What role does energy play today in the shifting geopolitics of the Middle East particularly in the ongoing conflicts in Syria and Libya?
Interestingly, energy doesn’t play much of a role in Syria, because the country is not an important energy player. There is some public speculation that Syria sits on a large energy resource base, both onshore and offshore, but I think those expectations are misplaced.
It’s commonplace to think of the Iraqi invasion of Kuwait in 1990 and the subsequent US-led coalition to liberate Kuwait as being predicated on ‘freeing up the oil’. Similarly, the war in Iraq in 2003 has been characterized – mischaracterized in my opinion – as a ‘grab for oil’. But, while Kuwait and Iraq sit on significant energy resource bases, Syria simply doesn’t.
What we’re seeing in Syria is a geopolitical competition between the regional players – Saudi Arabia, Turkey, Iran and Qatar – and then more widely Russia, the US and China. Syria really has become a battleground for regional and international players but the game is more about influence on the ground rather than energy.
Interestingly, China’s coming into this situation slowly because it’s more about the strategic location of Syria sitting atop the Arab world and being situated alongside the Mediterranean Sea which gives it access to Europe. So it’s more about Syria’s strategic importance rather than its energy supplies for China as well.
Libya is different. It does sit on considerable oil reserves and can comfortably produce 1.8 million barrels per day (mbd) during peace time. In fact, it has the capacity to increase production somewhere in the region of 2.5 mbd. But the country is far from reaching those levels and has not done so since the early 1970s. However, there is direct competition for Libya’s resources between Russia, Turkey and China, though all are engaged in differing ways in Libya’s energy scene.
The real competition is between competing local militias on the ground which seek control over oil resources as a means of securing political power. Militias, such as those aligned with Khalifa Haftar’s self-styled Libya National Army, which controls access over many oil assets in the east of the country, are backed by external powers such as the United Arab Emirates.
European powers, such as Italy and France, are also intimately involved in the political process and both countries have national energy champions with stakes in the success of Libya’s oil sector.
The ongoing blockade of Qatar by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt has seen the oil and gas-rich nation withdraw from the Organization of Petroleum Exporting Countries. How significant of a role has energy played in the regional crisis?
The roots of the crisis have been more based on how Saudi Arabia and the United Arab Emirates, on the one hand, and Qatar, on the other hand, have two competing visions for how the region should be.
One is focused on – we can call it the anti-Muslim Brotherhood axis if you like – which sees an alignment of countries which are secular in their outward policies, autocratic, authoritarian and see a strong role for the military in their political development. This alignment of states includes Saudi Arabia, the United Arab Emirates, Egypt, arguably Haftar in Libya as well as Russia which is a string of strongmen.
Qatar on the other hand sees political Islam, through the Muslim Brotherhood, as playing an important role in the development of the region which is more closely aligned with Turkey. Its relations with Iran tend to be complex but they are sort of part of a similar axis.
In terms of energy, while it hasn’t been instrumental, it’s important to note that while Saudi Arabia is one of the world’s leading oil exporters, Qatar is one of the world’s leading exporters of liquefied natural gas (LNG) which has allowed the country to develop an autonomous role regionally and globally much to the frustration of the Saudis. In a way, the division between oil and gas in the Middle East over the past couple of decades has really enhanced Qatar’s ability to pursue an independent foreign policy and play an active role in the region and beyond.
Following Donald Trump’s plans to withdraw US troops from Syria and Afghanistan, and the country’s apparent retreat from the region, what is the geopolitical importance of the Middle East, in terms of the region’s energy resources, to Russia and China and to what extent are Gulf states dependent on exporting to Russian and Chinese energy markets?
China imports 49 per cent of its crude from the Middle East and 37 per cent of Middle Eastern oil exports are destined for China. In terms of capital, Chinese exports to the region amounted to nearly $123 billion in 2016 while imports from the region were valued at $87.5 billion.
This is because China has made a number of significant upstream investments in Iraq and Iran, while Qatari and Saudi investors have invested in downstream operations in China, as a means of developing a value chain that ties the long-term economic interests of the countries together.
Despite China’s efforts to diversify the provenance of its natural resources, the Middle East – especially the Gulf region including regional competitors Iran and Saudi Arabia – will grow in importance as the country’s domestic demand grows.
Commensurately, increasing US production of shale oil and gas – which has helped the US become the world’s largest oil producer for the first time since 1973 – will continue to displace Middle Eastern oil in the markets of North America and Europe therefore creating a virtuous cycle between China and the Middle East.
Russia’s energy interests in the Middle East have developed significantly since Western governments imposed sanctions on the country following the outbreak of the Ukraine crisis in 2014. Russia has therefore been motivated by the need to secure new markets for its oil and gas, attract investments from Gulf states, work with major oil producers – such as Saudi Arabia – to stabilize international oil prices, undermine Europe’s endeavours to diversify its natural gas supplies and support delivery of Russian oil and gas to Asia as well.
While the world attempts to reduce its dependence on fossil fuels under the global Paris Agreement, how do you see the transition towards clean energy affecting the status quo among the Middle East’s oil and gas-rich nations, especially given Saudi Arabia’s state-owned company announcing that it is planning to expand into fossil fuel extraction projects for the first time overseas?
It depends upon the nature of the transition. It looks as though natural gas and nuclear will be a major part of the transition, which will simply benefit the region’s gas-rich states, notably Qatar and Iran.
But, this will be particularly irksome for Saudi Arabia, which is the region’s largest oil producer and the world’s only swing producer. The transition will therefore undermine its dominant position in energy markets and in the Gulf region too.
At the same time, its main competitor – Iran – looks set to benefit substantially over the longer term if it can break free of US sanctions and become a major gas exporting country.
Similarly, Qatar, which is subject to the current blockade by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt, will continue to enjoy independence by virtue of being the world’s largest exporter of LNG.
On the international stage, Saudi Arabia, together with Kuwait, Russia and the US, came together to prevent the adoption of an IPCC report last year which highlighted the need to limit global warming to below 1.5°C. Do you see this coalition growing in international climate change politics?
It’s hard to see any alignment between the four of them as a composite group although they each have their individual sets of goals.
Kuwait and Saudi Arabia are arguably much more closely aligned, while Russia and Saudi Arabia, at least in the short term, have shared interests in terms of managing market flows. The US, however, cannot really be viewed as part of this grouping, which is not even a grouping, but more of a confluence of interests. They may agree somewhat in their policies but I think it’s just a coincidence of interests.
But could they affect the fortunes of the Paris Agreement? Yes, they could indeed, but not as a coalition, but as individual countries.
The US is an extremely important energy player and Saudi Arabia is instrumental, too, being the primary actor within the Organization of Petroleum Exporting Countries and with all of the influence it can bring to bear on international climate change policies.