March 18, 2010
The scheduled start of drilling this month by China National Petroleum
South Pars gas field could be both a
harbinger and explanation of much wider geopolitical developments.
First of all, the $5 billion project - signed last year after years of foot
dragging by western energy giants Total and Shell under the shadow of US-led
sanctions - reveals the main arterial system for future world energy supply
Critics have long suspected that the real reason for US and other western
military involvement in Iraq and Afghanistan is to control the Central Asian
energy corridor. So far, the focus seems to be mainly on oil.
For example, there have been claims that a
planned oil pipeline from the Caspian Sea via Afghanistan and Pakistan to
the Arabian Sea is the main prize behind the US’s seemingly futile military
campaign in those countries.
But what the CNPC-Iranian partnership shows is
that natural gas is the bigger prize that will be pivotal to the world
economy, and specifically the dual flow of this fuel westwards and eastwards
from Central Asia to Europe and China.
Michael Economides, editor of the Houston-based Energy Tribune,
is one of a growing number of industry observers who is convinced that
natural gas will supplant oil as the primary energy source, not only in the
coming decades but over the next several centuries.
He points to the recent forecast by the International Energy Agency (IEA),
based in Paris, which has dramatically revised its estimates of recoverable
global natural gas reserves by 100 per cent. Economides ascribes this huge
upgrade to rapid technological improvements in tapping hitherto inaccessible
He says that the IEA estimates of natural gas
amount to 300 years of supply at current world demand.
"If one only just fantasizes any future
contributions from the orders-of-magnitude larger resource in the form
of natural gas hydrates, it is easy to see how natural gas is almost
certainly to evolve into the premier fuel of the world economy," he
The rising importance of natural gas as an
energy source has been steady and inexorable over many years.
Between 1973 and 2007, oil’s contribution to
world energy supply dropped from 46.1 per cent to 34.0 per cent, with the
increasing use of natural gas accounting for that decline, according to the
Other sources, such as the US-based Energy
Information Administration (EIA),
predict that global natural gas consumption will treble between 1980 and
2030, by which date it will mostly likely become the primary energy source
of choice for industrial and public needs.
There are sound scientific reasons why natural gas (methane) is becoming the
kingpin of fossil fuels.
Firstly, it has a much greater calorific
value than either oil or coal. That is, more heat is produced per
unit of fuel.
Secondly, it is a cleaner fuel, emitting
30 per cent less carbon dioxide when burned compared with oil and 45
per cent less compared with coal.
Thirdly, gas is more efficient for
transport, both as a raw material in compressed form along
land-based pipelines, and as a fuel to drive transport.
All energy industry agencies recognize that far
and above the premier sources of future natural gas are the Middle East and
Eurasia, including Russia.
The US-based EIA puts the natural gas reserves
in these regions as nine and seven times those of North America’s total -
the latter itself being one of the world’s top sources for that fuel.
Within the Middle East, Iran is the undisputed top holder of gas reserves.
Its South Pars gas field is the world’s largest. If converted to
barrel-of-oil equivalents, Iran’s South Pars would dwarf the reserves of
Saudi Arabia’s giant Ghawar oilfield. The latter is the world’s largest
oilfield and since it came into operation in 1948, Ghawar has effectively
been the world’s beating heart for raw energy supply.
In the soon-to-come era of natural gas
dominance over oil, Iran will oust Saudi Arabia as the world’s beating
heart for energy.
Both Europe and China stand to be arterial routes for Iranian and Central
Asian gas generally. Already, the infrastructure is shaping up to reflect
Nabucco pipeline is planned to supply gas
from Iran (and Azerbaijan) via Turkey and Bulgaria all the way to Western
Europe (signaling an end to Russian dominance).
Iran also exports gas via pipelines separately
to Turkey and Armenia and it is also following up export deals with other
Gulf countries, including the United Arab Emirates and Oman.
Another major arterial route is the so-called
peace pipeline from Iran to Pakistan and on to India, through which Iran
will export this fuel to two of the region’s most populous countries. But
perhaps the most tantalizing prospect for Iran is the 1,865-kilometre
pipeline that supplies natural gas from Turkmenistan through Uzbekistan and
Kazakhstan into China and is due to operate at full capacity in 2012.
Turkmenistan shares a 300-kilometre border
with Iran to its south and already has a gas export deal with Tehran. If the
South Pars gas field development can be
incorporated into the above transnational pipelines that would confirm Iran
as the beating heart of a world economy in which gas is the primary energy
This is amplified further by rapidly growing
demand for gas by China which the EIA predicts could be dependent on imports
for over a third of its natural gas consumption by 2030.
In this context of a major realignment in the world’s energy economy - one
where there will be a continuing diminished role for the US - Washington’s
blustering rhetoric about democracy and peace and
on terror or alleged Iranian nuclear weapons can be
seen as a desperate attempt to conceal its fear that it stands to
be a big loser.
Encircling Iran with wars and threatening gas
supplies to possibly the world’s top future gas customer - China - is the
real deal. US actions are more accurately seen as putting a knife to the
energy arteries of a world economy that it will no longer be able to
A further twist in this tale is the position of Russia. With its own vast
reserves of natural gas, it can be seen as a competitor to Iran. Arguably
less well positioned than Iran to supply both Europe and China, Russia is
nevertheless a major player and has been assiduously courting China with an
export deal since 2006.
However, as Economides observes,
"negotiations between the two countries have
been on and off and, especially, the pipeline construction has been
But Russia’s ambitions to expand its natural gas
exports may explain why it has shown itself to be such a mercurial ally to
Moscow’s ambivalent position towards
US-led sanctions against Iran, suggests that Russia has its own agenda for
hampering the Islamic republic as a regional energy rival.