Around the world
New study raises doubts about Saudi oil reserves
With over 260 billion barrels of proven oil reserves, a quarter of the world's total, Saudi Arabia is not only the top foreign supplier to the United States - the world's largest energy consumer - but also essentially the sole source of liquidity in the oil market. According to the Department of Energy's Energy Information Administration (EIA), the world will become more dependent on Arabian oil in the next two decades. To meet global demand for oil, Saudi Arabia will need to produce 13.6 million barrels a day (mbd) by 2010 and 19.5 mbd by 2020. Both the International Energy Agency and EIA assume Saudi oil output will double over the next 15 to 20 years. In a new study soon to be released, Matthew R. Simmons, president of Simmons and Company International, a specialized energy investment banking firm, contends that this is not likely to happen. He argues that Saudi Arabia's oil fields now are in decline, that the country will not be able to satisfy the world's thirst for oil in coming years and that its capacity will not climb much higher than its current capacity of 10mbd. Considering the growth in demand, this could easily spark a global energy crisis. Coming from someone who has advised the secretary of energy and the 2000 Bush campaign, this is a warning worth heeding.
Islamists threaten western energy companies in Algeria
Algerian security sources have recently warned that the terrorist organization Salafist Group for Call and Combat (GSPC) will try to perpetuate attacks against western energy companies as well as other Western targets in Algeria during the coming presidential election period. GSPC splintered off of the Armed Islamic Group (GIA,) an Islamic extremist group which aims to overthrow the secular Algerian regime and replace it with an Islamic state.
Following years of civil war and a bloody toll of 100,000 lives over the past 10 years Algeria is experiencing a significant economic upturn, in large part aided by strong oil and natural gas export revenues. The big question is whether Algeria's political climate will enable an investment climate sufficiently secure to attract energy companies. Progress toward such investment could be disrupted by the Islamists who oppose modernization and economic development.
A shortcut for Russian oil to Asia
While the U.S. labors to reduce Saudi dominance of global energy markets by bringing Iraqi oil back online, a Middle East country uniquely unendowed with petroleum is about to weaken the Saudi grip on the oil market even further.
A recent agreement between Russia and Israel will soon allow Russia
to supply the Asian markets with crude oil through the Trans-Israel Pipeline (TIPline), a 150-mile pipeline running straight through Israel, thus breaking for the short term the Saudi near-monopoly on oil sales to East Asia, the world's fastest growing energy market.
U.S., China Are on Collision Course Over Oil
While the U.S. is absorbed in fighting the war on terror, the seeds of what could be the next world war are quietly germinating. With 1.3 billion people and an economy growing at a phenomenal 8% to 10% a year, China, already a net oil importer, is growing increasingly dependent on imported oil. Last year, its auto sales grew 70% and its oil imports were up 30% from the previous year, making it the world's No. 2 petroleum user after the U.S. By 2030, China is expected to have more cars than the U.S. and import as much oil as the U.S. does today. With 60% of its oil imports coming from the Middle East, China can no longer afford to sit on the sidelines of the tumultuous region so important to U.S. energy security. In a recent LA Times article, IAGS executive director Gal Luft explains the implications.
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The Sino-Saudi Connection
China, Napoleon once remarked, is a sleeping giant, and "when it awakens the world will tremble."
China is now thoroughly awake, and is turning to the Persian Gulf for its oil supply.
Could China supplant the U.S. as a major Saudi ally? At the moment it hardly seems likely. China is still a modest force in the Middle East, while the U.S. maintains large numbers of troops and formidable amounts of equipment in bases throughout the region. But given the logic of its domestic needs, Beijing is almost certain to step up its diplomatic and military efforts. Making its path easier is the fact that this also happens to be a moment of deep tension in U.S.-Saudi relations. Gal Luft and Anne Korin of IAGS discuss the Sino-Saudi-Pakistani nuclear bomb and analyze the Sino-Saudi connection in the March issue of Commentary Magazine.
On the technology front
New technology can help fight pipeline sabotage
One of the biggest challenges to Iraq's reconstruction is the campaign of pipeline sabotage
that has thus far kept Iraqi oil offline denying the country much needed funds. According to
IAGS's Iraq Pipeline Watch there have been over 40 major attacks on pipelines primarily
against Iraq's only oil throughway to the Mediterranean, the pipeline connecting Kirkuk to
the Turkish port of Ceyhan. The Coalition Provisional Authority has made protecting the
pipelines and restoring Iraq's oil industry a top priority. Close to 14,000 security
guards have been deployed along the pipelines and in critical installations using
surveillance equipment and electronic motion detectors. There has also been a six-fold
increase in the number of mobile security patrols. But all this does not seem to
solve the problem. Now an Israeli company, Magal Security Systems, has announced a
unique technology known as PipeGuard, that can significantly improve the security
of buried gas and oil pipelines.
EPA Displays the First Advanced Hydraulic Hybrid Vehicle
The first advanced hydraulic hybrid sport utility vehicle was publicly displayed by the U.S. Environmental Protection Agency, along with its partners, at the 2004 Society of Automotive World Congress in March in Detroit, Michigan. This vehicle demonstrates that hydraulic hybrid technology has the potential to dramatically and cost-effectively improve the fuel economy of sport utility vehicles while at the same time improving performance. Also at the SAE conference, the U.S. Army's National Automotive Center introduced a hybrid hydraulic military truck, called the SmarTruck III.
GM and National Ethanol Vehicle Coalition Partner To Promote Use of E85
General Motors Corp. and the National Ethanol Vehicle Coalition (NEVC) announced a new public awareness campaign aimed at increasing the use of E85. E85 is a mixture of 15 percent gasoline and 85 percent ethanol - grain alcohol - can be used in flexible fuel vehicles (FFV) designed to use either E85 or gasoline. There are 3 million flexible fuel vehicles on the road today capable of using E85.
Ethanol is alcohol that is currently made from domestically produced corn. In the future, production of ethanol could come from biomass such as corn and wheat stalks, forestry waste and municipal waste.
Nissan leasing fuel-cell vehicles
Japan's second largest automobile manufacturer and the world's fifth, began a limited leasing of its X-TRAIL FCV, a high-pressure hydrogen fueled fuel cell vehicle (FCV). The first vehicle was delivered to oil refiner Cosmo Oil Co. earlier this week in a ceremony held at the JHFC Yokohama-Daikoku Hydrogen Station in Japan.
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Energy Security
Prepared by the Institute for the Analysis of Global
Security