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Energy superpower
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The term energy superpower has several potential definitions that might be used relating to different contexts. In recent years, however, it has come to be used to refer to a nation that supplies large amounts of energy resources (oil, natural gas, coal, uranium, etc) to a significant number of other states, and which therefore has the potential to influence world markets to gain a political or economic advantage. This might be exercised, for example, by significantly influencing the price on global markets, or by withholding supplies.
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Encyclopedia
The term energy superpower has several potential definitions that might be used relating to different contexts. In recent years, however, it has come to be used to refer to a nation that supplies large amounts of energy resources (oil, natural gas, coal, uranium, etc) to a significant number of other states, and which therefore has the potential to influence world markets to gain a political or economic advantage. This might be exercised, for example, by significantly influencing the price on global markets, or by withholding supplies. The status of "energy superpower" should not be confused with that of "superpower", as the nature of an energy superpower is defined very differently due to the non-military nature of an energy superpower's power base.
Energy superpowers project greater power than would be otherwise possible due to their lock on the exportable energy markets, and are becoming increasingly valuable to the global economy. In the global commodities' boom of recent years many of these states have benefited massively from increased production and prices.
Energy superpowers of the world
There are currently two "recognized" energy superpowers globally, both of whom have the largest reserves and production in their areas of energy they specialize in. Russia has the world's largest reserves of natural gas, and is the world's largest gas producer and exporter, while Saudi Arabia has the world's largest conventional oil reserves and maintains the world’s largest crude oil production capacity, estimated to be around 10.5-11.0 million bbl/d. Actions taken by companies or the government in either state are enough to produce an immediate reaction in the stock market, although the markets have been known to second-guess Saudi Arabia's stated production numbers.
Russia
Russia has the largest known natural gas reserves of any state on earth, along with the second largest coal reserves, and the eighth largest oil reserves. It is the world's second largest oil producer and, from time to time, overtakes Saudi Arabia as the world's number one.
Russia is also the world biggest natural gas producer with 22.3% of global natural gas production and also the biggest exporter with 24.0% of global natural gas export.In recent years Russia has identified the gas sector as being of key strategic importance. Many private oil and natural gas companies, most notably Yukos and Sibneft have been consolidated under the control of the state-controlled Rosneft and Gazprom respectively.
Gazprom also has control over all gas pipelines leading out of Central Asia, a region also rich in gas. Russia has used such gas, primarily that from Turkmenistan, on occasions where it has found itself unable to meet all its delivery obligations from its own production. Such circumstances in 2000 led to Gazprom allowing Turkmenistan to use its pipelines to supply gas to the highly-subsidised, low price Russian domestic market - leaving Gazprom free to fulfil its obligations towards European customers. Gazprom sells 33% of its gas to Europe, accounting for nearly 70% of the company's revenue. The remaining 30% is sold for domestic Russian consumption at highly subsidized prices.
As of 2006, Russia supplies over 25% of Europe's oil and over 40% of its gas. Its energy superpower status has recently become a hot topic in the European Union. Russia's overwhelmingly large reserves of natural gas have helped give it the title without much debate. Still, Russia's status as an energy superpower has been called into question by some. As Vladimir Milov, of the Carnegie Endowment for International Peace, says:
The “energy superpower" concept is an illusion with no basis in reality. Perhaps most dangerously, it doesn’t recognize the mutual dependence between Russia and energy consumers. Because of political conflicts and declining production, future supply disruptions to Europe are likely. As a result, there will come a day when European gas companies demand elimination of the take-or-pay conditions in their Russian contracts. This will threaten Gazprom’s ability to borrow. Putin’s attempt to use energy to increase Russian influence could backfire in the long run.
Russia has recently been accused by the West of using its natural resources as a policy tool to be wielded against offending states like Georgia, the Ukraine, and other states it perceives as hindrances to its power. At the beginning of 2006 Russia greatly increased the price of gas for Ukraine following that country's Orange Revolution. It later doubled natural gas prices to Georgia following an international incident. Critics speculated that this was an attempt to influence the Georgian leadership's defiance of Moscow.
Russia, in turn, accuses the West of applying double-standards relating to market principles, pointing out that it has been supplying gas to the states in question (ruled by regimes Moscow considers unfriendly) at prices that were significantly below world market levels, and in some cases remain so even after the increases. Russia argues that it is not obligated to effectively subsidize the economies of post-Soviet states by offering them resources at below-market prices. Russia has greatly increased the price of gas for Armenia and Belarus, which, unlike Georgia and Ukraine, has been closely allied with Moscow and forms a loose union state with Russia.
Despite Russia's vast potential, there had been concerns voiced by TNK-BP's Viktor Vekselberg that it would run into grave difficulties in 2007, citing that Russia had not opened up any new gas fields since the fall of the Soviet Union, and those which were currently in operation were rapidly depleting.
However, this opinion comes in direct contradiction to known facts, as Russia was not reported to have run into gas shortages during 2007. In October 2001 Gazprom began production at the Zapolyarnoye field in western Siberia measured at 3.2 trillion cubic meters. This puts Zapolyarnoye field in the top 10 largest fields in the world.
Despite this fact, some continue to argue that inefficient plant and aging infrastructure could force Russia to import additional gas from Central Asia. Such a scenario is not inevitable, as Gazprom has access to vast amounts of gas, and according to Gazprom's Alexey Miller intends to singlehandedly explore the Shtokman Field, one of the world's largest natural gas fields.
It is noteworthy that Russian gas imports present a lucrative opportunity for the country. In 2008 Russia plans to import most of its gas from Central Asian republics for a price that ranges between $100 and $150 per 1000 cubic meters. It resells most of this gas to Europe for a price that tops $250 per 1000 cubic meters.
Saudi Arabia
Saudi Arabia possesses both the world's largest known oil reserves and produces the largest amount of the world's oil, sometimes being outproduced by Russia, though maintaining the world’s largest crude oil production capacity. Considered to be the leading state of OPEC, its decisions to raise or cut production almost immediately impact world oil prices.
In 2005, oil export revenues accounted for around 90 percent of total Saudi export earnings, which accounted for 70-80 percent of state revenues, and 44 percent of the country's gross domestic product (GDP), as reported by the IMF. Saudi Arabia is increasing its oil production capacity to (bbl/d), by 2009.
Disputed energy superpowers
Canada holds perhaps one of the more ambiguous status' in international relations when it comes to its status as an energy power. Supporters of it being included with Saudi Arabia and Russia will point out that Canada has the world's highest production of uranium, producing over a quarter of the world's uranium in 2006. Canada also ranks number one on earth in energy produced via hydroelectricity, and exports large amounts of electricity to the US from hydroelectric production. Some Canadian institutions have taken to even calling the country an energy superpower, but these claims are almost all predicated on its oil production rates. Canadian Prime Minister Stephen Harper has taken to calling the country an energy superpower in Summer 2006. Currently Canada also ranks 3rd on earth in natural gas production behind Russia and the US, and seventh in oil production.
However, there are a number of critics of this view, who feel that Canada has not really established itself as an actual energy superpower. Critics, like Shawn McCarthy of Toronto-based Globe & Mail feel that in comparison to already existing energy superpowers like Russia, Canada is more like a "energy superstore" compared to Russia, which he says is the "real deal". Still others feel that Canada has not yet achieved the status, but rather is emerging as its production rates in oil grow, like the Oxford Analytica independent scholarly consulting firm. However, even proponents like Oxford Analytica acknowledged the incredible amount of investment that would be necessary to bring this about, and that Canada's growing energy production could precipitate a confrontation between the US and China over access to Canada's energy assets. Canada's potential status as an energy superpower is discussed in further detail below.
Still others like Dr. Raymont of EnergyINet Inc. are concerned that environmental principles will be sacrificed in the pursuit of Canada being an energy superpower, and wish it to set a standard as the world's only "clean" or "responsible" energy superpower.
Potential energy superpowers
In addition to the recognized powers, certain states have large or even enormous energy reserves that have not yet been exploited significantly, and which therefore have the potential to become the energy superpowers in the future.
According to Manik Talwani, a geophysicist at Rice University, there are two countries that are most likely to attain the status of Oil superpower: Venezuela and Canada. Citing their enormous potential reserves (1.2 trillion potential barrels for Venezuela and 1.75 trillion for Canada's oil sands), Dr. Talwani believes that they have the reserves to become energy superpowers in the next few decades as oil production declines elsewhere. However, as Dr. Talwani notes, both need 100 billion dollars or more to increase their production levels up to those of true energy superpowers.
Venezuelan potential for oil production
In 2003 Dr. Talwani said of Venezuela's ability to expand production, quote,
"Of course, expanding heavy oil production to make it a significant part of our energy strategy will require a huge investment. For example, oil companies have estimated that achieving just an additional of converted Venezuelan heavy oil would take some $3-billion in research and new refining capacity. Extrapolating such figures is hard to do, but a back of the envelope calculation indicates that it could take more than $100-billion to bring Venezuelan daily production up to Saudi levels."
Canadian potential for oil production
Canada itself produces today some , and is projected to increase its production at least double by 2017. However, it has far larger capital costs associated with expanding production, as shown by the "30 percent increase in average capital costs over the last year has challenged the growing market along with major infrastructure issues", noted by Monsters & Critics' Kristyn Ecochard.
Iranian potential for both gas and oil production
Iran is the world's fourth largest producer, and fifth largest exporter of oil. It has the second largest proven reserves of oil in the world behind Saudi Arabia. Iran is also the sixth largest producer of natural gas, with the second largest proven reserves. . These give Iran a hybrid status between Russia and Saudi Arabia as a potential Energy superpower. If its current relations with United States become less tense, increased foreign direct investment in the energy sector may hold the potential for becoming an energy superpower in the combination of gas and oil energy. British journalist Julian Evans has written that the sooner Iran lets go of its outdated ambitions to be a nuclear superpower, the quicker it can become a modern energy superpower.
Threats to energy superpowers
Recently a new strategy has emerged from al-Qaeda when it comes to fighting the United States. Rather than only targeting the U.S. interests directly in an attempt to cripple it, al-Qaeda now believes that cutting off the supply of energy to the U.S. should be a high priority. In particular, several powerful energy producing states like Saudi Arabia & Canada have had their energy industries listed as targets in al-Qaeda's effort to bleed the U.S. dry. In an apparent attempt to carry out this strategy, several masked men attempted to enter and destroy a section of the Saudi Abqaiq oil refinery. As of yet no attempt to attack energy industry infrastructure has succeeded by a known terrorist group, although Nigeria faces disruption of its energy industry by local rebel forces.
Says Ian MacLeod of the CanWest News Service, "A major supply disruption would send energy prices soaring. Had the Abqaiq attack been successful -- guards fired on cars driven by the bombers, detonating the explosives inside -- some experts say oil prices would have likely broken all records. A catastrophic hit could bring transportation and other parts of the U.S. and world economies to a standstill."
Energy superpowers as a result, while blessed with enormous natural wealth, are beginning to be pegged as targets in the worldwide War on Terrorism. While Saudi facilities are relatively well-protected, there is no consensus as yet as to the seriousness of the threat to other countries nor how well prepared they might be to stop an attack.
See also
Category: Energy by country
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