January 7, 2013 | Posted by Will Rogers
- 10:17am | 0 Comments
Natural resource trends topped international headlines in 2012 – from
illicit resource trade in Afghanistan to energy competition in the South China
Sea. Which ones should readers track in 2013? Here’s a list of the five international trends
I’ll be watching in 2013, in no particular order.
- China’s technological development in deepwater
drilling. China made great strides in strengthening its technological edge
in deepwater drilling last year. In May 2012, the state-run China National
Offshore Oil Company, CNOOC, began operating the country's first deepwater
drilling rig, putting CNOOC in a position to transform its reach by moving away
from solely shallow water operations to new depths, including deepwater blocs
of the South China Sea. (Chinese estimates place 70
percent of recoverable natural gas and oil deposits in deepwater of the
South China Sea.)
In December 2012, the Canadian government paved the way for CNOOC to acquire the
Calgary-based energy giant, Nexen Inc., including
the company’s high-tech ultra deepwater drilling technology, which would add to
CNOOC’s technological edge in deepwater drilling. The deal still faces some scrutiny from the U.S. Congress over Nexen's Gulf of Mexico assets. Regardless though, as China continues to develop
its edge in deepwater drilling technology, it could speed up the country’s
efforts to unilaterally drill in deepwater blocs of the South China Sea.
- An increasing focus on energy development
in the South China Sea as part of India’s “Look East Policy.” India shares
many of the same energy vulnerabilities as other countries in East Asia,
particularly a growing reliance on petroleum imports from the Middle East and
North Africa. Those same vulnerabilities have contributed to New Delhi’s
interest in exploring for energy in the South China Sea, which some countries,
including China, view as a potential “second
India’s foray into the South China Sea has drawn China’s ire, which has
protested India’s recent joint ventures with Vietnam. In December 2012, Chinese
fishing boats blocked a Vietnamese seismic vessel, causing the ship’s cables to
snap. The episode provoked a response from the Indian government, which said it
sending navy vessels to protect its interests in the South China Sea.” This
may lay the groundwork for a greater Indian naval involvement in the South China
Sea in 2013; it is something worth watching.
- Greater transparency in Afghan minerals
trade. Afghanistan’s Mining Minister Wahidullah Shahrani made great strides
in 2012 to improve transparency in the country’s extractive resources industry
by disclosing roughly 200 mining contracts that had previously been kept secret.
The move was in part an effort to help the Afghan government meet its
obligations for greater openness, a condition that many western countries,
including the United States, have tied to billions of dollars in aid money.
The Afghan government has yet to fully institutionalize some of the best
practices needed to transform its mining industry. Much of the effort is indeed
individually driven by officials like Shahrani who remain politically weak. And
it is increasingly clear that the country cannot afford to rely on individuals
alone to transform the mining sector. But watch to see if the Afghan government
adopts some changes in how it forms contracts with domestic and foreign
companies, including by passing a law requiring public disclosure of those contracts.
- Piracy’s role in driving Nigerian political
instability. The West African country was plagued by increased political instability
in 2012 tied to the government’s changing policy on fuel subsidies and bombings
by the militant Muslim group Boko Haram. Now Nigeria appears to be dealing with
increased piracy off its coast, where suspected Nigerian pirates have seized
oil tankers and stormed drilling platforms. Last week, The Wall Street Journal reported that Nigeria has emerged as the
new center for African piracy, rivaling Somalia; attacks
off Nigeria’s coast jumped from 10 in 2011 to 27 in 2012.
The growing instability in Nigeria could
contribute to higher energy prices globally. Nigeria is Africa’s largest crude
oil producer (and fourth largest exporter of crude oil to the United States).
The government aims to increase oil production from around 2 million barrels a
day to 2.5 million barrels a day in 2013. But production could be halted by
increased political instability driven in part by increased attacks from Boko
Haram and piracy. Moreover, continued political instability could drive away foreign
investment in the country’s energy sector. A report in December 2012 found that
Nigeria could experience an estimated 40 percent decline in oil
production by 2020 unless international energy companies sustain their
investments in the country’s oil and gas sector.
- Japan continues to walk back its nuclear phase
out policy. Japanese leaders began to walk back the government’s goal of
phasing out nuclear power by 2040 just
a week after officials declared the policy back in September. Tokyo’s
nuclear phase out policy has stirred concerns among businesses leaders and
others worried that retreating from nuclear energy could hurt Japan’s economy
over the long term. Indeed, Japan recorded a record trade deficit in 2012,
linked in part to increased energy imports from the Middle East and elsewhere
that are helping Japan compensate for the lack of electricity generation from nuclear power.
Economic and security concerns could give the
Japanese government continued cover to walk back its nuclear phase out policy
in 2013. In December, The Wall Street
Journal reported that Tokyo could “reopen
nuclear plants that pass stringent safety tests and consider allowing
40-year-old plants to remain open.” Watch for this policy to continue to
take shape in 2013.
These are just some of the international trends I'll be continuing to watch in 2013. There are other important trends to watch as well, such as the effectiveness of continued sanctions against Iran and Baghdad's efforts to mend its relationship with Kurdistan, to name just a few.
Tune in Wednesday for a look at the top U.S. policy issues to watch in 2013. I will take a look at some important U.S. policy trends, including continued progress from the national security community to incorporate climate change into a range of national security and defense policy documents, as well as congressional efforts to ratify the Law of the Sea Convention. More to come.