This April, the gas sector news centered around the traditional issues of production, supplies, and plans for the cultivation of recently discovered deposits occasionally bordered on battlefield reports. The events which were drawing media coverage hardly warrant the nervous projections about a prelude to a series of full-blown conflicts but do lend extra credibility to Z. Brzezinski's fairly old assessment that World War III over the dwindling global energy resources has long become an objective reality.
At least three developments related to the energy sector must be mentioned in the context of the crumbling global energy security. Early this April, gunmen in Yemen blew up the 38-inch pipeline used to feed gas to the Balhaf LNG terminal, disrupting the operations of Yemen LNG, which is run by France's Total. The media attributed the attack to Al Qaeda which supposedly avenged the killing of several militants by a US drone hours earlier, but it has to be taken into account that LNG from the Arabian Peninsula is, under long-term contracts, supplied by GDF Suez S.A., Total, and Korea Gas Corporation (KOGAS) exclusively to Europe and Asia and, from Al Qaeda's perspective, attacking a European company's facilities not geared towards the US should have made no sense.
A week later, a blast damaged a gas pipeline in the proximity of al Arish, in the northern part of the Sinai Peninsula. The infrastructure used to be an avenue for gas supply from Egypt to Israel and Jordan, and was, at the time of the attack, defunct after the previous attack which took place on February 5. Moreover, the April explosion was the 14th one to hit the pipeline. Back in November, Egypt's currently ruling Muslim Brotherhood pledged an array of security measures for the transit route including the installation of a monitoring system and the hiring of local Bedouins to patrol the adjacent area, but the plan failed to take off the ground, evidently due to the difficulty of cutting a deal with the Bedouins.
The third pertinent development was the "Noble Dina" joint military exercise performed by the navies and air forces of Israel, the US, and Greece. It is wildly held that the purpose behind the initiative was to send a message to Turkey concerning the dispute over the ownership of the natural gas reserves discovered in the East Mediterranean. While Cyprus pressed a claim on the fields which the country believes to be located in its exclusive economic zone, a rival bid followed immediately from Turkey, the founder and guarantor of the hitherto unrecognized North Cyprus. It factors into the disposition that the relations between Ankara and Tel Aviv soured after the raid of the Gaza flotilla by Israeli commandos who killed Turkish citizens in the operation. In 2010, Turkey and Israel suspended their formerly intense cooperation in the military sphere. It did not evade watchers that the hypothetic enemy in the framework of the "Noble Dina" drill in most regards closely resembled the Turkish forces.
The chronic though so far under-critical tensions in the Persian Gulf, where the confrontation between Iran and the US threatens to escalate into an armed conflict, further casts a shadow over the situation outlined above. Peace in the region is fragile and does not promise to last. Washington seems to be undecided at the moment, but years of pressure on the global public opinion to embrace air strikes against Iran's nuclear infrastructures as an inescapable option left no doubt that a military campaign against the country is brewing. On the other hand, Washington, which as of today clearly props up the Sunni Muslim radicals in North Africa and the Middle East, may also be considering some sort of a secret deal with the Iranian Shiites. If the scenario materializes, Tel Aviv's potential response will be to launch an independent snap offensive against Iran, leaving the US – a strategic ally of Israel – with no choice but to push the war to the victorious completion. For President Obama, the Nobel Prize winner for peace, that would obviously be an ill favor, especially with the presidential poll in the US at hand. Obama still has to cope with the dragging war against the Talibs in Afghanistan, which is a serious burden despite the opportunities it opens up to test new armaments, to train the US forces under real-life combat conditions, to dish out to the military-industrial complex heavy chunks of the US budgetary pie, and to keep drugs from the region flooding Europe and Russia.
Deciding in favor of a war with Iran would become easier for Washington in the mid-term, when progress in shale gas and off-beat oil extraction technologies will help the US become self-sufficient in terms of energy supply – that is, if by the time efforts to install a pro-Western clique in Tehran or to plunge Iran into chaos like Libya remain unsuccessful. Then, the blockade of the Strait of Hormuz and a pause in oil supplies from the region will not frighten the US, even combined they send the cost of crude sky-rocketing. Europe will similarly insulate itself from the trouble: chances are the brisk EU sanctions meant to tone down the oil import from the region reflect a profound future-oriented strategy.
At this point the news that prosecutors in Libya are screening foreign energy companies for financial abuse must not take anybody by surprise. Considering that Total and Italy's Eni are mentioned in connection with the probe, it is clear that, again, European grands are the ones to face problems.
In the meantime, history appears to be repeating itself and commentators increasingly suspect the US of trying to undermine Russia's revenue sources as it had undermined those of the USSR in the Soviet era. Washington's rediscovered approach is to transform the global energy market in a way that would immediately cause the net earnings from the Russian gas and oil exports to contract. Whereas in the case of the Soviet Union Saudi Arabia was instrumental in implementing the US energy strategy, these days the role is going to be given to Qatar, a country sitting on the world's third-largest natural gas reserves and ranking sixth among global gas exporters (Qatar also occupies the 21st line in the list of oil-exporting countries).
Recently Qatar, an emirate collecting immense gains from energy export, attracted unwaivering attention from the international energy policy watchers. The tiny country was spotted among the top sponsors of the Arab Spring, massively sent weapons and instructors to various Islamist opposition groups, and is obviously determined to parlay its economic potential into political influence in the vast region stretching from the Persian Gulf to Syria and Algeria.
Qatar intends to radically widen its niche in the LNG export in 2014 and on by reinforcing its positions on the Asian and European energy markets. In Europe, Qatar will therefore emerge as a key competitor to Russia's Gazprom which supplies natural gas to the continent via a pipeline network. Qatar invests in extensive LNG infrastructures in Europe and eyes partnerships with established European energy players, while constructing a giant domestic LNG terminal and new pipelines linking the facility to its inland gas fields.
Once out of the building docks, every one of a fleet of 25 Q-Max huge LNG-carriers commissioned by Qatar will enable the transit of 150 million cu m of natural gas per trip, giving a boost to the country's LNG expansion. No doubt, since Qatar's ambitions are backed by the US Exxon Mobil, the capacities will serve to erode Russia's status of the biggest natural gas supplier to Europe. There is a feeling that the Washington neocons who, at best, see Russia as a US vassal in a coming confrontation with China, hope to use the capabilities to coerce Russia into a complete refusal from any independent foreign policies…
A fresh study jointly released by the Energy Research Institute of the Russian Academy of Sciences and the Russian Energy Agency – a global energy forecast spanning till 2035 – says: “Tensions in North Africa and the Middle East are rising and the regions' discords (between the Sunni and the Shia Muslims, various tribes, and political factions) will persist into the foreseeable future. Over the forecast period, the oil output and consumption in the regions will drop by 10% and 5% respectively. Oil production in Iran will come to a grinding halt and oil consumption will plummet in 2013-2019 (the term is calculated based on the outcomes of the previous wars). In Iraq, production will shed 50% and consumption will stagnate. Production will revert to normal in Iraq by 2020 and gradually reach a healthy level within 3-4 years in Iran”. Simply put, experts thus foretell that a war with Iran will break out next year. Even if the projection is rooted in risky conspiracy theories and is needlessly alarmist, the sheer number of chilling forecasts and energy-related incidents spells disaster. Indications multiply that the moment when the global war over energy resources will switch from the cold to the hot phase is close ahead.
