Oil and GAS, Strategic Regional Cooperation between countries Case study: 's Natural Gas Export M.M.Zalloi NIGC-DIST8 [email protected]

Keywords:

Strategic Regional Cooperation, Persian Gulf, Global Energy Security

1. Introduction: Almost two-thirds of proven oil and a third of world natural gas resources are in the Persian Gulf countries. If the proven resources of the Caspian Sea basin added to them, percentage of proven resources will be increased. For example Russia, Iran and Qatar have more than 55 percent of world gas reserves. For this reason, Geoffrey Kemp1's strategic energy ellipse is one of the important geo strategic and geo economic fact of our era. Also, with increasing need of countries to energy resources, the role of Persian Gulf countries in the world energy supply in the future decades will be crucial. The geo politic importance of Persian Gulf rises from oil reserves mostly. But due to more compatibility with the environment, natural gas will be a serious rival for oil and coal in the basket of the world energy consumption. In fact, there are no real substitute energy sources for the Persian Gulf in the global energy supply.

Unfortunately strategic region of Persian Gulf in the past three decades faced with many security challenges due to wars and political conflicts. Iran- War, the first Persian Gulf War and Iraqi invasion of Kuwait, Iraqi War II and the crisis that occurred in 2003, all and all it implies that in recent decades the Persian Gulf region should be translated to energy and conflict any other time.

In this article, the writer will try to describe approaches and arrangements of security and then its effect on security of energy supply from the Persian Gulf region will be studied. Certainly, in classic security studies, different definitions defined as classical, negative discourse, positive discourse and integration discourse is presented.

After considering various definitions, new security approach (regional cooperation) for the supply of Persian Gulf energy with regarding of the new structure, role of international actors and variables will be presented and export of natural gas as a case study will be investigated.

Certainly, cooperation in construction of multi-national gas transmission networks, in addition to reducing costs of natural gas, in the development of convergence in the region has an important role and consequently it will increase regional security factor. It can be a good substitute instead of military treaties and cooperation in the region.

This type of cooperation for providing security, which based on elimination or reduction of political and military conflicts, can be effective to mental security of energy supply. Development of the security in the region with the help of constructive cooperation and creating a regional network of natural gas transmission lines can be interpreted as a energy

1 . Geoffrey Kemp is the Director of Regional Strategic Programs at the Nixon Center

(gas) security emerging, without unnecessary political, military and economic Investments can be obtained. The Peace pipeline, which will transfer Iran's gas to Pakistan and India is an obvious example of regional development and secure convergence which it can improve relations between Pakistan and India. It is essential; the countries outside of the Persian Gulf region and major global power help to expand such cooperation in this strategic area instead militarize Persian Gulf. Because, the game rule is based on the won-won, and the regional countries can pay to develop own country's infrastructure instead of military expenditures and enormous costs for purchasing military equipment. In addition to achieve economic benefits and profit of clean energy, the people get rid of the evil of hatred inflamed space and military threats of neighbors. On the other hand, with build of stable security based on peaceful cooperation in the region, the security of energy supply for other countries will ensure.

2- Geographical and Historical facts of Persian Gulf

The Persian Gulf region links the three continents of Asia, Europe and Africa and as an arm of the Indian Ocean is considered part of a system linking the Mediterranean Sea, the Red Sea, the Indian Ocean and the Pacific Ocean. Maximum length of the Persian Gulf is 989 km and its narrowest wide is 56 km in the Strait of Hormuz. Surface area of it is 251,000 km2. Average depth of Persian Gulf is 50 m and Maximum depth is 90 m. The Persian Gulf is mostly shallow and has many islands, of which is the largest. The basin countries of Persian Gulf are Oman, the United Arab Emirates, Qatar, Saudi Arabia, Kuwait, Iraq and Iran (along the entire north coast). Also various small islands lie within the Persian Gulf. It was generally thought that the Persian Gulf had previously extended farther north and that sediment dropped by the Tigris, Euphrates, Karun, and Karkheh rivers filled the northern part of the Persian Gulf to create a great delta. But geologic investigations now, indicate that the coastline has not moved and that the marshlands of the delta represent a sinking of the earth's crust as the Arabian land block pushes under Iran. The Persian Gulf waters have very slow currents and limited tidal range. The population of Persian Gulf is about 140 million and the majority of them are Muslim. [1], [2].

But about History of Persian Gulf, the following facts are considerable: In 550 B.C, the Achaemenid Empire established the first Persian Empire in Pars in the southwestern region of the Iranian plateau. Consequently in the Greek sources, the body of water that bordered this province came to be known as the Persian Gulf. [3]. Considering the historical background of the name Persian Gulf, Sir Arnold Wilson mentions in a book named: "Persia, A political Officials Diary", published in 1928 that: "No water channel has been so significant as Persian Gulf to the geologists, archaeologists, geographers, merchants, politicians, excursionists, and scholars whether in past or in present. This water channel which separates the Iran Plateau from the Arabian Plate, has enjoyed an Iranian Identity since at least 2200 years ago. [4].

No written deed has remained since the era before the Persian Empire, but in the oral history and culture, the Iranians have called the southern waters: "Jam Sea", "Iran Sea", and "Pars Sea". [4]. During the years: 550 to 330 B.C. Coinciding with sovereignty of the first Persian Empire on the area, especially the whole part of Persian Gulf and some parts of the Arabian Peninsula, the name of "Pars Sea" has been widely written in the compiled texts.[4] The advent of Islam took place in the Persian Gulf region and its culture has been founded on the principles of Islam. It has come to be known as the centre of the Muslim world.[1]. The Persian Gulf was an important transportation route in antiquity but declined with the fall of . Because of its strategic location, the Persian Gulf region has been the centre of attention for traders, businessmen and big powers for a long time. In succeeding centuries control of the region was contested by , Persians, Turks, and Western Europeans. The commercial interests, through shipment of goods from the Persian Gulf to the outside world and vice versa have made this region so important for big powers that wars have been fought over is control. The Portuguese were the first western power to enter the Persian Gulf. It was the successful circum navigation of the Cape of Good Hope by Vasco da Gamain 1498, which ushered in the era of European penetration of the East. From the sixteenth century onwards, the Persian Gulf became intractably linked with the commercial and political rivalries of the West maritime powers: first Portugal, then Holland and , and finally Britain. To this was added the rivalry of the Ottoman Empire from early sixteenth century when Baghdad and Basra became a part of this Empire. [1], [5], [6].

3- Persian Gulf, Caspian Sea and Iran: oil and gas

a) Persian Gulf: Oil, 'black gold" was found in the beginning of the twentieth century in the Persian Gulf region, and the Anglo-Persian Oil Company was formed in 1908 to extract this oil. Oil was so important for Great Britain that Winston Churchill wanted Britain to own the oil company, or at least ensure its own requirements of its produce. Discovery of oil elsewhere too in the Persian Gulf made the region important not only to Great Britain but to all those who needed oil. Therefore the discovery of big fossil resources in the region and the increasing need of the world’s industrial countries for the Persian Gulf oil altered the geopolitics of the region. [1], [7].

Now, the most important and biggest industry in the Persian Gulf region is oil production, with over 76 billion metric tons of recoverable oil and 32.4 trillion cubic meters of reserve gas in the region. About 25,000 tankers sail in and out of the Strait of Hormuz annually and transport about 60per cent of all the oil carried by ships throughout the world. There are about 800 offshore oil and gas platforms and 25 major oil terminals in this region. Saudi Arabia produces almost half of the net oil export in the region.[8] In the follow diagram, you can see crude oil and natural gas reserves and capacity of oil production in the Persian gulf region with regard to global energy(as a percent of global) [9].

The Persian Gulf Region and Global Energy (as a % of global)

Source: Energy Information Administration Short Term Energy Outlook

Persian Gulf oil is shipped east to Asia, primarily to Japan, China, and India, and west to Western Europe and the United States.

OPEC Flows of Crude and Refined Oil, 2006 (1000s of barrels per day)

North Asia and Latin Middle Total Producer/consumer Europe Africa America Pacific America East World IRAN 1,084 0 1,605 0 149 0 2,839 IRAQ 371 664 446 0 0 0 1,481 KUWAIT 317 154 1,956 0 46 0 2,473 QATAR 0 3 699 0 0 0 701 SAUDI ARABIA 1,163 1,501 4,721 85 340 497 8,307 UNITED ARAB 78 9 2,741 0 44 0 2,873 EMIRATES

Source: OPEC flows of Crude and Refined Oil, 2006 b) Caspian Sea: The Caspian Sea is a 700-mile-long body of water in central Asia bordered by Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan. Among the five nations, only Iran is a member of the Organization of Petroleum Exporting Countries (OPEC). Azerbaijan, Kazakhstan, and Turkmenistan became independent when the Soviet Union dissolved in 1991. The Caspian Sea region historically has produced oil and natural gas, but the region is considered to have large resources of oil and gas capable of much greater production. The Caspian Sea region presently is a significant, but not major, supplier of crude oil to world markets, based upon estimates by BP and the Energy Information Administration (EIA), U.S. Department of Energy. The Caspian region produced 1.9 million barrels per day (bbls/day) including natural gas liquids in 2005, or 2% of total world output. (Table 1).

Based upon figures published by BP, Caspian Sea region oil production comes from proven (economically recoverable) reserves of 48 billion bbls (Table 2). This equals about 4% of total world proven reserves, and much more than BP’s figure for U. S. reserves (29 billion bbls). EIA estimates of much larger “possible” reserves suggest a potential for much greater production. However, as indicated by analysis later in this report, there are obstacles to output increases both now and in the future. The Caspian Sea region’s relative contribution to world natural gas supplies is larger than that for oil. Its gas production of 3.0 trillion cubic feet per year (tcf/yr) in 2005 was 3% of world output. As with oil, gas production has been higher, but suffered during the Soviet Union’s collapse and the following years. Turkmenistan is the largest producer; with production of 2.0tcf/yr, it accounts for almost two-thirds of the region’s gas output.

Unlike oil, the region’s proven reserves of natural gas are a higher proportion of the world total than is its natural gas production. In some instances, exploration efforts hoping to find oil have found gas instead. The estimate of proven reserves of natural as in the Caspian Sea region for the end of 2005 published by BP — 257 tcf — represents 4%of the world total. Increases in Caspian region gas production face obstacles somewhat similar to those that challenge further oil development and production.[10]

C) Iran oil and gas

Iran is a member of the OPEC, and ranks among the world’s top three holders of both proven oil and natural gas reserves. Iran is OPEC’s second-largest producer and exporter after Saudi Arabia, and is the fourth-largest exporter of crude oil globally after Saudi Arabia, Russia, and Norway. Natural gas accounts for half of Iran’s total domestic energy consumption, while the remaining half is predominately oil consumption. The continued exploration and production of the offshore South Pars natural gas field in the Persian Gulf is a key part of Iran’s energy sector development plan.

According to Oil and Gas Journal, as of January 2009, Iran has an estimated 136.2 billion barrels of proven oil reserves, or roughly 10 percent of the world's total proven petroleum. Iran has 40 producing fields, 27 onshore and 13 offshore, with the majority of crude oil reserves located in the southwestern Khuzestan region near the Iraqi border. Iran's crude oil is generally medium in sulfur content and in the 28°-35° API range. In 2007, Iran exported about 2.4 million bbl/d of oil, primarily to Asian and OECD Europe countries, making it the fourth largest exporter in the world

Iran produced approximately 4.1 million barrels per day (bbl/d) of total liquids, of which roughly 3.8 million bbl/d was crude oil, equal to about 4.5 percent of global production. For most of 2008, it is estimated that Iran’s OPEC production was approximately 3.8 million bbl/d; OPEC-wide cuts in late 2008 have lowered its production quota to roughly 3.6 million bbl/d. Iran’s current crude oil production capacity is estimated to be 3.9 million bbl/d.

Iran produced 6 million bbl/d of crude oil in 1974, but has been unable to produce at that level since the 1979 revolution due to a combination of war, limited investment, sanctions, and a high rate of natural decline in Iran’s mature oil fields. Iran’s oil fields require structural upgrades including enhanced oil recovery (EOR) efforts such as natural gas injection. According to Oil and Gas Journal, Iran’s 2008 estimated proven natural gas reserves stand at 948 trillion cubic feet (Tcf), second only to Russia. Roughly two-thirds of Iranian natural gas reserves are located in non-associated fields, and have not been developed. Major natural gas fields include: South and North Pars, Tabnak, and Kangan-Nar. In 2007, Iran produced and consumed an estimated 3.9 Tcf of natural gas. Natural gas consumption is expected to grow around 7 percent annually for the next decade.

Both production and consumption have grown rapidly over the past 20 years, and natural gas is often used for re-injection into mature oilfields in Iran. According to FACTS Global Energy, Iran’s natural gas exports will be minimal due to rising domestic demand even with future expansion and production from the massive South Pars project. In 2007, roughly 70 percent of Iranian natural gas was marketed production, while approximately 30 percent was for enhanced oil recovery gas re-injection, and 285 million cubic feet was lost due to flaring. As with the oil industry, natural gas prices in Iran are heavily subsidized by the government.

The most significant energy development project in Iran is the offshore South Pars field which is estimated to have 450 Tcf of natural gas reserves, or around 47 percent of Iran’s total natural gas reserves. Discovered in 1990, and located 62 miles offshore in the Persian Gulf, South Pars has a 25 phase development scheme spanning 20 years. [11]

4) Regional Cooperation and sustainable security

As already mentioned, with attention to some particular characteristics, the Persian Gulf region is one of the strategic and geopolitical areas in the world and the centuries before the time of civilization in Mesopotamia, has known as a commercial waterway, and has had military importance.

History of the Persian Gulf countries is story of conflict, competition and controversial lessons.

Persian Gulf region is one of the main sources of the global energy supply, and it has the geopolitical and Geo strategic role in creating world order and global security. Geopolitical of Persian Gulf has been changed during the past centuries, which mainly changes or transformations, is due to the exchange of power in the Persian Gulf region. So "security" in this region has been considered by regional and global players and will be. In the global strategic considerations, security in this region can be considered as a new heart of land.

At the end of the twentieth century and the beginning of the third millennium, "security" more than any other time is considered. Concept of security are discussed in the national, regional and global levels. Forum security has special prestige, status and sensitivity than other approaches. On security issues, there are numerous withdrawals. And political issues, military, social, economic, cultural, religious and environmental topics have been considered.

So security can be studied from the three approaches:

National, Regional, Global approaches.

Each of these levels and approaches has interaction with the other two approaches National security of a country can not be studied without Conditions governing the pattern of international security because it has a kind of mutual dependence and for understanding of a level of security, is required studying of other two levels. In summary we can say that regional security is infrastructure of international security. Therefore, regional cooperation in the form of economic and energy cooperation can increase the coefficient of security stability in the Persian Gulf region. And with increasing security in the Persian Gulf, global energy security will be increased too. Construction of gas transmission lines between countries in the region is a kind of regional cooperation that can be replaced to military treaties. And has important effect in the enhancement of regional security coefficient. Peace pipeline between Iran, Pakistan and India has effective role in promoting of national security and also it has an important effect in enhancing regional security coefficient

4-1) Peace Pipeline between Iran-Pakistan-India:

Because the exportation of natural gas from Iran to India through Pakistan is a venture which may change the face of regional politics in South Asia. It is a study in how economic collaboration possesses the power to engender as well as transform social and political discourse between countries. Pakistan's collaboration with Iran may foster conflict resolution as well. In the past, Iranian and Pakistani foreign policies have disagreed on the issues of Afghanistan and Shi'a-Sunni conflicts in the region. Thus, trade and the larger experience of economic globalization possess the ability to exist as mediators in conflicts in the region and between regions.

Natural gas trade between India, Iran, and Pakistan challenges the geopolitical, historical, and strategic realities of the three countries and the general regions of the Middle East and Asia.

Conclusion: The Persian Gulf Region is a strategic and political region in world, because it is one of the main sources of the global energy supply, and it has the geopolitical and Geo strategic role in creating world order and global security. Therefore its security is very important for world. Unfortunately strategic region of Persian Gulf in the past three decades faced with many security challenges due to wars and political conflicts. For security in this region, there are several methods such as military treaties between regional countries or Military presence of foreign countries, but historical evidence has shown, none of them could not guarantee the stable security in this region. The regional cooperation between countries can be replaced to mentioned methods. IPI Gas pipeline is an objective sample for this regional cooperation.

References:

1-Dr. Amir Sajedi,"GEOPOLITICS OF THE PERSIAN GULF SECURITY: IRAN AND THE UNITED STATES", IPRI Journal IX,no. 2(Summer 2009): 77- 89

2-From Wikipedia, the free encyclopedia, Persian Gulf htttp://en.wikipedia.org/

3-Touraj Daryaee, The Persian Gulf Trade in Late Antiquity, Journal of World History, Vol. 14, No. 1, March 2003, accessed February 09, 2007

4-working Paper No. 61, UNITED NATIONS GROUP OF EXPERTS ON GEOGRAPHICAL NAMES, dated March 28, April 4, 2006 , accessed February 09, 2007

5-. Phillipe Le Billon,Fouad El Khatib, " from free oil to 'freedom oil', terrorism, war and US geopolitics in the Persian Gulf ", Forthcoming in Geopolitics(accepted July 2003)

6 -V. Mikhin, Western Expansionism in the Persian Gulf (New Delhi: Allied, 1988), 43.2 Duane Chapman.

7- Duane Chapman and Neha Khanna, “ The Persian Gulf, Global Oil Resources, and International Security,” Contemporary Economic Policy 24, no. 4, (2006):507- 519.

8-The Robert S. Strauss center, the university of Texas at AUSTIN. Strait of Hormuz.

9- Energy Information Administration, Country Analysis Briefs: Persian Gulf Region (June 2007) Online Available: http://www.eia.doe.gov/emeu/cabs/Persian_Gulf/pdf.pdf.Accessed: February 10, 2008.

10-Bernard A.Gelb," Caspian Oil and Gas: Production and Prospects ", CRS Report for Congress, Order Code RS21190 Updated September 8, 2006

11- Iran energy Data, Statistics and analysis, oil Gas, Electricity, www.eia.doe.gov