July 17, 2009

Natural Security Weekly News Roundup

While not even vaguely as exciting as reports of flesh-eating military robots (which, either fortunately or unfortunately depending on one’s point of view, turned out to actually just be vegetable biomass-powered machines), this week did feature a number of consequential moves in the realm of energy security both domestically and internationally.

In the Washington Post, retiring Alaska Governor Sarah Palin came out swinging against the Waxman-Markey bill currently in committee in the Senate, arguing that any form of cap-and-trade system would be catastrophic to the U.S. economy. Massachusetts Senator John Kerry fired back at Governor Palin in the Huffington Post, stating that Governor Palin’s assertion that America’s energy woes can be solved by exploiting domestic oil, natural gas, and coal reserves completely ignores the issue of climate change, which could be catastrophic not only to the economy but across the board. In other domestic news, supermajor Exxon Mobil seems to believe that the Obama administration is serious in its professed desire to push forward the development of biofuels, as it announced a $600 million investment in algae-based biofuels this week, despite CEO Rex Tillerson’s well-documented skepticism on the subject.

Internationally, it was a big news week for West African energy, with Nigeria in particular attracting much attention. On Monday, a Nigerian Federal High Court set free militant leader Henry Okah as part of an attempt to placate Movement for the Emancipation of the Niger Delta (MEND) rebels into accepting a government amnesty offer. The same day, MEND launched an attack unprecedented in its target area on an oil jetty in Lagos, the country’s commercial capital and largest city. MEND had previously contained its activities to the Niger Delta. Two days later, MEND declared a 60-day ceasefire in response to the government’s freeing of Okah. However, within 12 hours of the ceasefire being declared, there were reports of Nigerian military boats headed towards the Niger Delta, raising concerns that the ceasefire could be exceedingly short-lived. As such, the situation in the Niger Delta remains volatile; the attack in Lagos signals an unnerving ability and willingness by MEND to expand their insurgency beyond the Niger Delta to major population centers in Nigeria.

However, by the end of 2010, falling Nigerian output may be slightly compensated by the rise of a new oil exporter in the region – Ghana. While President Obama picked Ghana for his maiden trip to Sub-Saharan Africa based primarily on its reputation for being an exemplary democracy for the rest of the continent, Ghana is also posed to significantly increase its international importance in the coming years. On Wednesday, Bloomberg News reported that Ghana is set to become one of the top 50 oil producers in the world when its newly developed Jubilee field starts producing at the end of 2010. This is a potentially important development for the United States; while Ghana will not produce nearly enough oil to offset Nigeria, it is a strong ally of the United States and will diversify sources of energy from West Africa away from the militancy and corruption that plague Nigeria, and the horrific governance that defines Equatorial Guinea.

Finally, Europe made several moves this week to reduce its vulnerability to Russian gas shutoffs. Four European nations – Bulgaria, Romania, Hungary, and Austria – signed an agreement with Turkey to construct the Nabucco pipeline, which will bring natural gas from Central Asia to Europe via Turkey, bypassing Russia. That said, the Nabucco project still has a long way to go, as supplier countries have yet to sign on. Bulgaria, which found itself quite literally out in the cold last winter when Russia shut off gas supplies, also signed a separate agreement with Greece’s DEPA and Italy’s Edison to import Azeri gas in an effort to diversity its suppliers away from Russia. However, recognizing that Nabucco is still years away, the European Union is also making efforts to shore up its short-term energy security, announcing a new natural gas plan which will expand storage facilities, and calls for the implementation of “community emergencies” in the event of import shortages, allowing gas to be shared between states to circumvent midstream volatility.

In conclusion, Nigeria remains a confusing mess, but is potentially at a crossroads – the ceasefire is cause for (very slight) hope, but the attack in Lagos could represent a dangerous escalation of the country’s insurgency. In the United States, the debate over the way forward in addressing energy security continues; and in Europe, over-dependence on Russian gas remains a pressing and complex issue that will only grow in importance as colder weather begins to approach.