geopolitical impact of changes in patterns and trends in oil

8/9/2019 Geopolitical Impact of Changes in Patterns and Trends in Oil

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Geopolitical impact of changes in patterns and trends in oilEnergy security depends on:

• Resource availability (Domestic and foreign)• Security of supply• A ected by geopolitics• ittle e!cess capacity to ease pressure on energy resources• Energy insecurity is rising• "ainly for non#rene$able resources

Energy crisis % a serious shortage of energy supplies• As the energy crisis deepens& people $ill drive less& carpool&

high mileage cars $ill be in demand• ess and slo$er driving due to high petrol prices reduces the

number of road accidents• 'usinesses $ill turn o advertising lights and more people $ill

$ash their clothes in cold $ater• 'ut in poor areas& there $ill be more deaths from heat in the

summer and more deaths from cold in the $inter due toenergy costs

• uel riots could ensue• he energy crisis $ill also increase illegal immigration from

"e!ico to *SA $here there is already increasingunemployment+

• ,ncrease in social tensions• -hronic heating oil shortages may cause a greater migration

to the Sun 'elt• he middle class population $ill shrin. as more people $ill be

sin.ing into poverty• "ore homelessness

Solutions:• *SA constructed a Strategic /etroleum Reserve• 0il stored in a string of salt domes and abandoned salt mines

in ouisiana and e!as• ,t $as meant to store one billion barrels of oil $hich could be

used in the even of a supply discontinuation from the middleeast

Energy path$ays % the path$ay in $hich energy is e!ported• he Strait of 1ormu2 in the narro$ body of $ater bet$een the

/ersian Gulf and the Gulf of 0man• About 345 of the $orld6s oil supply passes through the strait

and it is closely monitored by ,ran $ho $arned that it couldbloc. this vital shipping route in the even of serious politicaltensions+


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• ,n 7igeria& the rebel groups attac. the oil installation in the7iger delta out of frustration at the paucity of the bene8tsaccruing to the region or in an attempt to gain payouts

• he armed rebel group .no$n as the "ovement for theEmancipation of the 7iger Delta ("E7D) intensi8ed attac.s onoil platforms and pumping stations

• An increase of violence has a ected the country6s 8nancialstability

• So the ability to supply crude oil to the outside $orlddecreases

• ,n 944 & 7igeria $as the largest oil producer in Africa• *SA is the number one buyer of ;ene2uelan oil and due to the

political turmoil& ;ene2uela6s state oil company stopped sellingcrude oil to *SA

• hey are important as they control the 5 of Russia6s GD/• he production of these fossil fuels is vital to the country6s

economic success• he high energy prices of recent years have been of massive

bene8ts• Russia6s strategic location& east to the energy hungry Europe

ensures that there is no shortage of the demand for Russiangas and oil

• South of Russia is the rapidly e!panding economies of ,ndia&-hina& ?apan and South @orea $hich re uires large amounts of energy

• European countries in particular have become increasinglyreliant on energy supplies from Russia

-ountry

/roductionBbillion barrels

per day

5 of$orld

totalRussia C4+= C@SA += C3*SA + C9-hina +3 >

• Russian gas is piped to various countries such as *.raine&'ulgaria& Germany and ur.ey via an e!tensive pipelinenet$or.

• he pipeline net$or.s for oil ad gas are o$ned by the state• Ga2prom& a state gas energy company has a monopoly on

Russian gas e!ports of about 935 of gas consumption in theE*


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• he 'altic states are almost C445 reliant on Russian oil• 9>5 of Germany6s oil is from Russia• =5 of /oland6s imports is Russian oil• he most important pipelines for Russian oil are those crossing

*.raine& they account for F45 of the gas sent beyond the -,S

• ,n ?anuary 944 & 'elarus cut o a transit pipeline carryingRussian oil

• he closure of the 444.m pipeline halted the movement ofRussian oil supplies to a number of countries

• his prevented C+9 million barrels a day to be transported• Dispute bet$een Russia and the countries led to the Russian

oil and gas to increase for certain countrieso 'elarus % *S BC444 cm 3 to *S C44

• o spite the increase in oil prices& 'elarus decided that it$ould impose an import duty of > a tonne on Russian oilthat $as shipped across its territory to $estern Europe

• Such disputes has raised the E* fears about its increasingreliance on energy supplies from Russia

• Some critics argue that Russia has a habit of manipulating gasand oil supplies for political purposes

• Solutions of Russian disputeo -hancellor "er.el said that the dispute bet$een Russia

and other countries illustrated the fact that Europe6senergy sources needed to be more diverse+ So the E* isgoing to:

o 'uild interconnecting pipelines and po$er lines such aselectricity hoo.#ups bet$een Germany and /oland as$ell as rance and Spain

o Diversify their supply& 7abucco pipeline $hich $illconnect Europe $ith gas 8elds in the "iddle East and-entral Asia via ur.ey

o 'uild more terminals for the import of li ue8ed naturalgas

• 'ut there has been doubts about the management and

eHciency of the energy industry in Russia• ,n 944=& the ,nternational Energy Agency& ,EA& said that the

Ga2prom may not have enough gas to supply Europe over thene!t decade

• his $as because it $as not re#investing enough to ensurecontinuous ade uate supplies in the future

• Ga2prom relies on limited numbers of large gas 8elds and hasfailed to invest in developing ne$ resources in the Artic

• o ma.e up for Ga2prom6s falling output in $estern Siberia andit6s continuous e!ports of oil to Europe& it increased its imports

from -entral Asia


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• Russia also prevents foreign investors to enter the energysector by imposing strict rules and regulations

• he country also ris.s scaring o vital foreign investments as$ell as potential oil and gas customers

• 'ecause foreign investments are re uired to .eep Russia6s oiland gas sector on trac.

• he study by the Economist suggested that Russia could see.to construct a gas cartel including the countries of -entralAsia& Algeria& Iatar& ibya and even ,ran

• January 2015• Vladimir Putin ordered the Russian state energy giant

Gazprom to cut supplies to and through Ukraine amidaccusations& according to he Daily "ail& that its neighbor hasbeen siphoning o and stealing Russian gas+ Due to theseJtransit ris.s for European consumers in the territory of

*.raine&J Ga2prom cut gas e!ports to Europe by =45&plunging the continent into an energy crisis J$ithin hours+J/erhaps e!plaining the e!plosion higher in 7atGas prices (andoil) today& gas companies in *.raine con8rmed that Russiahad cut o supplyK and six countries reported a completeshut o! o" Russian gas + he E* raged that the sudden cut#o to some of its member countries $as Jcompletelyunacceptable&J

• Ga2prom -E0 added that Russia plans to shi"t all itsnatural gas #o$s crossing Ukraine to a route %ia &urkey

• Gazprom' the $orld(s )iggest natural gas supplier'plans to send *+ )illion cu)ic meters through aproposed link under the ,lack -ea to &urkey' "ullyreplacing shipments %ia Ukraine

• About 4 percent of Russia6s gas e!ports to Europe and ur.eytravel through *.raine6s Soviet#era net$or.+

• Ga2prom plans to deliver the fuel to ur.ey6s border $ithGreece and .it(s up to the /U to decide $hat to do $ithit "urther' according to Sefcovic+

• Russia cut gas exports to /urope )y *0 per cent today'plunging the continent into an energy crisis $ithin

hours as a dispute $ith Ukraine escalated• his morning& gas companies in *.raine said that Russia had

completely cut o their supply+• ,ulgaria' Greece' 3acedonia' Romania' 4roatia and

&urkey all reported a halt in gas shipments "rom Russiathrough Ukraine

• Ga2prom has reduced deli%eries %ia Ukraine a"ter priceand de)t disputes $ith the neighboring country that t$icein the past decade disrupted supplies to the E* duringfree2ing $eather+

• LRussia $on6t hurt its image $ith a shift to ur.ey because ithas al$ays been a reliable gas supplier and never violated itsobligationsM # Russian Energy "inister Ale!ander 7ova.

http://www.dailymail.co.uk/news/article-1106382/Europe-plunged-energy-crisis-Russia-cuts-gas-supply-Ukraine.htmlhttp://www.bloomberg.com/news/2015-01-14/russia-to-shift-ukraine-gas-transit-to-turkey-as-eu-cries-foul.htmlhttp://www.bloomberg.com/news/2015-01-14/russia-to-shift-ukraine-gas-transit-to-turkey-as-eu-cries-foul.htmlhttp://www.bloomberg.com/news/2015-01-14/russia-to-shift-ukraine-gas-transit-to-turkey-as-eu-cries-foul.htmlhttp://www.bloomberg.com/news/2015-01-14/russia-to-shift-ukraine-gas-transit-to-turkey-as-eu-cries-foul.htmlhttp://www.bloomberg.com/news/2015-01-14/russia-to-shift-ukraine-gas-transit-to-turkey-as-eu-cries-foul.htmlhttp://www.bloomberg.com/news/2015-01-14/russia-to-shift-ukraine-gas-transit-to-turkey-as-eu-cries-foul.htmlhttp://www.dailymail.co.uk/news/article-1106382/Europe-plunged-energy-crisis-Russia-cuts-gas-supply-Ukraine.html


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Case Study – The Niger Delta: Oil Pollution• Niger Delta covers an area of 70,000km N (7.5% of Nigeria’s land area).• Contains over 75% of Africa’s remaining mangrove.• A report in 00! s"ggested t#at over $.5 million tonnes of oil #ave een spilt

in t#e delta over t#e past 50 &ears.• 'ne of t#e 5 most poll"ted places on art# (according to *)• 0 million people living in t#e delta are affected & t#e poll"tion.• +oll"tion damages crops and fis#ing.• #ell claims -5% of oil disc#arges in t#e last 5 &ears #ave een ca"sed &

sa otage.• 70,000,000m of nat"ral gas is flared off eac# da&.• /"ivalent of 0% of Africa’s nat"ral gas cons"mption.• nvironmental disasters in one of t#e 1orld’s largest 1etlands and Africa’s

largest remaining mangroves forests.• 'il spills, acid rain from gas flares and t#e stripping a1a& of mangroves from

pipeline ro"ts #ave killed fis# in t#e area• 2et1een $-3!4 00 , more t#an 000 #ectares of mangroves disappeared of

mangroves disappeared from t#e coast d"e to land clearing and canal dredgingfor oil.

• 6#e oilfields contain large amo"nts of nat"ral gas, t#is is generall& "rnt off asflares rat#er t#an eing stored or re4in ected into t#e gro"nd. 8"ndreds offlares #ave "rned contin"o"sl& for decades. (6#"s lead to acid rain releasing

green#o"se gases)• 6#e government #as recogni9ed !3$7 oil spills in t#e region since t#e start ofoil prod"ction in t#e area.

• Constr"ction and increased s#ip traffic #as c#anged local 1ave patternsca"sing s#ore erosion and t#e migration of fis# into deeper 1ater

• :ario"s t&pes of constr"ction #ave taken place 1it#o"t ade/"ateenvironmental impact st"dies.

Case Study – Oil Sands in Canada and Venezuela• Critical over t#e ne;t 50 &ears as t#e 1orld’s prod"ction of conventional oil

falls. "c# s&nt#etic oil 1#ic# can also e made from coal and nat"ral gas,co"ld provide a vital ridge to an era of ne1 tec#nologies.

• stimates of economicall& recovera le oil sand reserves<

• $30 illion arrels ='il >as o"rnal? estimates

• $7 illion arrels =2+? estimates

• orld cons"mes close to 0 illion arrels of oil a da&

• ,000 emplo&ees 1ork at Al erta oil sands.


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• 6#e& reac# $ million arrels of oil a da& in 005.

• 8alf of a"di Ara ia’s c"rrent o"tp"t is less t#an 5% of t#e 1orld’s prod"ctionin 0 0.

• @n takes tonnes of mined sand to prod"ce one arrel of s&nt#etic cr"de,leaving lots of 1aste sand.

• @t takes a o"t t#ree times as m"c# energ& to prod"ce a arrel of oil4sandscr"de as it does a conventional arrel of oil t#"s oil sand are larger creators of green#o"se gas emissions.

geopolitical impact of changes in patterns and trends in oil

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