Energy Security Case Studies

There is an energy crisis in the USA for the following reasons:

Consumption

• Consumed 21.3% of all global primary energy supplies and 23.8% of the world’s oil in 2007
• An average American consumes over 100 times more electricity than a citizen of Karibati – the world’s lowest electricity consumer

Reliance on imports

• 3 main needs for energy are: electricity generation, transport and heating
• Oil and natural gas are major sources for these fuel needs
• 1960-2003: USAs reliance on imported oil and gas increased from 18-58% (oil on its own is at 70%)
• USA became concerned about the dependence on imports after 9/11
• Bush (2006): America must end its dependence on oil and dependence on the Middle East is an economic security issue and a national security issue

Price

• Oil is used in every sector of its economy, so any price rise threatens the economy by making everything more expensive

• Energy security in the UK has become a major political issue
• The UK was virtually self-sufficient in energy because of gas and oil in the North Sea in the 1980s-90s
• North Sea production has started to decline and UK became a net importer of gas in 2004
• By 2020 gas imports could account for 80-90% of total demand
• Coal, which is widely available from reliable sources at competitive prices currently accounts for about 15% of the UK's primary energy supply and most of it is imported
• The UK still has workable reserves of coal so could offset energy security concerns by increasing the use of coal to generate electricity
• However, such as change would increase the UK's carbon emissions, which it has committed to reduce

Key Facts

• Stretching from Lake Baikal to the Sea of Japan
• Runs 4,150km/2,580 miles - more than 3 times as long as Trans-Alaska pipeline
• Russia's biggest infrastructure investment at a cost of $15.5 billion
• Will represent an increase of about 1/3 in Russia's oil pipeline export capacity
• Signify a major Russian shift toward the Pacific, where oil could be sold to any country, including the USA

Major Obstacles

• No guarantees that there will be enough oil to fill the pipeline
• The Kremlin vowed not to contribute state funds for the pipeline construction
• Transneft (the state pipeline monopoly) has been told by Moscow to find its own financing (preferably on international markets)
• Questions over the pipeline's profitability (has been alikened to the Trans-Siberian Railway which made no profit)
• Switching the pipeline to Perevoznaya (a tranquil bay) from Vostochny (main industrial port) was little-publicised
• Growing global environmental protest movement
• Perevoznaya is home to 30-40 Amur Leopards (one of 50 endangered species)
• Tankers would steam past only maritime nature reserve and would enter a maritime cul-de-sac with shallow waters and fragile ecology
• Transneft plans to get oil here by building the pipeline through one nature preserve and along the southern border of a second preserve
• Tiny leopard and tiger habitat will be cut off

• Will be 2600 miles long
• Construction began in 2006 and is likely to take 10 years
• Russia originally planned for it to run through the area where the last remaining wild Amur leopards live (Chinese border, near Vladivostok)
• This route was changed in July 2005

Problems

• Initial routeran too close to the the northern tip of Lake Baikal (world's largest freshwater lake and UNESCO protected site) and there were fears that an oil spill could be an environmental disaster
• Therefore, it was re-routed further north, away from the lake, rapidly increasing the cost
• The cost has risen because of rising steel prices
• Face challenges of building in soils affected by differing permafrsot conditions
• The longest and most expensive pipeline ever built

• The EU and Russia are battling over the Nabucco pipeline which is aimed at diversifying Europe's energy imports.
• The Nabucco pipeline (first planned in 2004) will transport natural gas over 3,000km from the Caspian region to Austria via Turkey, Bulgaria, Romania and Hungary.
• Expected to start construction in 2010 to finish in 2013 at a cost of $8 billion.
• The Nabucco pipeline will be supplied with gas from Iran, Azerbaijan, Kazakhstan, Turkmenistan, Egypt and Syria.
• The huge amount of gas delivered will make the EU less dependent on Russian supplies.
• It is in the EU's interest to diversify its gas imports because of lack of reliability from Russia (who temporarily shut off gas supply to Ukraine in 2006).
• The Nabucco project has already had problems because of Iran and Syria's political instability.