Journal of Energy Security

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Lighthouse: Energy Security Thoughts & Snippets

U.S. gas exports: the pipe dream

The fracking miracle that flooded the North American market with surplus natural gas also led to a spike in oil production and contributed to the fall in global oil prices. Since oil and gas prices are linked in Asia and elsewhere the collapse in oil prices led to an even sharper decline in LNG prices.  As a result American gas is no longer desired abroad, certainly not in Asia – the fastest growing market for gas, no matter how many export permits are granted. The U.S. should therefore consider alternative uses for its gas.

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It’s time for Israel to stop neglecting Cyprus

The natural gas discoveries Cyprus and Israel share should be an important item on the two countries' bilateral agenda. But the governments of Israel and Cyprus would be remiss if they focus the dialogue exclusively on gas, as there are other, no less important, strategic opportunities the two countries can advance. Cyprus is in a unique position to offer Israel a coveted prize: strategic depth.

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China’s “One Belt - One Road” Mega-Project Will Boost Eurasian Natural Gas Opportunities

China is expanding its influence westward with the “New Silk Road” project, which will prominently feature natural gas projects and maritime trading. If completed, the project will connect Pacific to Atlantic, and be the largest infrastructure undertaking ever built. This project has the possibility of creating millions of jobs, providing security in Central and South Asia, as well as giving a way for energy resources to flow to new consumers in developing regions.

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Securing Indonesia’s Energy Future

Indonesia is well endowed with natural resources, but similar to other developing countries, poor government policies have not utilized this wealth efficiently. Inefficient government energy policies and rising consumption coincided with Indonesia’s declining oil industry. Peter Maslanka examines opportunities and challenges facing Indonesia’s energy sector, and evaluates the policies that have been implemented to strengthen its energy sector. Also examined area the risks that exist to keeping these policies from being successful. Last, provided are a number of policy prescriptions for Indonesia to meet its growing energy needs.

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Beyond Oil and Gas: Kazakhstan Bets its Future on Reform

With escalation on and near Russian soil, Western Europe is searching for an alternative gas and oil supplier; Kazakhstan may be the likely candidate.  Kazakhstan is in the midst of modernizing, and is enthusiastically looking for opportunities to participate in the global economy.  The country is among the top 15 in the world when it comes to essential oil reserves and has expressed willingness to develop these reserves. Kazakhstan also partnered with China in the creation of large energy cooperation projects which are part of the New Silk Road.

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Turkey threatens the major prospects for Eastern Med gas supply

With the development of the Aphrodite offshore natural gas field and the potentially game-changing East Med pipeline, the Eastern Mediterranean can and should play a vital role in ensuring European energy security. Turkey does not recognize Cyprus as a sovereign country and is attempting to block Cypriot oil and gas exploration, claiming the share of Turkish Cypriots in any hydrocarbon wealth.  The large-scale undertaking brings many economic and political benefits to all the countries involved, including Turkey.  However, the project is not likely to be realized without Turkey’s participation, and such cooperation is not likely without the US and EU pressure on Ankara.

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Systemic Violence Threatens Middle East Oil Outlook

Even though there are vast, cheap reserves of oil and gas in the Middle East and North Africa (MENA), political instability remains as the main barrier to exploration and production. The current oil slump has hurt investment worldwide, nevertheless the recovery period appears to favor investment in North America, the Caspian, and Africa. The OPEC report issued in late May noted that “generally speaking, for non-OPEC fields already in production, even a severe low price environment will not result in production cuts, since high-cost producers will always seek to cover a part of their operating costs.”

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Will Greece-Russia gas deal threaten EU energy security?

Recent attempts of Russia to secure its dominant position on the European natural gas market via enforcing ties with the leaders of certain EU member countries such as Greece and proposing the development of the “Turkish Stream” – the infrastructure project that will only increase Europe’s dependence on Russian gas - are met with skepticism in Brussels. Europe's response to this challenge is increase in energy trade with major gas producers in the Caspian region – Azerbaijan and Turkmenistan. Energy cooperation between these countries, Turkey and the EU are expected to be mutually beneficial and, what is even more important, to solve one of the top priority energy-related issues in the Old World – decrease of Russian political influence connected with its status of the biggest supplier of natural gas to European market. This article analyses the problems that need to be solved in order to overcome the mentioned issues from both political and economic perspectives. 

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Can the American Energy Revolution Survive a Deal with Iran?

There is no lack of voices warning against the dangerous implications of the nuclear agreement the Obama Administration is advancing with Iran. The opposition has mostly focused on the destabilizing geopolitical impact of a nuclear Iran and what it means for the security of the U.S. and its allies. But there is one less obvious casualty – the North American oil and gas industry.

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Ukraine’s Tax Hike Will Strangle the Domestic Oil and Gas Sector

The Ukrainian government is threatening the future of its already struggling oil and gas sector by introducing new taxes. The royalty, which taxes output sales, together with the tax rates of 70% for state-owned production companies, 55% on wells under 5,000 meters depth, and 35% on wells over 5,000 meters will lead to a dramatic decrease in domestic production and increase Ukraine’s dependence on Russia. For Ukraine this is a question of survival as it cannot continue its dependence on Russian gas for geopolitical reasons and sending Western investors packing would be suicidal.
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Fuel for Thought: The Importance of Thorium to China

Over the past few years China has launched efforts to develop the world's first commercial thorium - fueled reactor based on the use of liquid salt. There are a number of reasons thorium-fueled reactors, in particular the thorium molten salt reactor (TMSR), would work for China. First, nuclear fission does not produce air pollution. Second, thorium, being a by-product of rare-earth mining, is believed to be far more abundant in China than uranium. Third, it could turn thorium, currently considered a waste-by-product in the processing of rare earth elements, into something of value.
China's effort of developing a TMSR is part of a bigger program to develop both solid fueled and liquid fueled reactors.Cindy Hurst gives an overview of China's thinking in regard to thorium and the actions it is taking to develop the first thorium molten salt reactor. Read in full here.

Strategic Implications of Chinese Energy Policy

China's vast coal reserves and system of hydroelectric dams, as well as eighty nuclear reactors currently under construction or planned, will enable it to provide for its electricity needs, albeit with some non-trivial environmental consequences. Transportation fuel is a completely different story in China, as it is everywhere else. All these cars, not to mention other modes of transport (ships, trains, and planes) require gigantic quantities of oil, and China is already the world's number one importer, with 60 percent of its oil needs coming from abroad—a level of dependency almost twice as high as America’s.  Obtaining the crude will become an increasingly difficult task, considering the potential for economic growth China still harbors.  This probably means that China will be ever more willing to compromise its "peaceful rise" policy in order to meet its energy security needs. Japan went to war against the United States in 1941 largely for fear of being starved of energy. Can we learn anything from that tragedy? Read more here.

US experts: Southern Gas Corridor critically important, crucial for Europe

As the military clash in Ukraine and the conflict between Russia and the West escalates, U.S. government top energy officials and leading experts on the South Caucasus energy and politics assembled at a Washington DC conference on “Security and Energy Implications for the South Caucasus after Ukraine.” The January 28th event was cosponsored by the Kennan Institute of the Wilson Center and the newly formed Center for Energy, Natural Resources, and Geopolitics (CENRG) at the Institute for the Analysis of Global Security.

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Israel’s gas dream – the end is nigh

Succumbing to populist pressure, the Israeli government today delivered a crippling blow to the country's ambition to become a regional energy player. With the decision of the Israeli Anti-Trust Authority to revoke an arrangement permitting Noble-Delek partners to develop the natural gas field Leviathan, declaring them a cartel - a move that will require the separation of Leviathan from Tamar and the sale of Leviathan to a new partnership, effectively postponing the development of Leviathan indefinitely - the scenario of “zero gas” - and perhaps even the withdrawal of Noble from Israel altogether - should be considered seriously.  The implications are profound not only for Israel but for the entire region.

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Don’t get used to cheap oil

The recent slump in oil prices has sent gasoline prices below $3 a gallon, leading many Americans to believe that our energy predicament is a vestige of the past. Decades of anxiety over our dependency on Middle Eastern oil with all its economic and geopolitical trappings are giving way to a new era of complacency in our energy discourse. Such a euphoric mindset could lead to painful consequences down the road.
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How East-West Competition Turned Balkan Energy into a Geopolitical Football

How East-West Competition Turned Balkan Energy into a Geopolitical Football
Energy supplies to Central and Eastern Europe, and especially the Balkans, have become a “football” in the worsening relations between Russia and the West – and the countries of the region. Natural gas, nuclear, and so forth: what is needed is dispassionate policy analysis taking into account both geopolitical and economic factors, which in this article Ariel Cohen attempts to provide. 
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Beware of the Climate Trap

The recent agreement between President Xi and President Obama in which the U.S. committed to reduce greenhouse gas emissions up to 28 percent below its 2005 levels while China committed to have its emissions levels peak by 2030 was one of the trumpeted announcements of the recent APEC Summit. The details on how this will exactly be done are fuzzy and will be left to negotiations in the United Nations Climate Change Conference in Paris next year. But the 2030 goal means that in the coming months China will be subjected to international pressure to turn words into deeds by accepting CO2 reduction measures which may be detrimental to its economic development. To this it should not agree.

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European Energy Security: An American Responsibility?

When the Ukraine crisis broke out threatening to compromise Europe's energy supply from Russia, many American politicians and pundits called for the United States to expedite exports of liquefied natural gas, or LNG, to help bolster European energy security. Never mind that the United States won't have its first LNG export terminal in operation until late 2015 at the very earliest; that much of its approved gas exports are already committed to long-term contracts in Asia; and that Ukraine as well as most European countries under the Kremlin's boot do not have the terminals for receiving LNG. The United States is under no obligation to bolster Europe's energy security just because Europe, in its fixation on climate change, has for years undermined its own energy security and brought upon itself its current predicament. Gal Luft elaborates.

Building an Asian Energy Buyers' Club

Asia's energy landscape today is a cluster of segregated markets. A change may be in order. With the backdrop of this week's meeting of Asia-Pacific energy ministers in Beijing Gal Luft elaborates.

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Arbitrage will be pursued (Iranian edition)

When something is subsidized, people use more of it....and smuggle/sell it elsewhere to cash out on the subsidy. Case in point, fuel in Iran.

The Economist reports "An estimated $40-100 billion is paid every year to keep Iranians, poor and rich, supplied with cheap energy, water, fuel and basic food. Consumption has soared. Shopkeepers in Tehran spray their verandas to drive away the dust. Cars clog the country’s roads. Iran’s energy consumption is reckoned to be 80% above the Middle East’s average. Worse, billions of dollars are squandered every year by smugglers taking Iran’s cheap fuel across borders to Iraq and Pakistan."

The subsidies have just been reduced but are still substantial...."On April 28th President Hassan Rohani raised petrol prices by 75%, from 4,000 to 7,000 rials ($0.16 to $0.28) per litre."

Caspian Gas, TANAP and TAP in Europe’s Energy Security

Russia’s occupation of the Crimea and possible incorporation of Eastern Ukrainian regions has demonstrated Europe’s vulnerability to Gazprom’s energy power. Whatever the EU’s reaction, diversification of energy supply to diminish Russia’s market share is likely to be one of them. The Trans Adriatic Pipeline (TAP) is one step towards the strategic goal of diminishing Gazprom’s huge presence in Europe. but in view of the proposed construction of the Russian South Stream pipeline, how can Central Europe, and especially Bulgaria, Romania, Austria and Lithuania, ensure energy diversification? What next for the Southern Corridor? Is Russia going to accept and tolerate infrastructure growth of the Caspian and other competitors south of its borders? Dr. Ariel Cohen, an Advisor to the Institute for the Analysis of Global Security, has just written an extended piece on these issues published by the Italian Institute of International Affairs.  Click here to view the entire article. 

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