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Lighthouse: Energy Security Thoughts & Snippets

Time for plan B for the planet

The UN climate summit in Glasgow, COP26, ended in failure. Aside from an agreement to end deforestation by 2030, which, like its 2014 predecessor, is unlikely to be implemented, and the formation of a US-EU partnership to limit methane emissions by 30% by 2030 compared with 2020 levels, the summit mostly produced hot air. To better utilize scarce resources, we must shift our focus from attempted prevention to adaptation. Prevention means investing trillions of dollars, which we do not have and we must therefore borrow from future generations, in an energy transformation, which may or may not cap temperature rise. Adaptation is about increasing resilience to a fluctuating climate while improving quality of life and reducing energy costs.


In Historic Russia - China Nuclear Power Cooperation, U.S. Loses Big

The record-setting nuclear deal inked between China and Russia earlier this month is the latest blow to America’s declining influence in commercial nuclear power across the globe. James Grant presents the issues.


Putin Uses North Korean Summit to Make Energy Moves

With the ink barely dry on the historic Trump-Kim summit agreement, Moscow is already maneuvering itself to take advantage of rapprochement on the Korean peninsula.  The first order of business: reviving a decades - old energy megaproject that would connect Russian gas and the Trans-Siberian railroad to Seoul via North Korea. As concerning as it may seem for Washington, reinvigorated ties between Moscow and Seoul may prove a strong bargaining chip for Donald Trump in his forthcoming talks with Vladimir Putin -- rumored to take place in Vienna this July.


Kazakhstan is opting for nuclear engagement, not deterrence

With North Korea wreaking havoc by testing nuclear weapons and missiles, and with the Iranian nuclear program becoming once again the focus of U.S. foreign policy, Washington is searching for solutions to both crises. In 1991, Kazakhstan hosted one of the largest nuclear test sites of the Soviet empire, as well as the fourth largest nuclear arsenal in the world, larger than that of the United Kingdom, France, and China combined. Although wedged between two nuclear-armed giants, Kazakhstan chose to accede to START-I, the Nuclear Non-Proliferation Treaty, and the Comprehensive Test-Ban Treaty. Under these, Kazakhstan relinquished all nuclear warheads to Russia instead of maintaining and building up an independent deterrent it could ill afford. This was vastly consequential — and highly controversial. Read the rest here.

Keep OPEC out of Wall Street

For the past several months two of the world’s leading stock exchanges – the New York Stock Exchange (NYSE) and the London Stock Exchange (LSE) - have been competing over the listing of Saudi Aramco, Saudi Arabia’s national oil company, in what would be the largest IPO in history.  With an estimated valuation of $2 trillion the five percent Aramco will be offering the public are valued at $100 billion - more than the combined value of the top five largest IPOs ever floated in New York City. With such a bonanza every crumb is a mountain of cash. But from the broader public’s perspective things look vastly different. The Aramco IPO is a test of the integrity of our financial system and under the current structure no democratic government which believes in free and open markets should expose its investors to such an offering. Gal Luft explains.



Report Calls for Proactive US Response to China's Belt&Road Initiative

China's multi-trillion dollar Belt and Road Initiative (BRI) is the most ambitious and all-encompassing economic development project in the history of humanity. It aims to connect scores of Asian countries in a web of roads, high-speed rail, power lines, ports, pipelines, fiber-optic lines and other infrastructure with the goal of stimulating growth in the scores of developing countries in Asia, the Middle East and Europe. As such, it is poised to impact almost every region in which the United States has strategic interests. Yet, Washington has largely ignored the BRI, and in some cases it even took active measures to undermine it. According to a new report by Dr. Gal Luft, co-director of the Institute for the Analysis of Global Security (IAGS), this course of action needs to be revisited by the new administration.

"The sooner Washington begins to engage with the BRI, the sooner it can begin to leave its mark on it, to the benefit of the U.S. economy as well as that of two-thirds of humanity," Luft wrote. "Like it or not, China is currently offering a meaningful remedy to global economic stagnation and, as such, Beijing's program deserves serious consideration."

The IAGS report, titled "It Takes a Road - China's One Belt One Road Initiative: An American Response to the New Silk Road," provides detailed analysis of the BRI and its implications for U.S. foreign and economic policies. The report analyzes several potential responses by the U.S. arguing that the best course of action for the Trump Administration would be a selective by-in in which the U.S. will publicly embrace the overall BRI vision of regional connectivity and energy security but will only actively participate in cherry picked projects that correspond with its geopolitical rationale while staying away from those BRI elements that undermine its strategic interests such as projects that benefit Russia and Iran or stir acrimony in Southeast Asia.

More specifically the report offers ten concrete recommendations enabling the US to be an active participant in the effort to address Asia’s infrastructure deficit and slowing growth while protecting U.S. vital interests in the region. It calls for the Trump Administration to adjust the government bureaucracy to be able to address a project of such magnitude, to establish mechanism of coordination between the U.S. and China on matters related to BRI, to carve out a role for the U.S. in stimulating Asia’s development, to strengthen U.S. coordination with European and Asian allies and to use its leadership role in Multilateral Development Banks. It also calls for Washington to consider joining the newly established Asian Infrastructure Investment Bank (AIIB).



China’s Infrastructure Play

Writing about the United States' mix of resistance and apathy toward China's ambitious infrastructure investments, Gal Luft explains how Washington should instead cautiously back the many aspects of the Belt and Road Initiative that advance U.S. interests and oppose those that don't: "The United States does not have to choose between securing its global position and supporting economic growth in Asia: selectively backing the B&R would help achieve both goals." Click for the full article.

United States and Canada Must Jointly Develop North American Energy Market

With Canada's complex and costly extraction and high transportation costs, the enduring low oil prices have hit the country particularly hard. Furthermore, possible alleviative measures such as pipeline and LNG terminal expansion face not only domestic but also U.S. opposition. TransCanada’s recent acquisition of the US-based Columbia Pipeline Group Ltd however, should allow it to export more easily to the U.S., and hopefully represents a step towards further cooperation between the U.S. and Canada in the North American energy market.


India’s energy supply security: Growing concerns

India’s energy supply security: Growing concerns

The recently released World Energy Outlook (WEO) 2015 hints that India is moving to the center stage of global energy system. Considering that the IEA has devoted an entire section of the WEO 2015 to India which carries a detailed assessment on India’s current energy scenario, the outlook for its future demand and supply and a discussion on the implications for India’s energy development, India’s growing importance on the world energy scene is apparent. Commander Kapil Narula examines the implications.


Polish coal at the turning point: uneasy past, challenging future

Polish coal at the turning point: uneasy past, challenging future

Poland remains the sole defender of coal in the EU arena and is often perceived as a potential obstacle on the way to a green energy Europe. A close examination of the Polish energy industry clarifies the roots of this stance and the likelihood it will be maintained over a long-time horizon.


In Paris climate conference coal will still be elephant in the room

Outside the UN General Assembly the Paris Conference of Parties (COP21) will be the largest gathering of world leaders. But behind the climate kumbaya, the reality is that many of those leaders will not attend the summit out of concern for the world's changing climate, but rather to ensure that their countries, mostly developing ones, don't end up sacrificed on the altar of climatism.


Plan B for Libya

Reuniting the Libyan militias has been the West’s only endgame for Libya since the oil-rich country slid into a civil war following the 2011 removal of Muammar Qaddafi by a select coalition of NATO countries led by Britain, France, and the United States. But this outcome does not seem to be getting any closer. Indeed, things have gotten much worse.  Gal Luft discusses an alternative.


Will ENI’s discovery in Egypt sink Israel’s Leviathan?

The discovery of the Italian energy company ENI of a giant gas field off the coast of Egypt has transformed the East Mediterranean energy play overnight. The newly discovered field called Zohr could hold a potential of 30 trillion cubic feet of gas – the largest discovery in the region, thirty percent larger than the Israeli Leviathan field which held the title until today. Zohr’s entry into the scene is a true game changer. It delivers a painful blow to both the Israeli and Cypriot economies and more specifically to the gas partners, Delek Drilling and Noble Energy, which until now have held the only discoveries in the region.


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.


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.


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.


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.


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.


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.


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.”


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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US Energy Security Council RT discussion

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