Energy Security in Asia: China, India, Oil and Peace

Report to the Norwegian Ministry of Foreign Affairs..."India and China are both characterized by a tremendous increase in energy
consumption, of which an increasing share derives from imports. Very rapid
economic growth always makes it difficult to arrive at a sound balance between
demand and supply, and this tends to generate waste, bottlenecks and insecurity.
Although both countries are trying hard to provide appropriate energy, increase their
energy efficiency, and diversify their sources of supply, they are becoming
increasingly dependent on imported oil, and the Persian Gulf is set to remain their
predominant source of oil in the coming decades. Instability in the Middle East thus
poses a serious challenge to the security of China and India, just as it does for Japan,
the US and many European countries. The question of maintaining a stable supply of
fossil fuels poses several security challenges. One is to boost one's own production,
another to diversify one's sources of import, and a third to secure the transportation of
oil and gas on vulnerable sea routes; or over land through pipelines that depend on
long-term strategic relationships with the producing countries.
In China and India a heightened awareness of the geopolitical implications of energy
supply and demand has given energy issues an increasing prominence both in their
domestic and foreign policies. However, it is difficult to say if this leads to more
tension in their foreign relations or if instead it pushes them towards increased
international cooperation. Plans are certainly being made for future possible ‘resource
wars', but emphasis is presently being put on economic competition, and on seeking
to maximise each country's position on the international energy market. Then again,
such increasing resource competition may contribute to raising the stakes of conflict
in areas where national jurisdiction has not been resolved (East China Sea, South
China Sea), and also in some of the energy exporting countries. Burma is one such
country, in which the energy security dynamics of India and China are played out, and
this is detailed in an appendix to the report.
The report is based on available literature, online energy data, and communication
with Indian and Chinese researchers. We have used country reports and statistics
provided by the International Energy Agency (IEA), statistics, forecasts and analyses
by the US Energy Information Administration (EIA), unpublished academic papers,
books and articles by Indian and Chinese researchers, and reports by several European
and American analysts.
Based on our assessments of the energy security strategies and interests of the major
players in the region, the report outlines three scenarios for the future of international
relations in Asia. The first, called ' is the most positive and also,
in our judgment, the most likely. The second scenario, ',
presents a possible embargo against China, and is perhaps the least likely, at least in
the near future. The third scenario, ' presents the nightmare
scenario of a full scale ' with global impact and serious consequences
for India and China. The situation in Iraq, and especially the ongoing developments with relation to Iran's nuclear programme, force us to say that this scenario is not just
a fantasy fiction, but a real possibility, even in the short term.
The final section of the report offers suggestions as to implications of the outlined
scenarios for Norwegian foreign policy formulation. Four areas of cooperation that
would improve energy security in China and India, as well as globally, are identified:
1) support for the promotion of energy efficiency,
2) assistance in the development of clean coal and gas technology for electricity
production,
3) a campaign for engaging the world's great powers in a major research effort to
develop transportation technologies that do not depend on oil,
4) assistance in the nomination and promotion of Indian and Chinese candidature
for IEA membership...