From the Editor's Desk China Drought Challenges Central
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25 May 2010 | Vol. 1, № 18. From the Editor’s Desk Dear FDI supporters, Welcome to the Strategic Weekly FDI’s energy security research Analysis . This week FDI investigates the programme, Dr Charmaine Samuel Taylor, drought which is causing food shortages of the measures that have been taken to across the south-western provinces of reduce the human-induced elements of China and the violent Maoist insurgency greenhouse gases, such as carbon dioxide. which continues to trouble parts of India’s FDI welcomes comment on both SWA eastern and central states. articles and Strategic Analysis Papers . Also considered are the possible use of Comments, as well as suggestions for methane hydrates as a future energy future articles, can be forwarded by source and the Australian Government’s e-mail to Leighton G. Luke at push for a single national off-shore [email protected] petroleum regulator. Major General John Hartley AO (Retd) Upcoming Strategic Analysis Papers Institute Director and CEO include an exploration by the manager of Future Directions International ***** China Drought Challenges Central Government Background A devastating drought has caused food shortages across large tracts of China. In some parts of China the food shortages began in April, however, July, August and September are expected to be the worst months. Rain has not fallen for more than a year, although flooding-rain in late April put a sudden end to the drought in parts of the Guangxi Zhuang Autonomous Region. Comment The rainfall in parts of China is the lowest it has been in decades. Some commentators have even described it as a once-a-century occurrence. In the Yunnan Province alone there are still an estimated 27 million people affected by the drought. Other provinces that have been affected are Guizhou, Sichuan and the megacity of Chongqing (Chungking). In Guizhou province, 86 out of its 88 cities are within the drought zone and more than 17 million people are short of drinking water. According to Xinhua News Agency, an estimated 18 million head of livestock are also affected, as well as 8.13 million hectares of arable land. In all, at least 60 million people have been caught up in the drought across China, according to Chinese Government data. By early April, the national Government had donated 1.1 billion yuan ($200 million) toward relief. Drought affected regions of China, 2010. Source: MarketSkeptics A Chinese news report from Xinguanet in May said China’s centrally administered state- owned enterprises (SOEs) donated 248 million yuan ($44 million) in the first quarter of 2010 with the money coming from 49 of the 126 SOEs under China’s State Assets Supervision and Administration Commission. China’s three giant oil companies, China National Offshore Oil Corp, PetroChina Co and China Petroleum and Chemical Corp were the largest contributors. For the Chinese Government, the problem of dealing with the drought is more than a logistical challenge to ensure people receive food and water aid. The real test is ensuring that law and order is maintained. Every year there are reports of riots throughout China as a result of shortages of affordable food and water. Page 2 of 8 For many Chinese, the drought has become another grievance in addition to poor living conditions and other concerns with social justice. Official data, viewed by Chinese observers as reflecting only a portion of the actual numbers of riots and mass protests, show that the number of significant incidents rose to more than 87,000 in 2005 compared to just over 10,000 in 1995. Unhappiness is clearly growing in China and anti-government organisers are getting better at galvanising support. Gary Kleyn Research Manager Global Food and Water Crises Research Programme [email protected] ***** Maoist Attacks Continue Unabated in India Background Ambushes and bomb attacks launched by Maoist guerrillas continue to claim lives in the so- called “red corridor” area of central and eastern India. In their most recent attacks, the Maoists, also known as Naxalites, used landmines and remote controlled Improvised Explosive Devices (IEDs) to target both security personnel and civilians. Although the Maoists’ operations are a long way from Commonwealth Games venues in Delhi, speculation that the guerrillas may have links to the Lashkar-e-Taiba (LeT) terrorist organisation would require Games organisers to factor them into the list of potential threats. Comment The Maoist campaign began in 1967 against State and Union Government authorities in parts of the states of Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Karnataka, Madhya Pradesh, Orissa, Uttar Pradesh and West Bengal (an area which has become known as the “red corridor”). Although an ultimate Maoist victory is improbable in the extreme, given India’s sheer size and increasing standards of living, the Source: The Hindu guerrillas continue to wreak havoc in large tracts of impoverished rural land, with villagers – their traditional supporters and whose rights the Maoists claim to be fighting for – increasingly caught between the guerrillas, security forces and the often brutal anti-Maoist Salwa Judum militia. The most recent fatal attack took place on 17 May in the jungles of Dantewada district, Chhattisgarh state, and used landmines to target a bus carrying Special Police Officers and Page 3 of 8 civilians, some of whom were returning home after sitting police recruitment exams. At least 35 people were killed in the attack. An ambush on 6 April, also in Dantewada, resulted in the deaths of 75 officers from the paramilitary Central Reserve Police Force, while 24 members of the paramilitary Eastern Frontier Rifles (EFR) were killed on 15 February in a daring attack on the EFR’s Silda camp at Midnapore in West Bengal state. A 20 May attack on railway infrastructure caused the derailment of a goods train carrying oil after the railway track was dynamited, but caused no fatalities. Speaking at a press conference on 24 May, Indian Prime Minister Dr Manmohan Singh described the Maoists as India’s ‘biggest internal security challenge’. According to the Chief Minister of Chhattisgarh state, Mr Raman Singh, the Maoists have, over the last decade, killed more than 1,000 civilians, over 650 policemen and destroyed 132 electric towers, 106 school buildings and three hospitals. The Chief Minister also stated on 19 May that, in view of the growing sophistication of the IEDs used by the Maoists, they may have developed links with LeT. If so, the Maoists could join the Indian Mujahideen group as LeT proxies, a situation likely to cause headaches for security planners preparing for the October Commonwealth Games in Delhi – an LeT-Indian Mujahideen-Maoist linkage would add to the challenges that will be faced by the 10,000 police and paramilitary personnel the Indian Government plans to deploy for Games security. In any event, security forces in the remote rural areas of the “red corridor” will continue to have their work cut out for them. Leighton G. Luke Manager Indian Ocean Research Programme [email protected] ***** Methane Hydrates: The Next Big Thing in Commercial Gas Production? Background The commercial exploitation of naturally occurring methane hydrates is likely to happen in the near future with several nations working towards introducing hydrate-sourced natural gas into the market. The amount of natural gas stored in the world’s methane hydrates is believed to be enormous, potentially providing more energy than all other fossil fuels combined and becoming more than a $200 billion industry. Comment Methane hydrate is a gas hydrate, also known as methane clathrate, methane ice or “fire ice”. It is a crystalline solid consisting of gas molecules, primarily methane, each surrounded by a cage of water molecules, forming a solid similar to ice. It was first discovered in the Page 4 of 8 1960s in a Siberian oil field under the permafrost. Similarly, Canada and Alaska have discovered sources under permafrost, while other significant deposits of methane hydrate have been found under sediments on the ocean floor. In an article titled ‘High Resolution Carbon Dioxide Concentration Record 650,000–800,000 Years before Present’, published in 2008 by the British scientific journal, Nature, scientists have also discovered the presence of the compound in deep Antarctic ice cores which record a history of atmospheric methane concentrations dating to 800,000 years ago. This also serves as a primary source of data for global warming research, along with oxygen and carbon dioxide. The energy industry is interested in gas hydrate for the following reasons: when warmed or depressurised, it reverts back to gas and water; the structure concentrates natural gas; and there are vast reservoirs around the world. It is intended that the gas from hydrates will be similarly used for purposes such as electricity generation and automotive fuel. According to Art Johnson, President of Hydrate Energy International, commercial gas production from this resource is expected in five to 10 years with limited production sooner. Current global activity includes drilling programmes in Japan and India of 32 and 39 wells respectively, seismic surveys specifically for hydrate assessment, and hydrate drilling programmes in 2007 in China and South Korea. According to The Australian Bureau of Agricultural and Resource Economics (ABARE), Australian Commodities June Quarter, Vol. 16, No.2 , world liquefied natural gas (LNG) trade is forecast to increase by six per cent in 2010 to approximately 180 million tonnes, as gas consumption increases in line with improved economic conditions. Japan is the world’s largest LNG buyer, with imports expected to exceed 60 billion tonnes in 2010. Australian Commodities also highlighted that South Korea’s increased gas imports in 2010 will be supplied by new long-term contracts with suppliers in Indonesia, the Russian Federation and Yemen.