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Last Updated: Sunday, 1 January 2006, 20:59 GMT
Energy and the new world power play

By Paul Reynolds
World Affairs correspondent, BBC News website

Russia's Vladimir Putin
Russia now heads the G8, for whom security of energy supplies tops the agenda
The row between Russia and Ukraine over natural gas is the result of a powerful combination of world energy concerns and Russia's desire to exert its influence in its own back yard.

It is ironic that as Russia takes over the 12 months chairmanship of the G8 industrial countries, at the top of whose agenda is security of energy supplies, it chooses to reduce the security of its neighbour's natural gas imports.

The Russians say this is all a question of economics and that if Ukraine chooses to turn to Western ways, then it will get them - the market will rule and it will lose the old favouritism still shown to Russian friends like Belarus.

The Russians also point out that they have never stopped the supply of gas to Western Europe, which started in the days of the Soviet Union and has continued right through the upheavals that followed.

New world

Ukraine fears that it is being none too subtly punished for the Orange Revolution and for its pro-Western policies.

Pipelines near Kiev
The West is watching the Russia-Ukraine row closely
Whatever the cause, the case illustrates the new world we are entering, one in which new sources of energy became new sources of potential tension and conflict.

Of course, there is nothing strange about energy being at the centre of diplomacy and world policies, even war. The Japanese attack on Pearl Harbor had its origins, at least in part, in a decision by the United States to limit oil exports to Japan in 1941 in response to the Japanese invasion of China.

Oil played its part in a 1953 coup in Iran - organised by the US and Britain. They overthrew an elected prime minister, Mohammed Mossadegh and installed Shah Reza Pahlavi instead, a move that still reverberates in relations with Iran.

The West became interested in the Arab world not because a few diplomats fancied themselves as latter-day Lawrences of Arabia (although some did). It wanted its main source of oil to be secure.

We learned from British archives released a couple of years ago that in 1973, the US drew up a plan to seize oilfields in Saudi Arabia, Kuwait and Abu Dhabi in response to the Arab oil embargo.

For decades the aim of securing oil has been realised.

It is only now, with the drying up of oil a prospect over the next decades, that new worries are coming to the fore.

China growth

With the rapid growth of China in particular, but also of India and a whole raft of middle-sized economies, the rush for the world's remaining oil is under way.

Pipeline in Kazakhstan
The Central Asian "stans" - such as Kazakhstan - are energy rich
China's need for oil is already influencing its foreign policy. It gets oil in Sudan, therefore anyone wanting sanctions against Sudan over Darfur has to reckon with China. The same goes for Iran, where China is also a buyer.

The US government's Energy Information Administration tracks the world's energy supplies and needs and has this to say about the European Union:

"The EU is a net importer of energy. According to a report published by the European Commission, (European Union Energy Outlook to 2020), two-thirds of the EU's total energy requirements will be imported by 2020. Eurogas expects that the EU will also import up to 75% of its natural gas requirements by 2020."

No wonder the EU is looking at the argument between Russia and Ukraine with concern.

Such concern has meant that world attention has turned to some previously obscure parts of the globe.

The Arctic is one example. The melting of the ice cap is now well under way and this means a new gold rush - for "black gold" and other minerals. Land is being claimed, borders are being contested and new tensions are developing.

Energy diplomacy

In 1996, the British government despatched Prince Charles to several of the Central Asian "stans" which used to be part of the Soviet Union - Turkmenistan, Uzbekistan, Kazakhstan. All just happened to be energy rich, in either oil or gas. He also went to Kyrgyzstan but it has no oil or gas, so he just visited an army veterans' home.

It was a trip he did not enjoy (apart from the pleasures of viewing the Silk Road remains) but his enjoyment was not the point. Diplomacy was. Energy was.

The fact is that Britain's own supplies of gas from the North Sea are not what they were. New horizons have to be opened up. Soon, for example, the sight of huge liquefied natural gas (LNG) ships from Algeria and Venezuela will become familiar in UK ports. That, too, will have an impact on British diplomacy.

And the future of nuclear power is now back on the agenda. This means that those countries with big uranium deposits, such as Australia and Kazakhstan, are going to find they have many new friends if governments choose to take the nuclear track.

Many will, although some countries - Germany and Sweden among them - are closing their nuclear stations after public pressure. Others, such as Finland, are rebuilding.

In Britain, the debate has just been reopened. In France it was ended 30 years ago. France has been 80% nuclear since deciding not to be a potential hostage to an oil embargo. It now sells its spare capacity to its neighbours, including the UK, using a line across the Channel paid for by the original British European budget rebate.


Russian gas cut 'will not hit EU'
30 Dec 05 |  Business
The Arctic's new gold rush
25 Oct 05 |  Business

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