Energy Diplomacy and Security in the Age of Shale Gas Revolution

Energy Diplomacy and Security in the Age of Shale Gas Revolution

Importance of energy security

Energy today seems like the very essence of international politics. No overview of current world affairs is meaningful without an examination of the role played by energy. Energy producers, energy consumers, and energy transporters in any country become more important in accordance with the role they play. The study of world affairs requires an understanding of global energy dynamics. What happens above the ground, under the ground, or among nations contributes to the definition of peace and coexistence in various regions of the planet. By addressing questions of availability and the acquisition of energy we paint a complete picture of the situation throughout the world. When inquiries about energy have not been answered, nothing has been fully answered.

There are issues that need to be explored in relation to energy and its importance to world affairs. We can sketch out some of them, starting with the importance of the issues of security.

These are: Security from energy shortages, security from events above the ground, the security of energy transportation, security from financial turmoil, and European energy security.

1. Security from inadequate energy

It is of crucial importance for every sovereign nation to have guaranteed supplies of energy. Some are blessed with the ability to produce enough energy (oil or gas) supplies to satisfy their needs and export to others. These countries, apart from being energy sufficient, are also quite wealthy due to their ample resources. They do however face problems of their own. The availability of natural resources leads nations to serious economic problems. The inflow of foreign currency raises exchange rates, making any domestic products very expensive — thus hurting exports while imports become cheap and very attractive. In this way domestic industry suffers and consumers turn to foreign imported goods. Consequently, the economy becomes focused only on one industry, the export of natural resources, namely energy, while all other economic activities are marginalized.

It is therefore imperative for countries rich in national resources, especially in energy, to make a serious effort to diversify their industries and embark on entrepreneurial initiatives to produce their own consumer goods.

2. Security from events above the ground

Energy policy needs to take into account various parameters in regard to security and its diplomatic outreaches. Many observers have commented on something that sounds strange at first. To a large extent the price of gas and oil and the issues affecting the security of energy supplies are determined more by occurrences above the ground rather than those under the surface of the earth. Very often it is events having to do with civil wars, interstate conflicts, religious fanaticism, acts of terrorism, and various types of national disasters (floods, fires, hurricanes, earthquakes, snowstorms, motorway or train accidents, etc.) that have a greater impact on the availability of energy. In most of these circumstances there are usually severe disruptions in the supply of energy with disastrous effects on the prices as well as the availability of the aforementioned products.

It goes without saying that other domestic events may have similar disconcerting effects on energy security. A country’s legal system, the smooth functioning of its judiciary, and its political culture are reflected in its stability and the state of its public finances, which may affect its level of governability, along with its stability on the energy front. In in the end, almost every aspect of public life may be crucial to the very sensitive issue of energy costs and security.

3. Security of energy transportation

In addition to the energy-producing countries, those states that play host to the major oil and gas pipelines are also important for the availability of energy worldwide. The use of these transport hubs is crucial for global welfare. As a result, these nations play a significant role in diplomacy, since their whims are important for the welfare of the energy producers as well as for the consumers. It goes without saying that energy diplomacy is closely intertwined with the courting of nations that sit on the transport routes of the various pipelines.

Countries with landlocked energy resources are particularly vulnerable to the availability of transport routes. It is much easier for energy producers when they have direct access to major ports and can thus establish oil and gas terminals to export their products. By means of fluctuating prices, producers lure transport nations to their side, thus facilitating exports and their own financial intake.

This is indicative of the importance of diplomacy in securing a safe and sustainable supply of energy. Diplomacy therefore goes hand-in-hand with energy security. This is true at every level of the production, transportation, and, finally, the supply chain. 

4. Security from financial turmoil

There can be no question that stable finances set the picture for a nation's welfare. For every energy-producing nation, it is of paramount importance to control its public finances so that energy remittances can be directed toward preordained programs. In this way, internal economic stability is sustained, export schedules are met, and the country may extend its strength to its neighbors, thus fulfilling its diplomatic goals and overall geostrategic aims.

5. European energy security

It is crucial for Europe's well-being for it to secure its energy supplies. For many years North Sea oil was crucial for the continent's supplies. Russia always played a major role in its shipments of oil (by means of the Druzhba or “Friendship” pipeline passing through Lithuania and Poland) and gas. Even in the darkest years of the Cold War, Russian supplies were never interrupted. The need for foreign currency appeared to be much more important than ideology in the years of the Soviet Union. In the same way today Russia is a reliable business partner in its energy deals with Europe. 

However, the diminishing oil reserves in the North Sea and the proliferation (actual or proposed) of gas pipelines from Russia to Europe have raised concerns about the continent relying overwhelmingly on Russian energy. At first glance the qualms appear to be valid. The conflict in Ukraine has raised concerns about Russia employing the energy weapon against Europe. Real life, however, shows us something different. Russia would have much to gain, and equally a lot to lose, should it unleash the energy weapon against Europe. There are large sums of money at stake, and it is not to Moscow's advantage to jeopardize these remittances just for political gains. The Russians never did so in the past. It is doubtful they would attempt to do so in the future. 

The most recent discoveries of shale gas in the US and Canada makes it possible for the West in the case of an emergency to amply provide Europe with energy security, were Russia to cut its own supplies. Likewise, there appear to be plans for new gas terminals to be built in Europe, so that liquid gas could be transported there across the Atlantic.

What’s more, gas pipelines from the Caspian Sea and Azerbaijan (the Trans Adriatic Pipeline, or TAP) are in the works, so that Southern Europe would be guaranteed a safe supply of gas from these sources.

Energy and Diplomacy

Anxiety is easing about energy security in the West. Energy diplomacy, however, will always play a crucial role in the way states project their power and image beyond their national borders. This will continue, irrespective of ideological differences, alliances, or geopolitical shifts.

For countries with considerable energy reserves, their consequent economic strength will enable them to play a major role in world affairs. Their political influence upon other, poorer parts of the world will emanate from the strength they derive from the affluence that energy has brought them. Russia is able, as it was in the past, to utilize the power of its energy production to assist countries on its periphery, as well as nations in other parts of the world, enabling them to tackle difficulties and overcome hardship. 

Likewise the US, due to its recent shale gas revolution, may be better strategically placed to guarantee the energy security of those nations that would otherwise find themselves on the brink of collapse. 

Other nations, i.e. Saudi Arabia and Qatar, among others, utilize their financial strength to play a major role in the Middle East or in Islamic politics in general. 

Diplomacy therefore is closely intertwined with energy. Big energy suppliers are able to move away from political marginalization and enter the mainstream arena of international politics. In our era, energy protagonists will also play the leads in the drama of geopolitics.

Tags: Energy