Energy Security : an Interdisciplinary Approach / Gawdat Bahgat
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P1: OTE/OTE/SPH P2: OTE fm JWST043-Bahgat December 28, 2010 15:57 Printer Name: Yet to Come P1: OTE/OTE/SPH P2: OTE fm JWST043-Bahgat December 28, 2010 15:57 Printer Name: Yet to Come ENERGY SECURITY P1: OTE/OTE/SPH P2: OTE fm JWST043-Bahgat December 28, 2010 15:57 Printer Name: Yet to Come P1: OTE/OTE/SPH P2: OTE fm JWST043-Bahgat December 28, 2010 15:57 Printer Name: Yet to Come ENERGY SECURITY AN INTERDISCIPLINARY APPROACH Gawdat Bahgat National Defense University Washington, DC, USA A John Wiley and Sons, Ltd., Publication P1: OTE/OTE/SPH P2: OTE fm JWST043-Bahgat December 28, 2010 15:57 Printer Name: Yet to Come This edition first published 2011 C 2011 John Wiley & Sons, Ltd Registered office John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom For details of our global editorial offices, for customer services and for information about how to apply for permission to reuse the copyright material in this book please see our website at www.wiley.com. The right of the author to be identified as the author of this work has been asserted in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by the UK Copyright, Designs and Patents Act 1988, without the prior permission of the publisher. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. Designations used by companies to distinguish their products are often claimed as trademarks. All brand names and product names used in this book are trade names, service marks, trademarks or registered trademarks of their respective owners. The publisher is not associated with any product or vendor mentioned in this book. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold on the understanding that the publisher is not engaged in rendering professional services. If professional advice or other expert assistance is required, the services of a competent professional should be sought. Library of Congress Cataloging-in-Publication Data Bahgat, Gawdat. Energy security : an interdisciplinary approach / Gawdat Bahgat. p. cm. Includes bibliographical references and index. ISBN 978-0-470-68904-2 (hardback) 1. Energy policy. 2. Energy development. 3. Power resources. I. Bahgat, Gawdat. II. Title. HD9502.A2B335 2011 333.79–dc22 2010046393 A catalogue record for this book is available from the British Library. Print ISBN: 9780470689042 ePDF ISBN: 9780470980187 oBook ISBN: 9780470980170 ePub ISBN: 9780470980163 Set in 10/12pt Times by Aptara Inc., New Delhi, India P1: OTE/OTE/SPH P2: OTE fm JWST043-Bahgat December 28, 2010 15:57 Printer Name: Yet to Come Contents About the Author ix Preface xi Acknowledgements xiii List of abbreviations xv Glossary xix 1 Introduction 1 1.1 Energy Security 2 1.2 Diversification of Energy Mix 3 1.2.1 Oil 4 1.2.2 Natural Gas 5 1.2.3 Coal 7 1.2.4 Nuclear Power 8 1.2.5 Biofuels 10 1.2.6 Other Renewable Sources 11 1.2.7 Investment 13 1.2.8 Resource Nationalism 14 1.2.9 Geo-policy 14 1.3 Conclusion 16 References 17 2 United States 21 2.1 Oil 22 2.2 Natural Gas 26 2.3 Coal 29 2.4 Nuclear Power 29 2.5 Ethanol 32 2.6 The Quest for an Energy Strategy 33 2.7 Conclusion: The Way Forward 36 References 37 3 European Union 41 3.1 The EU Energy Outlook 42 P1: OTE/OTE/SPH P2: OTE fm JWST043-Bahgat December 28, 2010 15:57 Printer Name: Yet to Come vi Contents 3.1.1 Oil 42 3.1.2 Natural Gas 43 3.1.3 Coal 44 3.1.4 Nuclear Power 44 3.1.5 Renewable Sources 46 3.2 Russia 48 3.3 Central Asia/Caspian Sea Region 50 3.4 Mediterranean Sea 52 3.5 The Gulf Cooperation Council 53 3.6 Turkey 53 3.7 Conclusion: The Way Ahead 54 References 55 4 China 59 4.1 Regulatory Authority 60 4.2 Oil 62 4.2.1 Imports from the Middle East 63 4.2.2 Africa 66 4.2.3 Central Asia 68 4.2.4 Refining 70 4.2.5 Shipping 71 4.2.6 Strategic Petroleum Reserve (SPR) 71 4.3 Coal 72 4.4 Natural Gas 73 4.5 Nuclear Power 73 4.6 Renewable Energy 74 4.7 Overseas Exploration and Production 74 4.8 Conclusion 75 References 76 5 Persian Gulf 79 5.1 Socio-economic and Political Challenges 80 5.1.1 International Sanctions 82 5.1.2 Wars and Ethnic/Sectarian Strife 82 5.1.3 Terrorism 83 5.1.4 Closure of Straits of Hormuz 83 5.1.5 Domestic Instability 83 5.1.6 Underinvestment 84 5.2 Saudi Arabia 84 5.3 Iran 93 5.4 Iraq 101 5.5 Conclusion: The Way Forward 106 References 106 6 Africa 111 6.1 Algeria 113 P1: OTE/OTE/SPH P2: OTE fm JWST043-Bahgat December 28, 2010 15:57 Printer Name: Yet to Come Contents vii 6.2 Libya 114 6.3 Egypt 117 6.4 Sudan 119 6.5 Angola 120 6.6 Nigeria 121 6.7 United States and Africa 123 6.8 Europe and Africa 125 6.9 Conclusion: The Way Ahead 126 References 126 7 Caspian Sea 131 7.1 Hydrocarbon Resources – An Assessment 132 7.1.1 Azerbaijan 133 7.1.2 Kazakhstan 134 7.1.3 Turkmenistan 145 7.2 The Legal Status of the Caspian Sea 147 7.2.1 Azerbaijan 147 7.2.2 Kazakhstan 148 7.2.3 Russia 148 7.2.4 Turkmenistan 148 7.2.5 Iran 148 7.3 Geopolitical Rivalry and Pipeline Diplomacy 149 7.3.1 Iran 149 7.3.2 Russia 150 7.3.3 China 152 7.3.4 Europe and the United States 153 7.4 Conclusion: The Way Forward 154 References 155 8 Russia 157 8.1 Oil Sector 158 8.2 Natural Gas 160 8.3 The Energy Strategy-2030 161 8.3.1 Oil Sector 162 8.3.2 Gas Sector 162 8.4 The Arctic Hydrocarbons 162 8.5 Russia–EU Energy Partnership 164 8.6 Russia, the Middle East, and OPEC 168 8.7 Energy Sector Organization 170 8.8 Conclusion: The Way Forward 172 References 173 9 OPEC and Gas OPEC 175 9.1 OPEC: History and Evolution 176 9.2 OPEC: Objectives, Membership, and Organization 179 9.3 OPEC Summits 181 P1: OTE/OTE/SPH P2: OTE fm JWST043-Bahgat December 28, 2010 15:57 Printer Name: Yet to Come viii Contents 9.4 OPEC: Long-Term Strategy 183 9.5 Gas OPEC 185 9.6 GECF and OPEC 185 9.7 Oil vs. Gas 186 9.7.1 Russia 189 9.7.2 Iran, Qatar, and Algeria 190 9.7.3 Consumers’ Reaction 191 9.8 Conclusion 192 References 193 10 International Energy Agency 195 10.1 The Founding of the IEA 195 10.2 The International Energy Program 198 10.3 Structure of the IEA 199 10.3.1 The Governing Board 199 10.3.2 Standing Groups 200 10.3.3 The Secretariat 202 10.3.4 Membership 203 10.4 Energy Security 205 10.4.1 Emergency Response Mechanisms 206 10.5 How Did the System Work? 209 10.5.1 The 1979–1981 Crisis 209 10.5.2 The 1990–1991 Crisis 210 10.6 Conclusion 211 References 212 11 Conclusion 213 11.1 Energy Security 213 11.2 The International Energy Forum (IEF) 215 11.3 Joint Oil Data Initiative 216 11.4 Conclusion: The Way Forward 217 References 218 Index 219 P1: OTE/OTE/SPH P2: OTE fm JWST043-Bahgat December 28, 2010 15:57 Printer Name: Yet to Come About the Author Dr. Gawdat Bahgat is a professor at the Near East South Asia Center for Strategic Studies, National Defense University, in Washington, DC, United States of America. Dr. Bahgat has taught political science and international relations at several universities. His areas of exper- tise include energy security, counter-terrorism, proliferation of weapons of mass destruction, international political economy, the Middle East, the Caspian Sea and Central Asia, and US foreign policy. Dr. Bahgat is the author of seven books and about 200 scholarly articles. His work has been translated into several foreign languages. He has been invited to and presented papers at conferences in Australia, Europe, and the Middle East, and is a frequent contributor to several media outlets. He holds a PhD in political science from Florida State University, an MA in Middle Eastern Studies from American University in Cairo, and a BA in political science from Cairo University. P1: OTE/OTE/SPH P2: OTE fm JWST043-Bahgat December 28, 2010 15:57 Printer Name: Yet to Come P1: OTE/OTE/SPH P2: OTE fm JWST043-Bahgat December 28, 2010 15:57 Printer Name: Yet to Come Preface Energy is the lifeblood of civilization. Both as individuals and nation states we depend heavily on energy. In almost everything we do, we rely on one or several sources of energy. Many people and governments used to take the availability of energy sources for granted. Our deepening reliance on energy and the rise of a combination of geopolitical, geological, and environmental challenges have cast doubt on this assumption that energy will always be there.