Chinese Multilateralism in Energy Security the Case of Iran

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Chinese Multilateralism in Energy Security the Case of Iran University of Amsterdam Graduate School of Social Sciences Chinese Multilateralism in Energy Security The Case of Iran MSc Political Science (International Relations) Thesis Project: The Geopolitical Economy of Energy 23 June 2017 Amsterdam, the Netherlands Author: Supervisor: Thijs Jansen Dr. M.P. (Mehdi) Amineh 11094966 Second reader: Dr. H. (Henk) Houweling. 2 Table of Contents Abstract .................................................................................................................................................. 5 Acknowledgements ................................................................................................................................ 6 Map 1 – China........................................................................................................................................ 7 Map 2 – Iran .......................................................................................................................................... 8 List of Tables and Figures .................................................................................................................... 9 List of abbreviations ............................................................................................................................ 10 Chapter 1: Research Design ............................................................................................................... 13 1.1 Introduction ........................................................................................................................... 13 1.2 Literature Review .................................................................................................................. 16 1.3 Theoretical and conceptual framework ................................................................................. 22 1.4 Brief argumentation and hypotheses ..................................................................................... 25 1.5 Research method ................................................................................................................... 26 1.6 Structure of the thesis ............................................................................................................ 27 Chapter 2: Background ...................................................................................................................... 29 2.1 Introduction ........................................................................................................................... 29 2.2 Background of Chinese state-energy relations ...................................................................... 29 2.3 The current Chinese energy situation .................................................................................... 32 2.3.1 Oil ......................................................................................................................................... 33 2.3.2 Gas ........................................................................................................................................ 34 2.4 Conclusion ............................................................................................................................. 35 Chapter 3: The Sino-Iranian Energy Relations ................................................................................ 37 3.1 Introduction ........................................................................................................................... 37 3.2 State, energy security and NOC’s in China ........................................................................... 37 3.2.1 The Chinese state and energy supply security ............................................................... 38 3.2.2 The going out strategy and Chinese NOC’s .................................................................. 40 3.3 State, the hydrocarbon Industry, and the political economy of energy in Iran ...................... 44 3.3.1 The political economy of energy in Iran ....................................................................... 44 3.3.2 The Iranian hydrocarbon industry ................................................................................. 46 3.4 The Sino-Iranian energy relations ......................................................................................... 52 3.4.1 Sino-Iranian diplomacy and trade.................................................................................. 52 3.4.2 The activities of China’s NOC’s in Iran ........................................................................ 56 3 3.5 Conclusion ............................................................................................................................. 62 Chapter 4: Geopolitical and geo-economic challenges for the Chinese energy supply security from Iran .............................................................................................................................................. 65 4.1 Introduction ........................................................................................................................... 65 4.2 Domestic challenges in Iran .................................................................................................. 65 4.2.1 Political (power) challenges .......................................................................................... 65 4.2.2 Socio-economic challenges ........................................................................................... 68 4.2.3 Technical challenges ..................................................................................................... 69 4.3 International Challenges ........................................................................................................ 70 4.3.1 The Middle East ............................................................................................................ 71 4.3.2 China, Iran and the West ............................................................................................... 74 4.4 Conclusion ............................................................................................................................. 79 Chapter 5: Conclusions ....................................................................................................................... 83 Bibliography ........................................................................................................................................ 89 Primary sources ................................................................................................................................. 89 Internet Sources ................................................................................................................................. 89 Academic articles and book chapters ................................................................................................ 91 4 Abstract This thesis will provide a comprehensive analysis of the involvement of China in Iran between 2001 and 2017. This will be done by using a critical geopolitical perspective, which enables to analyze the crucial factors that have contributed to China’s activities beyond its borders. In addition, it is able to explain geopolitical and geo-economic means that gain importance in the international sphere. Analysis is in this thesis relies on several claims. First, the Chinese development of the last decades has depended on increasing energy imports, based on the current Chinese energy situation this will continue in the foreseeable future. China’s national oil companies (NOC’s) have a crucial role in this regard. The companies are important tools for Chinese geo-political economic power projection. To determine the strength and sustainability of energy relations, this thesis will look into diplomatic-, trade-, and investment relations. Furthermore, it outlines the increasing military cooperation on the Eurasian continent. Iran’s domestic ruling elite is analyzed within the critical geopolitical perspective and from an rentier state perspective. The country’s ruling elite is highly dependent on incomes from oil. It will be argued that the elite’s stability in Iran is maintained through high expenses on defense and military. Domestic as well as international geopolitical and geo-economic challenges have the potential to influence the Chinese energy supply security from Iran. Keywords: China, Iran, multilateralism, energy relations, critical geopolitics 5 Acknowledgements This thesis has been the result of six months of extensive research into the Sino-Iranian energy relations. When I started studying I couldn’t have guessed that this would be the subject that I would eventually write my final thesis on. After studying economics and business administration in my Bachelor, I wanted to change the direction of my studies during my Master. This has resulted in two years of studying International Relations at the University of Amsterdam. In the first semester of my Master I followed the course Energy and Geopolitical Economy in Eurasia, taught by Mr. M.P. (Mehdi) Amineh. During the first lectures and while reading articles, the subject started fascinating me more and more. At the end of the course I was determined to write my thesis on the subject and with Mr. Amineh. Luckily, this became reality as I got into his research project. In this thesis I’ve tried to capture the most important factors of relations between China and Iran, when it comes to energy supply security. Although there will always be room for more analysis,
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