, the U.S. provided spare capacity, and oil boycotts failed. Starting 1970, U.S. spare capacity disappeared, setting stage for October 1973 OPEC boycott and price spike. Also set the stage for nationalization & politicization of oil supply from Persian Gulf, Venezuela. Creating an energy price world driven by oil prices, looking like this:
When global oil supply spare capacity gets concentrated in the Persian Gulf, and falls to 2 MBD or less. This triggers Persian Gulf producers to acquire acute pricing power and boycott potential (this includes Iran and Iraq). Thus even if U.S. supply is not physically curtailed, it’s economy is hostage via price.
The U.S. has both global responsibility and a supreme national interest in protecting security of supply from Persian Gulf. This means protecting stability of Saudi Arabia, hence wars in 1991, 2001 which still continues.
U.S. Foreign Policy has Quietly been Hostage to Saudi Arabia, despite periodic Saudi economic aggression vs. U.S. interests , U.S. has steadfastly supported House of Saud. US fear as much fragility of Kingdom as what Saudis might do intentionally the Nightmares: civil war/insurrection destroys oil fields and/or. Kingdom falls to Radical or Shia Islam. Hence we see a well knit Military alliance(US fleet in PG in response to Iraqi invasion), Constant arms sales and training of Saudi defense forces, two state solution and financial support for Palestinians.
Summarizing U.S. Foreign Policy and Energy Vulnerability: The Status Quo
(a)    Still exposed to physical supply disruption/boycott, though less.
(b)   It is hostage via alliances to Europe/Japan on supply security.
(c)    Economically exposed to supply curtailments global price effects.
(d)   Committed to security of Persian Gulf supply routes, stability of Saudi Kingdom due to U.S. exposures & inability/unwillingness of others to act.
(e)   Europe, Japan, China, India have greater exposure but act as ‘Free Riders’.
(f)     OPEC’s power rested on reality that high prices don’t unleash new supply
(g)    Price hikes are immediate but has taken 5-7 years for new supplies to come forth.
(h)   The balance between world energy demand and available supplies will be precarious. The risk of periodic shortfalls in supplies is likely to be greater than the prospect for surpluses since the governments of oil exporting countries may not supply all of the oil which industrial countries want, even at ever higher prices.
(i)      The nation needs to accept the fact that…a world securely based on a flow of energy from renewable sources still remains a distant prospect…the nation must aggressively develop the indigenous sources that can be available in the meantime.

There has been the ‘Energy Shadow’ over U.S. Foreign Policy for 4 decades but, it May be changing!
The good news - New supply side dynamics is reshaping this World.
(a)    Hydraulic Fracking has unlocked vast new oil & gas resources @ <$100/b.
(b)   New Natural Gas especially important strategically.
(c)    LNG is creating global gas market and options to move on from coal/oil.
(d)   Wind & Solar costs have come down to where they can displace much coal inside power generation & help make EVs feasible clean transportation.
How much will these Help? Let’s Examine Today’s Energy Vulnerabilities
(a)    Supply Interruption/Physical Boycott.
(b)   China & India are huge importers of PG oil…China @ ~ 9 MB/D and Growing.
(c)    Europe & Japan remain dependent on PG for oil imports, Russia for oil & natural gas.
(d)   Fracking supply moving U.S. towards balanced, only imports from Canada/Mexico.
(e)   Price vulnerability remains global. However, fracking, LNG & renewables change price dynamics for better.
How much Difference have they Made? Let’s measure the vulnerabilities & Supply Side progress
Oil Import Vulnerability Source: EIA 2017 Annual Energy Outlook
Net Importers Exposure: MB/D
Country
2016
2025
2040
CHINA
6.9
8.4
10.2
EUROPE
10.4
10.3
11.3
JAPAN
3.9
3.5
3.2
INDIA
4
5
8
United States
5.3
2.4
2.2
‘Call’ on M.E. OPEC 27.830.839.0
27.8
30.8
39
Natural Gas from Russia - Europe’s Other Vulnerability
Individual European CountriesVulnerability to Russian Gas Supply
Developments Significantly change the Position of the U.S. Going Forward
Net Oil Importers Exposure: MB/D has decreased from 5.3 MB/D(2016) to 2.2 MB/D(2040)
There has been also an increase in the FTM (field to market) exploration of US oil and NGL from 63%(2016) to 70%(in 2040).
What is Unconventional Development’sContribution Here?
MB/D U.S. Oil & NGLs



Year
2016
2025
2040
Total US
12.3
15.2
15.1
Tight OIL
4.6
6.2
6.3
NGLs
3.1
4.3
4.2
% Total
63
69
70

What About Natural Gas & Renewables? Self-sufficiency, LNG Exports, Lower Carbon E
TCF U.S. DRY GAS
Year
2016
2025
2040
Total US
26.5
36.1
37.7
Tight GAS
4.7
4.8
5.8
SHALE PLAY
14.1
20.8
25.3
% Total
71
71
82
Net Gas Export QBTU
-1
4.7
5.8
Renewables BKWH
559
938
1139
%Total
14
23
26

North American oil self-sufficiency can be a reality –no need for imports from OPEC ME or even Africa
(a)    North America has a significant LNG exporter, with upside potential.
(b)   Reserve supply source for Europe and/or Asia –with Alberta a ‘Reserve Gas Bank’.
(c)    Options to expand LNG/CNG-based transportation.
(d)   U.S. has best set of low-carbon, renewable options in either high carbon tax or disruptive technology world.
(e)   Best wind/solar resources, grid, + nuclear & hydro.
(f)     Leading EV industry.
Interestingly, this Changes the U.S. Bargaining Position with Allies & Rivals.
(a)    Over next 2 decades, vulnerability of Europe, Japan, China /India increases while that of U.S. should decrease.
(b)   THE BIG CHANGE –North American oil self-sufficiency gives U.S. the option to seal itself off from OPEC supply disruptions, INCLUDING PRICE.
(c)    In supply curtailment, U.S. prohibits exports outside of North America.
(d)   Canadian supply channeled into U.S. via pipelines.
(e)   USG buys Mexican production for redistribution, at world price if necessary.
(f)     Temporary U.S. price controls until disruption normalizes, with Mexican premium ‘socialized’ via small emergency excise tax.
(g)    Opening up the question, should U.S. still carry sole burden of PG security?
Injecting More Fluidity into U.S. Foreign Policy on Energy, Middle East
(a)    Opportunity for Cooperative approach on burden sharing in PG.
(b)   Initially, NATO + Japan based. Eventual opportunity for China to join, backed by U.S. willingness to share ‘pain’ in supply curtailment.
(c)    Europe/Japan join regional military alliance with Saudis vs. ISIS.
Realizing this Potential –5 Rules & Policies for Harvesting Benefits of Stronger U.S. Position
(a)    It shall be a U.S. Foreign Policy objective to maintain > 3 MB/D of spare capacity among the Persian Gulf oil producing states.
(b)   Adopt Regulatory frameworks/enforcement to assure frac’ing & associated infrastructure are environmentally safe but otherwise not disrupted.
(c)    It shall also be U.S. Foreign policy to do the following :
-          Continue integration of North American energy production via interconnecting pipelines
-          Encourage LNG exports to allied nations currently dependent on Russian or ME Gas
-          Promote a ‘Burden Sharing’ approach to PG security issues, tied to continued emergency supply sharing understandings
-          Adopt a Carbon Tax that enables nuclear power to survive/grow alongside cheap natural gas w/o ‘reenergizing’ coal in power generation
The Potential Outcome, and How it Could Be Different from Recent Decades
(a)    The Potential Outcome for U.S. and Allies are :
-          Moderate, Stable Oil Prices –because OPEC always has significant spare capacity
-          Supply disruption minimized by OPEC spare, broad alliance guarding PG, consumer supply sharing arrangements, and frac’ing’s ability to ‘surge capacity’.
(b)   Russia’s threat to Europe diminished by absence of higher oil revenues, Europe’s access to LNG.
(c)    Saudi Arabia bolstered vs. external threats while incentivized to continue modernization under moderate, stable oil prices.
(d)   Continued transition to lower carbon economies via Natural Gas, LNG, Renewable.
(e)   Differences from Past:
-          U.S. no longer exposed to global oil price spikes.
-          U.S. no long hostage to Allies’ supply vulnerability.
-          U.S. no longer sole bearer of security responsibilities in PG.
Energy Connectivity in Asia - The India-ASEAN Case
India, with more than 17 per cent of the global population, accounts for less than 1 per cent of global oil reserves and global natural gas reserves and about 7 per cent of global coal reserves. Consequently, the country has been importing substantial quantities of energy resources. In recent decades, India’s import dependence on energy has increased due to the growth in population, faster economic growth and inability of traditional fuels to cope with the growth in energy demand. With reference to all forms
of energy, India’s dependence on energy imports is about 35 per cent of its total supplies (Table 2). While this is lower than countries such as Japan, South Korea, Taiwan and Singapore, however, at around US$120 billion in 2013-14, India’s net energy import bill was about two-fifths of its total
exports, which is higher than many countries that rely largely on imported energy products and services, making India among the most energy vulnerable countries. Given this scenario, it is difficult to imagine that India can become an energy hub and not just an importer of energy products. However, there is
the example of Singapore which, in spite of not producing even an ounce of crude oil, succeeded in establishing itself as a hub for petroleum and petroleum products. What went in its favour was not just an excellent trading infrastructure but also its location. Although some of Singapore’s neighbours produce crude oil, the island city is located midway between the oil-rich West Asia and oil-hungry East Asia. Replicating the Singapore experience, India is now among the major exporters of petroleum products, and they are also the top export item of India.
This can be replicated as India is uniquely located in this regard. Interestingly, while most of the global trade in petroleum and petroleum products is sea-borne, trade in natural gas and electricity is best accomplished through land routes.
To the west of India, there is West Asia, and Iran in particular, which has substantial natural gas reserves. To its north-west, there are the Central Asian Republics (CARs) which also have substantial gas reserves. Some of the CARs also have substantial hydropower generation potential, which is also available in Nepal and Bhutan located in the north of India.
Moreover, to the east of India, there is Myanmar, with substantial oil and gas reserves as well as huge hydropower potential. Such energy sources are available in a few other countries of the Association of Southeast Asian Nations (ASEAN), particularly in Indonesia, Malaysia, Brunei, Vietnam and Lao People’s Democratic Republic (PDR).
The need for connecting India with natural gas sources from its neighbourhood was recognised as early as 1989 when The Energy and Resources Institute (TERI) proposed the construction of the Iran-Pakistan-
India (IPI) gas pipeline. The Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline was conceptualised as TAPI in 1995. India proposed to join the latter in 2008, following which it was known by its more popular nomenclature TAPI, which is now proposed to be completed by 2019.
However, due to the lack of convergence of the energy security policies of Bangladesh and India, the pipeline did not materialize. The MBI pipeline can be revived keeping the broader perspective of energy cooperation in the region.
Energy Indicators in India and ASEAN Countries 2014

Country/Region
Per Capita TPES(toe)
TPES/GDP (PPP) (toe/thousand 2010 US $)
Per capita Electricity consumption(KWh)
World
1.89
0.14
3030
OECD
4.16
0.11
8030
Africa
0.67
0.15
570
India
0.64
0.12
800
Brunei
8.52
0.13
10110
Cambodia
0.42
0.14
270
Indonesia
0.89
0.09
810
Malaysia
3
0.13
4650
Myanmar
0.36
0.08
210
Philippines
0.48
0.07
710
Singapore
5.12
0.07
8840
Thailand
1.99
0.14
2570
Vietnam
0.73
0.14
1440

Source: International Energy Agency (IEA), 2016.
Note: toe= ton oil equivalent; KWh= kilowatt hour; TPES= total primary energy
supplies; GDP= Gross Domestic Product; PPP= purchasing power parity.

India’s Approach to Energy Cooperation in the Neighbourhood
Although India is an energy deficit country and has been importing a substantial part of its energy needs, its experience in energy cooperation is quite limited, with the exception of Bhutan. Hence, while India maintained good relations with its major energy supply sources in West Asia and Africa, it did not have any comprehensive energy cooperation covering a broad range of sectors and issues with any of these countries. As a result, the ‘cooperation’ was limited mainly to the signing of long-term contracts with
some of these countries for the supply of oil and gas. It is only in recent years that some Indian companies have invested in some of these countries or are engaged in businesses that go beyond purchasing resources, such as production sharing contracts. In the process, some investments have been
made in some ASEAN countries as well.


Allies
Projects Completed/WIP
India - Bhutan
Bhutan started importing electricity through the Jaldhaka hydropower plant.
Development of the 336 MW Chukha hydropower project, which commenced in 1978 and was commissioned in 1989.
By 2007, two more hydropower projects were constructed in Bhutan with Indian assistance.
Bhutan signed a Framework Agreement with India in December 2009, whereby India committed to develop 10,000 MW of installed capacity in Bhutan by 2020,


India-Nepal
Tanakpur Agreement (1991) and the Mahakali Treaty (1996) were signed, but any real progress remained elusive.
Not much has progressed as far as constructing large power plants are concerned.


India-Bangladesh
Major achievement was made when a transmission line with a capacity of 500 MW between Berhampore in India and Bheramara in Bangladesh was completed, and power began flowing from India to Bangladesh from October 2013.
Bangladesh also got connected to the eastern Indian state of Tripura from where 100 MW of power is flowing.


India-Pakistan
India is considering proposals to import liquefied natural gas (LNG) at one of its import terminals in Gujarat and move this gas through the Dahej-Vijaipur-Dadri-Bawana-Nangal-Bhatinda pipeline to Punjab and then to Pakistan.
Negotiations between India and Pakistan on the possibility of a gas pipeline from Iran and the CARs passing through Pakistan.

Prospects for India-ASEAN Energy Cooperation
India and ASEAN have already identified renewable energy as an area for cooperation. The same is enumerated as below :
(a)    The electricity generation sources, indicate that India has developed significant capability in wind energy, while Indonesia and the Philippines have the same in geothermal energy.
(b)   Singapore, too, is generating significant electricity from waste.
(c)    While India-ASEAN energy cooperation focuses on renewable energy only, India, along with some of its South Asian neighbours and some members of ASEAN (Myanmar and Thailand) is part of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), where energy has been identified as one of the important sectors for comprehensive cooperation.
(d)   India is already involved in the development of energy infrastructure in the ASEAN region, especially in CLMV. India is building power plants, power transmission lines and sub-stations, and oil and gas pipeline lines.
(e)   Malaysia has made significant investments in the energy sector in India. Indian companies have invested in energy resources such as coal, oil and gas sector in the ASEAN countries.
(f)     India imports coal from Indonesia and exports petroleum products to ASEAN countries. A look at the resource positions in India and ASEAN, however, indicates that there is significant scope for trading in energy products and services, particularly natural gas and electricity.
(g)    The development of the region-wide natural gas pipeline and electricity transmission lines in the ASEAN region is almost complete. India can easily connect to the electricity transmission grid and natural gas pipeline grid in ASEAN by connecting to Myanmar.
All the above opportunities are either untapped and /or requires serious political will to fully exploit it’s potential. Close synergies will thus pave the way for framing much stronger Regional politics of ASEAN.

Asia's Energy Security Future: The Geopolitical Dimension
The upturn in crude oil prices, along with the increasing production of U.S. shale oil, will potentially have a profound impact on the geopolitics of this resource, particularly at a time when Asia is emerging as a demand hot spot. Asian economies including China, India, Japan, South Korea, and Southeast Asian countries are looking at a tremendous rise in oil demand in the next few years. Per estimates from the International Energy Agency, oil demand in Southeast Asia alone is set to rise from the current levels of 4.7 million barrels per day (bpd) to 6.6 million bpd by 2040. Increasing economic growth rates and subsequent rise in standards of living are the prime factors behind the demand push. China has already emerged as the world’s largest crude oil importer in 2017, and its oil demand is projected to rise further by 4.6 percent, hitting 600 million tonnes in 2018. Following close behind is India, with a projected increase of 4.3 percent in its oil demand in 2018. With the increase in demand and rise in prices, the scramble for affordable, accessible and secure oil supplies will fuel the geopolitics in the region.
One of the most noticeable impact of the increase in crude oil prices in 2008 was the rise in tensions in the South China Sea in the same period. The increase in tensions is attributable, in part, to resource geopolitics, wherein China sought to dominate and control the maritime trade routes in order to secure oil supplies at a time when rising prices and shortfalls in production threatened to erode the very basis of its economic growth. 2008 was an inflection point, after which both the frequency and the intensity of the face-offs in the disputed region have grown. China’s attempts at setting up oil rigs, cutting short the patrols of oil and gas survey ships from Vietnam, harassing U.S. surveillance ships and aggressively claiming islands/rocks in the South China Sea saw an unprecedented rise.
While the fall in oil prices in 2015 brought about some sort of relief to the energy insecurity of importing countries, the fact that cheap oil may now be a thing of the past threatens to exacerbate the existing geopolitical conflicts and widen the fault lines once more. It is important to underline here that with the demand hot spot for oil and gas moving to Asia the scramble for a secure access to affordable resources is expected to lead to heightened conflict between the regional powers.
More specifically, China’s flagship Belt and Road Initiative (BRI) and its energy intensive undertones is bound to impact the geopolitics around energy trade routes. The BRI is emerging to be a significant geopolitical tool through which China is rapidly expanding its naval presence and acquiring strategic ports in the Indian Ocean Region. Moreover, the projects initiated under the umbrella of the BRI are also heavily energy intensive. About 60 percent of the $50 billion investment announced under the China-Pakistan Economic Corridor (CPEC) is meant for the coal-fired power generation plants, for instance. As a part of the BRI, China is also building two oil and gas pipelines from Myanmar’s Rakhine state to Yunnan province in southwest China. The pipelines will carry oil imported from Arab countries and deliver it to Myanmar’s Kyaukphyu port on the Bay of Bengal, developed by China as another of its strategic assets in the Indian Ocean Region.
Moving to South Asia, the development and acquisition of Hambantota port in Sri Lanka by China has also been undertaken with a view to secure the critical bridge connecting the energy supply lanes in the Indian Ocean. All in all, together, the South China Sea and the Indian Ocean Region account for over 80 percent of the world’s seaborne trade, with over 70 percent of it passing through critical choke points: the Strait of Hormuz and Strait of Malacca.
The growing economic and military assertiveness of China in the two regions has already prompted national security concerns. Countries like India, Japan, and Australia, along with the United States, have reignited the Quadrilateral Security Dialogue, or the Quad, an informal alliance that seeks to maintain regular talks between the countries. An energy-hungry China, equipped with the energy juggernaut that is the BRI, accompanied by the sharp increase in the energy demand of other Asian countries, and the equally sharp spike in global crude oil prices, should set off alarm bells over the future of geopolitics in South and Southeast Asia.

Final thoughts and conclusions
In this report we re-visited the discovery of oil and traced how and when it gained its superior economic and political value. We also looked back at the involvement of the family dynasties that dominate our modern finance and business world, in both the industrial and political evolution of oil. Their influence on the U.S. foreign policy, along with the rise of black gold as a leveraging tool, led to the militarization of the oil business – and with more militarization came more conflict zones.
Beating ahead the entire focus would be to achieve a sustainable energy future.. A doubling of supplies can be achieved by 2050 with cleaner and more efficient technologies, the underpinnings of a low carbon economy.
The energy mix will become more diverse, provided government assumes a strong role in RD&D and the private sector cooperates Choices of new energy technologies and sources will be driven by higher energy prices, setting a global carbon price high enough to affect choices without crimping economic
growth, especially in developing countries, and considerations for higher standards for clean energy production.
The world’s energy mix will include more supplies of hydroelectricity, nuclear power with satisfactory planning for spent fuel, bio-fuels, biomass and other renewables.
A new framework for agreement on setting a Supply chain , Trading laws, Pricing and storage for future would demand much better relationship between the stakeholders.
World needs a more cohesive call in terms of energy politics which involves a grand mix of Technology and tabling (of concerns).




"First, we have to find a common vocabulary for energy security. This notion has a radically different meaning for different people.


The bottom line will be to bridge the gap between the


HAVE & HAVE NOT’s”

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