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     May 12, 2012


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The energy wars heat up
By Michael T Klare

Conflict and intrigue over valuable energy supplies have been features of the international landscape for a long time. Major wars over oil have been fought every decade or so since World War I, and smaller engagements have erupted every few years; a flare-up or two in 2012, then, would be part of the normal scheme of things.

Instead, what we are now seeing is a whole cluster of oil-related clashes stretching across the globe, involving a dozen or so countries, with more popping up all the time. Consider these flash-points as signals that we are entering an era of intensified conflict over energy.

From the Atlantic to the Pacific, Argentina to the Philippines, here are the six areas of conflict - all tied to energy supplies - that have

 

made news in just the first few months of 2012.

A brewing war between Sudan and South Sudan: On April 10, forces from the newly independent state of South Sudan occupied the oil center of Heglig, a town granted to Sudan as part of a peace settlement that allowed the southerners to secede in 2011.
The northerners, based in Khartoum, then mobilized their own forces and drove the South Sudanese out of Heglig. Fighting has since erupted all along the contested border between the two countries, accompanied by air strikes on towns in South Sudan. Although the fighting has not yet reached the level of a full-scale war, international efforts to negotiate a ceasefire and a peaceful resolution to the dispute have yet to meet with success.

This conflict is being fueled by many factors, including economic disparities between the two Sudans and an abiding animosity between the southerners (who are mostly black Africans and Christians or animists) and the northerners (mostly Arabs and Muslims).

But oil - and the revenues produced by oil - remains at the heart of the matter. When Sudan was divided in 2011, the most prolific oil fields wound up in the south, while the only pipeline capable of transporting the south's oil to international markets (and thus generating revenue) remained in the hands of the northerners.

They have been demanding exceptionally high "transit fees" - US$32-$36 per barrel compared to the common rate of $1 per barrel - for the privilege of bringing the South's oil to market. When the southerners refused to accept such rates, the northerners confiscated money they had already collected from the south's oil exports, its only significant source of funds.

In response, the southerners stopped producing oil altogether and, it appears, launched their military action against the north. The situation remains explosive.

Naval clash in the South China Sea: On April 7, a Philippine naval warship, the 115-meter Gregorio del Pilar, arrived at Scarborough Shoal, a small island in the South China Sea, and detained eight Chinese fishing boats anchored there, accusing them of illegal fishing activities in Filipino sovereign waters.

China promptly sent two naval vessels of its own to the area, claiming that the Gregorio del Pilar was harassing Chinese ships in Chinese, not Filipino waters. The fishing boats were eventually allowed to depart without further incident and tensions have eased somewhat. However, neither side has displayed any inclination to surrender its claim to the island, and both sides continue to deploy warships in the contested area.

As in Sudan, multiple factors are driving this clash, but energy is the dominant motive. The South China Sea is thought to harbor large deposits of oil and natural gas, and all the countries that encircle it, including China and the Philippines, want to exploit these reserves. Manila claims a 200-nautical mile "exclusive economic zone" stretching into the South China Sea from its western shores, an area it calls the West Philippine Sea. Filipino companies say they have found large natural gas reserves in this area and have announced plans to begin exploiting them.

Claiming the many small islands that dot the South China Sea (including Scarborough Shoal) as its own, Beijing has asserted sovereignty over the entire region, including the waters claimed by Manila; it, too, has announced plans to drill in the area. Despite years of talks, no solution has yet been found to the dispute and further clashes are likely.

Egypt cuts off the natural gas flow to Israel: On April 22, the Egyptian General Petroleum Corp and Egyptian Natural Gas Holding Co informed Israeli energy officials that they were "terminating the gas and purchase agreement" under which Egypt had been supplying gas to Israel.

This followed months of demonstrations in Cairo by the youthful protestors who succeeded in deposing autocrat Hosni Mubarak and are now seeking a more independent Egyptian foreign policy - one less beholden to the United States and Israel. It also followed scores of attacks on the pipelines carrying the gas across the Negev Desert to Israel, which the Egyptian military has seemed powerless to prevent.

Ostensibly, the decision was taken in response to a dispute over Israeli payments for Egyptian gas, but all parties involved have interpreted it as part of a drive by Egypt's new government to demonstrate greater distance from the ousted Mubarak regime and his (US-encouraged) policy of cooperation with Israel.

The Egyptian-Israeli gas link was one of the most significant outcomes of the 1979 peace treaty between the two countries, and its annulment clearly signals a period of greater discord; it may also cause energy shortages in Israel, especially during peak summer demand periods. On a larger scale, the cutoff suggests a new inclination to use energy (or its denial) as a form of political warfare and coercion.

Argentina seizes YPF: On April 16, Argentina's president, Cristina Fernandez de Kirchner, announced that her government would seize a majority stake in YPF, the nation's largest oil company. Under President Kirchner's plans, which she detailed on national television, the government would take a 51% controlling stake in YPF, which is now majority-owned by Spain's largest corporation, the energy firm Repsol YPF.

The seizure of its Argentinean subsidiary is seen in Madrid (and other European capitals) as a major threat that must now be combated. Spain's foreign minister, Jose Manuel Garcํa Margallo, said Kirchner's move "broke the climate of cordiality and friendship that presided over relations between Spain and Argentina". Several days later, in what is reported to be only the first of several retaliatory steps, Spain announced that it would stop importing biofuels from Argentina, its principal supplier - a trade worth nearly $1 billion a year to the Argentineans.

As in the other conflicts, this clash is driven by many urges, including a powerful strain of nationalism stretching back to the Peronist era, along with Kirchner's apparent desire to boost her standing in the polls. Just as important, however, is Argentina's urge to derive greater economic and political benefit from its energy reserves, which include the world's third-largest deposits of shale gas.

While long-term rival Brazil is gaining immense power and prestige from the development of its offshore "pre-salt" petroleum reserves, Argentina has seen its energy production languish. Repsol may not be to blame for this, but many Argentineans evidently believe that, with YPF under government control, it will now be possible to accelerate development of the country's energy endowment, possibly in collaboration with a more aggressive foreign partner like BP or ExxonMobil.

Argentina re-ignites the Falklands crisis: At an April 15-16 Summit of the Americas in Cartagena, Colombia - the one at which US Secret Service agents were caught fraternizing with prostitutes - Argentina sought fresh hemispheric condemnation of Britain's continued occupation of the Falkland Islands (called Las Malvinas by the Argentineans). It won strong support from every country present save (predictably) Canada and the United States.

Argentina, which says the islands are part of its sovereign territory, has been raising this issue ever since it lost a war over the Falklands in 1982, but has recently stepped up its campaign on several fronts - denouncing London in numerous international venues and preventing British cruise ships that visit the Falklands from docking in Argentinean harbors. The British have responded by beefing up their military forces in the region and warning the Argentineans to avoid any rash moves.

When Argentina and the UK fought their war over the Falklands, little was at stake save national pride, the stature of the country's respective leaders (Prime Minister Margaret Thatcher vs an unpopular military junta), and a few sparsely populated islands. Since then, the stakes have risen immeasurably as a result of recent seismic surveys of the waters surrounding the islands that indicated the existence of massive deposits of oil and natural gas. 

Continued 1 2  






US on slippery oil slope (Apr 3, '12)

A tough-oil world (Mar 15, '12)


1.
Doubts fly as US envoy to Pakistan quits

2. Iran queries Obama's pact with Karzai

3. Thai army secretly plans for the worst

4. Plutonomy and the precariat

5. World powers rush to plunge Syria into war

6. Waiting for Copernicus

7. Rumor aside, a smooth transition is assured

8. US: China's aggression written in the stars

9. Pyongyang paints history in its own image

10. Cyprus gas project goes ahead

(24 hours to 11:59pm ET, May 10, 2012)

 
 


 

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