The global energy supply is rapidly transforming, and with it, the world's geopolitical structure is changing as well. Recently, Foreign Policy's resident energy writer, Steve LeVine, posted a piece about the shifting global energy picture. The article focuses on how rapidly, and dramatically, the world's energy balance is shifting. Part of his piece is based on the latest report from noted energy analyst Ed Morse of Citibank, who predicts that by 2020 the United States could not only be largely energy self-sufficient, but also a major exporter of natural gas. (For another view on how the U.S. could be largely free of imported oil by 2020, read my earlier piece on the plan developed by John Hofmeister, former president of Shell.)
LeVine's piece includes a discussion on the explosion of countries either joining, or planning to join, the petroleum exporter's club. LeVine cites new discoveries of natural gas deposits off the coasts of Israel, Tanzania, and Mozambique, as a few examples of this new class of energy-exporting countries.
For example, Kenya announced the discovery of a large crude oil reserve a few weeks ago, and recently broke ground on an oil exporting facility near the coastal town of Lamu, that would handle not only Kenya's oil, but that from South Sudan as well. Even war-torn Somalia may soon get in on the oil exporting act.
And then there's hydrofracking, the controversial process that has led to a vast expansion of commercially-viable petroleum reserves in the United States, and has driven domestic natural gas prices to historic lows. Just a few years ago, the U.S. was a serious importer of natural gas; now plans are in the works to build export terminals in the U.S. to send gas to more lucrative markets in Asia.
Other nations have taken notice of the abundance of supply that can come from hydrofracking – Great Britain is hoping the process will revive their fading natural gas sector, while Poland is hoping to frack its shale gas reserves to ween itself off imports from Russia. Energy-hungry China has invested in shale gas fields in the western United States, in a bid to gain expertise in hydrofracking, so that they might exploit their own domestic reserves.
The global energy picture is vastly different today than it was just 10 or 15 years ago; and by the end of the decade it is likely to be vastly different still as more countries become energy-producers. This will have a profound effect on international relationships. In his annual address to parliament, current Russian Prime Minister (and soon to be President) Vladimir Putin warned the Duma of the “challenge” Russia faces from hydrofracking and shale gas production.
In addition to relying on oil and natural gas exports to fill the national coffers, Russia's position as the primary natural gas supplier to much of Europe has given them a measure of dominance over European politics. Poland's interest in developing their shale gas reserves are a clear sign that Russia could lose this favored position. An indication of Russia's response comes from the recently announced joint-venture between ExxonMobile and Rosneft, which will give the Russian firm access to shale gas fields in the U.S.
The Organization of Petroleum Exporting Companies (OPEC) will also feel the impact of new, diversified energy supplies. With Saudi Arabia's own oil fields in decline and domestic consumption gobbling up more of their oil production, their role as the world's most important energy producer is in trouble, as is thererole with OPEC as the driving force in the global oil markets.
Imagine then a Persian Gulf that isn't continually a global hotspot – why would it be if it weren't for oil? At the same time, more focus will shift to the new oil-producing lands of Africa, where oil and gas production could either spark a renaissance for the continent, or allow more countries to fall victim to the resource curse. The politicians and policymakers in the U.S. need to realize that the world is changing, and they need to adapt accordingly.