Gulf and European Energy Supply Security - Feem-project.net

Energy Security: Potential for EU-GCC Cooperation
enforcement of the contracts. This can be seen
as referring directly to the Energy Charter Treaty,
designed to perform the mentioned tasks, but
still not ratified by Russia.
1.4 Resource Nationalism
Every country in the world is indeed resource
nationalist in the sense that it wants to harvest the
most fruits out of its soil. The reality is that while in
the past International Oil Companies (IOCs) could
easily manage the rate of depletion of the fields
they were operating and could easily prospect
foreign territories, nowadays those prerogatives
have fallen back in the hands of the national
governments.
Some authors 7 have argued that the NOCs have
different stakeholders from IOCs and, therefore,
a different way of envisaging their activity. They
play an important role in their domestic economies,
need to satisfy actors other than international
investors, and sometimes play the role of an
instrument of foreign policy. The maximization of
the benefits is consequently “one of the variables
in the equation” and not the only one, which has
led some to argue that NOCs take less efficient
decisions than IOCs. This being said, the situation
greatly varies depending on the country as each
state has a specific attitude, some behaving in more
efficient ways than others.
Resource nationalism is not different from any
other foreign policy issue; countries protect their
interests, like they always have. For example, Saudi
Arabia directs gas to the production of chemicals
and uses this resource to propel the industrialization
of the country; therefore, it has no intention to
export gas. Can this be called resource nationalism?
It is rather the logical expression of a development
strategy. The EU will have to deal with this like it
would any other issue of international economics;
resource nationalism per se should not be considered
as a cause for heightened concern.
2.Risk Quantification by source
As we have outlined the major geopolitical
factors threatening the global natural gas industry,
the discussion now needs to be focussed on the
analysis of each major gas source so as to determine
individual weaknesses and opportunities.
2.1. Russia
Russia is today the EU’s largest external supplier
of natural gas with about 196 bcm exported in 2008. 8
It is also the country possessing the largest reserves
in the world (44.38 tcm), the second largest producer
(527.5bcm) and the largest natural gas exporter.
Russia has been a reliable partner for its main
clients for decades, and it is likely to remain one in the
future. Historical experience shows that even during
periods of heightened tensions between the West
and the Soviet Union, supplies were not cut. In the
recent past, three unfortunate incidents involving
Europe’s gas supplies occurred, which fuelled fears
and motivated many to call for a reduction of the
dependence on Russia and an increased quest for
alternative sources, which led to the emergence of
the Nabucco project. 9
All Russian gas is exported by pipeline. This
assures the customer at the end of the pipeline that
the gas flow cannot be diverted easily and quickly.
When political motivations are balanced by economic
interests, the mutual dependence between Russia
and the EU is a factor that limits, to a great extent,
unilateral decisions. On the other hand, countries
allowing the pipeline to go through their territories
can exert pressure on either the producer or the
customer. Therefore, Russia is a reliable partner over
the long run, but can present significant risks in the
short term, whether those risks are directly created
by Russia or by third countries.
Russian gas export routes all point in the
direction of Europe and are concentrated in Ukraine.
The Ukrainian problem has motivated Russia to find
new routes to reach West European markets. Both
the Nord Stream and South Stream projects follow
this logic.
The growing ties between Russia and China have
been deemed to have the potential to divert gas
flows away from Europe. Chinese energy needs have
grown dramatically in the last few years, but the usage
of natural gas remains relatively limited. However,
several import projects have caught the attention
of observers. For the small volumes imported until