the new petro power paradigm - Diplomat Magazine

Di spatches|ENERGY
Perhaps. Setting aside the most perilous
pronouncements about the longterm
state of global petroleum supplies,
however, no one can deny that a growing
segment of the international community
has developed a more than critical attitude
towards oil, thanks to its complicity
in global climate change, terrorism and
financial turmoil. But if citizens — particularly
western ones — feel increasingly
uncomfortable about greasing the skids of
Middle Eastern despots in contributing to
a planetary meltdown, they seem to accept
their contributing role by being more than
ambivalent about the alternatives.
Consider Germany. While other nations
are doubling-down on nuclear
power despite the events of Fukushima,
Germany has decided to phase out its
nuclear reactors by 2022. Held up against
the unfolding process of climate change,
this turn of events has stoked fears around
kitchen and corporate boardroom tables
that electricity will become too expensive
and unreliable.
But Germany’s decision to phase out
nuclear power could also boost its position
as one of the most important manufacturers
and exporters of technology, designed
to collect and carry alternative forms of
energy, such as wind, solar and geo-thermal
power. Getting out of nuclear power,
therefore, could be the best or worst thing
Germany has done for some time.
So what should be done? How does the
international community reconcile ecological
inevitabilities with economic necessities?
To paraphrase Winston Churchill,
safety and certainty in energy lie in variety
and variety alone. Oil will likely remain
the most important source of traditional
energy for some time. This is partly thanks
to the tragic irony that climate change,
often attributed to the burning of fossil
fuels, promises to open up new reserves
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in the Arctic, where the predicted — not
to mention profitable — scramble for its
resources might already be underway.
But if this quest for new riches might be
the source of geo-political conflict in the
future, it has also seen its fair share of cooperation.
U.S. giant Exxon Mobil recently won
what The New York Times called a “coveted
prize” in the global petroleum industry, by
securing the right to drill for oil off Russia’s
Arctic coast. The scale of this agreement
with Rosneft, Russia’s state-owned
oil company, is, in the words of Russian
Prime Minister Vladimir Putin, “scary,”
as investments by both companies might
reach $500 billion, according to The Times.
As part of the deal, Exxon has agreed to
give Rosneft assets, including some in the
Gulf of Mexico and in Texas.
International Energy Agency
With such figures in the room, one can
only surmise that the potential of future
profits readily trumps political grievances,
past and present.
Technological improvements such
as carbon-sequestration also promise to
lower environmental inhibitions about
the use of coal and other non-renewable
hydrocarbons.
But all depends on supplies and exploration
costs. Other energy alternatives,
including renewables one, will emerge as
part of a moving puzzle and, with them,
new players in the great game for energy.
This review has sought to recognize
this unfolding transition by acknowledging
nations whose traditional energy
resources remain under-explored for a
variety of reasons. But it has also sought
to highlight nations that are taking steps
to break their dependence from traditional
forms of energy. Saudi Arabia and Russia,
today’s energy super-powers, could soon
find themselves competing for energy
supremacy.
1. Brazil
It was a brief moment of levity that says
much about the growing leverage of Brazil
as a global energy player. When German
Chancellor Angela Merkel visited Brazil
in 2008, then-president Luiz Ignacio Lula
da Silva, told her she would soon be able
to call him “Sheikh Lula” — given the
discovery by Brazil’s state-owned oil company
Petrobras and its European partners
of massive oil deposits off the Atlantic
coast. While it will take considerable effort
and expense to extract and exploit these
reservoirs as they lie beneath more than
four kilometres of water, rock and salt,
they hold an estimated 8 billion to 12 billion
barrels of oil, according to published
figures.
Impressive statistics of this kind have
naturally inspired interest from some of
the world’s largest energy consumers,
including the United States, which has
sought to strengthen commercial and political
ties with this increasingly important
global power. But oil represents only one
part of Brazil’s diverse energy portfolio.
The country is already among the leading
producers of hydro-electricity and continues
to invest in additional capacities. Brazil,
the second-largest producer of ethanol
behind the United States, according to
The Wall Street Journal, has also prepared
the ground for additional growth in its
bio-fuel sector. In contrast, the U.S. Senate
has moved to scrap ethanol subsidies
to combat rising deficits and food prices.
Brazil, in short, stands poised to become
an energy giant.
2. China
Call it a case of stating the obvious. As the
International Energy Agency notes in its
2010 World Energy Outlook, developments
in China will have “major implications”
on the global supply and demand for
oil, natural gas, and coal, not to mention
prospects for limiting climate change.
While this assessment acknowledges
the status of China as the world’s largest
consumer of energy and producer of
FALL 2011 | OCT-NOV-DEC