June 15, 2016

The New Great Game

Changing Global Energy Markets, The Re-Emergent Strategic Triangle, and U.S. Policy

This report explores the interface between energy market changes and great power politics. With Chinese President Xi Jinping’s embrace of China’s rise as a major power and subsequent assertive moves in the South China Sea (SCS), and Russian President Vladimir Putin’s efforts to directly challenge U.S. aims in both Eurasia and the Middle East, the United States/Russia/China “strategic triangle” is again shaping global politics. Energy issues are at the core of this new contest. This report focuses on China’s and Russia’s energy assets, vulnerabilities and strategic goals, and the extent of, and limitations to, their new energy-centered strategic partnership. The report lays out a pathway forward, and specific policy recommendations, for how the United States can leverage and strengthen its energy assets in the years to come to support its national security interests and foreign policy goals.

As recently as three years ago, energy markets were dominated by assumptions of continued rapid demand growth and doubts about the security of supply, especially given growing instability in the Middle East. These factors reinforced one another in placing continued upward pressure on energy prices. The “peak oil hypothesis” – the notion that the world was soon to reach the maximum point of oil production as the depletion of existing sources sped ahead of available new sources – shaped both financial and corporate strategies, and consumer country fears.

But enormous shifts on the supply-side in the United States and the demand-side in China have transformed global energy markets. Technological innovation gave rise to the unconventional energy boom in the United States in which crude oil and natural gas production increased by over 80 percent and 50 percent respectively in less than a decade. The Obama administration, in the face of opposition from environmentalists, recognized that the shale boom could be a source of economic growth and, given the lower carbon footprint of natural gas, create a global “bridge strategy” away from coal. 

After accounting for 60 percent of total global energy demand growth over the past decade, the China energy surge is over as the country moves away from spending 25 percent of GDP in fixed asset investment through building hundreds of new cities. President Xi has put the country on a course to rebalance its economy from one based on manufacturing to services, investment to consumption, and exports to domestic spending. As a result, the growth targets for the Chinese economy have declined by some 40 percent, while its energy intensity is declining very rapidly. In turn, this depresses the pace of global energy demand growth. 

These market changes have shifted the risks in global energy markets from consumers to producers, and have created major opportunities for both the United States and China. The United States is on the cusp of a new era as a major energy exporter, and has exercised its new energy leverage in promoting international sanctions on Iran that helped to bring Tehran to the negotiating table over its nuclear program. For China, new market conditions have eased concerns around supply vulnerability, creating new options for global energy partnerships and the context for China’s ambitious new Silk Road project that aims to connect East Asia to the Middle East and Europe. 

For Russia, whose economy is highly dependent on its energy resources, the impact of these market changes are much more problematic, both in terms of falling prices and greater competition among producers. The changes in global energy markets coincided with Russia’s conflict with the United States and its European allies over Ukraine. In the aftermath of Russia’s annexation of Crimea, the West imposed a series of sanctions on Russia, most importantly on key technologies and financing streams critical to Russia’s energy production expansion. Putin refused to buckle to Western demands and instead announced Russia’s own “pivot to Asia,” especially to China.

Senior leaders from both Russia and China have met frequently, vowing each time to boost some aspect of their ties. Putin has stated that Russia and China have no major differences on key global issues, and the two countries have signed scores of high-level agreements. A number of huge deals to send Russian gas to China were closed, with the clear intention that China would become the major financier of Russia’s future energy development. In the military sphere, Russia and China held joint naval exercises in the Mediterranean, Sea of Japan, and South China Sea in 2015. Russia has also agreed to sell China critical surface-to-air missile technology and top-of-the-line fighter planes, which could enable China to project greater presence into the South China Sea.

But China-Russia energy ties have not played out so smoothly, tempering the possibilities for a true strategic convergence. Two years after the big gas deals, the Russia-China energy axis appears to have lost a good deal of momentum, despite continued memoranda of understanding and other agreements. Slowing Chinese energy demand, and proliferating Chinese natural gas options, have removed some of the urgency behind the Russia-China energy détente. The Chinese have not responded to the new opportunities for investment that Moscow put forward. In general, China is demanding more, including lower prices and control of timetables, from these deals, and the Russians have been unwilling to continue to give in, as they did on pricing in the large gas deals in 2014, and remain wary of becoming China’s “resource appendage.”

Rather than a quick pivot to Asia, Russia is coming to terms with its limited energy choices and the growth of stiff competition – and with them, continued dependence on European markets. Today, Europe and Russia are economically intertwined around oil and gas, which is unlikely to change drastically in the near future. Russia and Europe are mutually dependent on one another for exports and imports in the energy sector. However, given the recent friction between Russia and its neighbors, Europe – encouraged by the United States – is renewing its long-term effort to wean itself off Russian energy.

For its part, the United States is not yet well positioned to take advantage of the new energy market circumstances to advance many of its national interests. Unlike China and Russia, which reacted fairly quickly and are pursuing policies to counteract their energy vulnerabilities and expand resilience, U.S. leaders have been slower to grasp opportunities for advancing U.S. global leadership, balancing a tense relationship with China, and working to contain Russian foreign aggression. 

The report argues that the United States needs to update its perspectives and policies to reflect the country’s new position as a major energy power. Such a new approach should seek to develop new norms, arrangements, and even institutions around market resilience, technological innovation, and global stability that will help reassert and convey U.S. leadership on energy on the global stage. It must approach energy security and climate change as two sides of essentially the same coin, rather than as distinct policy arenas. Despite the agreement last year between the administration and Congress to lift the 40-year ban on crude oil exports, energy trade policy and regulation in the United States lag well behind the emergence of the United States as a major oil and natural gas producer.

The rise of the United States as an energy producer and the weakening of China’s acute sense of vulnerability create the possibility of energy becoming a source of tension mitigation rather than exacerbation in the Pacific and beyond. But neither the United States nor China have yet developed a serious initiative to engage the other in a more cooperative manner on energy, nor are the countries able to place their shared energy interests in a broader regional framework with other East Asian nations. Shortcomings in U.S. leadership have contributed to confusion and a lack of confidence broadly in Asia about the role the United States will play as an energy power. This is particularly notable when it comes to Asian concerns about the role the United States will play in the sea lanes linking Asia with Middle Eastern producers, which have been crucial for the economic development of all countries in the region, and the degree to which U.S. regional allies will get caught in the U.S.-China power struggle.

In light of these concerns the report makes recommendations for U.S. policymakers to present a clear framework for the role the United States will play in promoting and protecting global energy market flows and efficient trading, and adapting domestic energy policy for resilience and maximization of strategic interests. It also urges U.S. leaders to establish a new Pacific Energy Forum with several East Asian counterparts and expand bilateral energy cooperation between the United States and China. Additionally, it recommends a strategy to address Russian coercive energy market activities abroad by expanding cooperation with European and other partners to bolster European energy resilience, and specific policies to maintain security commitments in the Asia-Pacific to protect energy market stability unilaterally and through international security cooperation. 


China’s President Xi has bade farewell to his predecessors’ rhetoric that China is merely a developing country and has embraced its rise as a major power. Russian President Putin, at the same time, has embarked on a series of assertive moves to directly challenge U.S. and Western aims in both Eurasia and the Middle East. As a result, the United States/Russia/China “strategic triangle” that dominated the final decades of the Cold War is making a comeback. Geopolitics is again in vogue.

But the dynamics of the latest round of great power contestation are different from the 1970s and 1980s. Then, the United States exploited constant Sino-Soviet tensions, and Moscow feared total isolation, especially after President Richard M. Nixon went to China in 1972. The United States used its leverage to win agreements from the Soviets on strategic arms limitations and to gradually normalize relations with Beijing. This time around, U.S.-Russia tensions are high, and China is positioned to play Russia and the United States against one another. 

A second element in which this round of triangular geopolitics differs from the end of the Cold War is the role of energy. Energy issues were peripheral to the earlier triangle; they are at the core of the new one. Indeed, recent changes in global energy markets have elevated the significance of the United States as a major producer, while Russia finds itself in a much more competitive environment as a leading producer. Furthermore, Asia will be the center for global energy and economic growth for years to come, and the strong pivot to Asia of energy superpowers Russia and the United States makes the Pacific an increasingly important center of gravity for economic and strategic relations. 

As for China, all significant energy producers, consumers of energy-intensive Chinese goods, and those neighbors and transit states that are conduits for such trade are watching closely for commercial opportunities. Though many nations are stakeholders in this trade, particularly Gulf energy suppliers, new and dynamic relationships in the Asia-Pacific will dominate strategic competition in the decades to come. The energy-linked trade flows in the region will drive new ties, new trade terms, and new security opportunities. 

Over time, and in step with energy market moves, China, Russia, and the United States will each individually attempt to bend their energy advantages to strategic ends. This is the new “great game.” Putin made the first move in this game, with his declaration of an energy-centered “pivot to Asia” and the signing of a series of gas agreements with China in 2014 following the Russian annexation of Crimea and the ensuing imposition of Western sanctions. 

But China and the United States are the stronger corners of this triangle, and will have greater opportunities to translate their energy interests into either bitter competition or a source for collaboration and mutual benefit in the bilateral relationship. In today’s buyers’ market, China may even have the strongest set of cards to play, offering investment capital, a growing consumer base, and long-term commercial and security commitments in order to expand its international stature and influence in its immediate neighborhood and far beyond. It is expanding energy links with Russia, though the combination of slowing Chinese growth, weak energy prices, and a growing range of partners has meant that China’s response to Putin’s moves have been disappointing to Russia, which has fewer options. 

For the United States, the last decade’s phenomenal growth in unconventional oil and gas output slowly has led to a rethinking of the decades-old perception of domestic energy scarcity and vulnerability into one of abundance and clout on the world stage, even during the current downturn in oil prices. As a result, U.S. exports are forcing energy suppliers from Russia, the Gulf, Africa, and elsewhere to compete with a new class of high-tech U.S. energy producers.

Over time, and in step with energy market moves, China, Russia, and the United States will each individually attempt to bend their energy advantages to strategic ends. This is the new “great game.”

This revolution and the growing penetration of renewable energy are altering the way we think about energy security. Policymakers increasingly prioritize a more diverse array of energy inputs at home and abroad. They also increasingly focus on lower-carbon or no-carbon fuels globally to reduce pollution, minimize energy-driven economic shocks, and help adapt to the need to address the social costs of carbon. 

The changing definition of energy security also includes a new view of U.S. foreign commitments linked to energy. Even while the United States has decreased its dependence on imported energy, and expanded its view of energy resources beyond oil, policy commitments to safeguard the flow of oil in global sea lanes remain significant for the United States and its economy, given that a major disruption of the global oil market could send prices skyrocketing for all consumers. But the 1980 Carter Doctrine, which offered U.S. maritime security to the Gulf, no longer captures the right set of key energy market players, and its implication that a single powerful actor should provide global energy security is antiquated. What must be re-examined are the concessions the United States may exact for this provision, and the cooperative opportunities that appreciation of its security benefits can create. 

U.S. policymakers have yet to fully take into account the energy dimension of global geopolitics, and the need to integrate this with broader security and foreign policy perspectives.

The most challenging aspect of such a transformation will be changing the long-held view that energy interests between producers and consumers are overwhelmingly competitive, which had been true when Organization of the Petroleum Exporting Countries (OPEC) dominated the market and consumer countries feared the cartel’s market power. But in today’s more diverse and resilient supply context, the main fear has shifted to the producer side, where intense competition over the ability to sell now defines the market. 

In this context, U.S. leaders must clarify – for themselves and for the rest of the world – an updated set of priorities on both international energy trade given U.S. unconventional energy’s rise and the U.S. role in providing maritime security for energy. The United States and China, for example, are global giants as energy consumers, importers, and emitters. This coincidence creates a range of shared interests in the economic sphere and increasing options for cooperation rather than competition. The deep and growing trade ties between the two only expand shared interests in peaceful and uninterrupted commerce. But U.S. policymakers have yet to prioritize this and use it for leverage in the broader bilateral relationship. 

U.S. leaders must clarify – for themselves and for the rest of the world – an updated set of priorities on both international energy trade, given U.S. unconventional energy’s rise, and the U.S. role in providing maritime security for energy.

The competitive aspects of the U.S.-China relationship have made it difficult for each to focus on shared interests. Abundant misperceptions exist in China that the United States is not open to the energy investment of Chinese companies, and that Chinese traders would be cut off from U.S. energy exports in a crisis. Cool relations between China and the United States are one driver in the China-Russia energy relationship, which offers both Western Pacific nations an opportunity to balance the United States’ role and influence in the Asia-Pacific. 

Russia, a militarily powerful nation with a history of using coercive gas pricing and its transit infrastructure as leverage to advance its political interests in Central Asia and Europe, is nonetheless a junior partner to China in the Asia-Pacific. Pinched by low oil prices and Western sanctions, Russia is externalizing domestic economic discontent in foreign adventurism. This may expand President Putin’s stature at home, but it makes Russia a more unpredictable and potentially dangerous actor in the global arena. While Putin portrays energy as one of the key tools in Russia’s international political playbook, changing energy dynamics are not moving in Moscow’s favor. Russia is a massive supplier to the West, while having a relatively small role in the East. But Russia’s position in Europe is being challenged both in natural gas and oil. The EU is pushing to be better prepared for energy supply disruptions, European gas demand is stagnant, and a surplus of liquefied natural gas (LNG) supply will enter global and European markets. On the oil front, Russia is facing competition from Saudi Arabia and Iran. Saudi Arabia and Russia have discounted their crude to Europe, and Saudi Arabia has targeted countries like Sweden and Poland, where Russia has long been the dominant supplier. Iran has regained 900,000 barrels per day of market share since the lifting of sanctions. This means that the threats to Russia’s market share in Europe are difficult to balance from a buildup in the East. 

This paper explores the interface between energy market changes and geopolitics. It is especially focused on China’s and Russia’s energy assets, vulnerabilities and strategic goals, and their implications for U.S. interests. Geographically, the paper focuses on the Pacific Basin. Given the growth in U.S., Brazilian, and Canadian production, the Atlantic Basin has dried up as a growth market for out-of-area producers, leaving the Pacific as the area where intense competition among producers will play out. The paper concludes by exploring how the United States is positioned to address these circumstances, calling out deficiencies and making policy recommendations for U.S. leaders that leverage and strengthen U.S. energy assets in the years to come. 

Recommendations for Updating U.S. Policy and Strategy

As previously discussed, U.S. energy policy and foreign policy have lagged in their adaptation to new energy market circumstances. They have not taken advantage of new opportunities to leverage domestic high-tech energy productive capacity and the ability to export oil and gas abroad to advance U.S. political goals, particularly with respect to key competitors and partners in the Asia-Pacific region. And when the United States has acted, it has been largely for punitive ends to isolate Iran or Russia through sanctions. U.S. policymakers correctly perceive important strategic opportunities they now have to undermine the manipulative energy pricing power of Moscow or Riyadh by supporting and encouraging a strong U.S. energy production and export capability. This can be a powerful lever to check adversaries or unwelcome aggression on the international stage. However, it is an insufficient approach to the new U.S. energy market power due to its lack of focus on positive levers to advance national interests. The United States should more actively link its energy assets to positive U.S. strategic and security leadership globally, including on new forms of global energy governance, and to facilitate more efficient, stable and secure global energy market and economic functioning. 

A series of recommendations for U.S. leaders below lays out a new set of national-level energy and foreign policy objectives oriented toward a strategy of cooperation and communication in an era of market abundance, rather than zero-sum and protectionist competition. The recommendations highlight the development of greater interaction, data sharing, and institutional platforms internationally to help leverage new domestic energy resources for the advancement of strategic objectives. The strategies focus significantly on expanding ties in the Northern Pacific, the site of important energy trade and strategic interaction in the years ahead, with the aim of cultivating a commercial and political framework that can help to balance sources of conflict in the region. They also include force posture and projection recommendations for U.S. forces that bring together the significant need to support stable energy supply to global markets and fundamental U.S. principles for maritime security. Additionally, they include foreign policy recommendations for the United States in Europe, which will address and balance Russia’s powerful role as an energy exporter and also set an important leadership precedent on global energy governance and on the establishment of liberal market norms and standards to foster resilient, competitive, and open energy systems. 

Policy Recommendations

1. Present a clear framework for the role the United States will play in promoting and protecting energy global market flows and efficient trading. Affirm that this is a paramount national security matter.

The U.S. Secretaries of State, Energy and Defense should publicly outline a framework or doctrine for how the country will promote energy security at home and abroad in the years to come. They should situate this matter as one of national security as well as of commercial interests, and the emphasis for this framework should be on prioritizing shared energy interests with international counterparts, particularly for the purpose of creating positive levers to influence key strategic relationships, trade opportunities, and the achievement of greater security and political stability. U.S. policy leaders should affirm the role that energy assets may continue to play in the execution of coercive economic policy, including sanctions, but they must also make clear the conditions for such policy options and the broader intent to act multilaterally with partners to protect international norms and a rules-based international market and political system. Therefore, the focus on energy diplomacy and statecraft should emphasize a shared global priority on market stability and the positive economic role the United States can play for energy security at home and abroad. 

This message should be presented in public remarks or an official written statement that signals international counterparts, private investors, and officials throughout the U.S. governmental bureaucracy. It should specifically acknowledge the United States’ market role as a powerful energy producer of conventional and unconventional hydrocarbons, as well as renewable energy, and a leader in the energy-efficiency technology sphere. It should furthermore emphasize the economic and strategic significance of the United States’ role as a new LNG and crude exporter. 

Beyond acknowledging the powerful role of the United States in energy markets, leaders should use this message as a platform to set out priorities for the United States as a leader on new global energy governance challenges, and as a steward and promoter of energy security. U.S. officials should lay out an agenda for international energy trade promotion and provision of maritime security related to global energy flows. 

U.S. officials have offered remarks on a number of these topics in the past. However, it will be particularly important for the next U.S. president, and the appropriate members of his or her cabinet, to do so in a cogent, comprehensive, and high-level public manner. Additionally, these officials should specifically discuss shared energy interests with China and articulate the view that elevating these interests can help to promote cooperation and mitigate potential competition in the Asia-Pacific region between the two powers.

2. Adapt U.S. domestic energy policy for resilience and maximization of strategic interests.

To promote resilience of the U.S. economy, policy leaders in the White House, the Departments of Energy and the Treasury, and the Environmental Protection Agency should redouble their efforts to enhance efficiency, promote alternative energy sources, and deepen natural resource stewardship. Such efforts can help to limit use of finite oil and gas energy resources, limit the stress on U.S. energy infrastructure, and limit economic vulnerability, which will better position the United States to tap the energy sector as a source of economic strength and growth. Furthermore, they will enhance the stature of the United States on the global stage as an economic leader and pace-setter on energy, a highly strategic global commodity. Such leadership will resonate in the Northern Pacific, where South Korea, Japan, and China are extremely focused on similar energy initiatives for their own economic resilience, as well as in Europe, where leaders are concerned with advancing their supply security and diversity through minimizing reliance on Russian gas. Additionally, this leadership will expand U.S. credibility and influence, particularly with China, which seeks to dramatically expand its work in efficiency and alternative energy, and which has demonstrated an interest in partnering with the United States on measures to manage energy demand and emissions. Specific policy recommendations follow. 

Continue critical energy demand management efforts. The work of the current and past administration to toughen vehicle fuel economy standards and other key demand management measures for transportation fuels in particular should be sustained and strengthened with future regulation by the National Highway Traffic Safety Administration and the Environmental Protection Agency. 

Sustain the size of the Strategic Petroleum Reserve, modernize it, and study options for diversifying locations and changing authorities. Administration policy leaders should do everything possible to sustain the size of the SPR. While its current 694 million barrel size far exceeds IEA requirements for 90 days of import cover, it is the large size of this reserve, and the potential for the United States to release that into the global oil market, that is a powerful check on market supply or price shocks. Given the congressional commitments to sell approximately 25 percent of this stockpile to satisfy various budget requirements, the administration, led by the National Security Council in consultation with the Energy Department, should immediately advance a rationale for the need for maintenance of a large stockpile and the limits or parameters they will uphold for selling off this asset to either maintain the stockpile or to support unrelated budgetary needs. 

Additionally, the Department of Energy should examine whether it may be sensible to hold stockpiles of crude or refined product in various additional strategic locations around the United States or abroad. Beyond this, the White House, with Energy Department counterparts, should expand SPR release authorities to encompass the ability to release crude in anticipation of a price increase.

Finally, Congress should fund efforts to manage degrading SPR structures and distribution capacity. As Energy Secretary Ernest Moniz pointed out, the SPR is in need of maintenance and a life extension program. Moreover, changes in the location and volumes of domestic oil production have altered the flow of oil and oil products in the United States, resulting in pipeline reversals and increased commercial use of marine terminals. Dedicated marine terminals would help ensure that the SPR is able to deliver incremental barrels of oil to the market in the event of a supply disruption without simply backing out domestic production. The Department of Energy anticipates that adding dedicated marine loading dock capacity in the Gulf Coast and undertaking a life extension program would cost $1.5–2 billion. Congress should allocate funding to these needed investments and ensure that a portion of the revenue from any SPR sale should fund maintenance and modernization efforts. 

3. Establish a new Pacific Energy Forum.

To reinforce U.S. leadership in maritime geopolitics of the Northern Pacific, a critical sphere of influence for U.S. security forces now and in the decades ahead, and to expand common interests and commercial ties in the highly strategic energy market among U.S. partners and allies in the region, the United States should establish a new Pacific Energy Forum (PEF). This forum should be convened at the vice presidential level or foreign counterpart equivalent to mobilize policy focus and commitment within the forum, and include China, Japan, South Korea, and the United States. It must focus on building energy ties as a deterrent to conflict and as a source for mutual economic and strategic advancement for the partners. The forum should also invite Russia and Australia, the two other most important Pacific security and energy players in the U.S. view, to join some meetings of the PEF as ancillary members. 

The geographically contained framework for this forum considers geopolitical interests as the key selection principle for membership, and a deep shared interest in energy trade as the substantive focus of forum discourse and activities. It would link mature states, representing the world’s top economies and great military powers as participants, and would facilitate a major step forward for the United States and other members as a forum to advance strategic interests and a meaningful framework for constructive multilateral engagement.196 An entire Asia-Pacific-wide multilateral framework linking energy security, technology innovation, and cooperation and crisis management would be laudable, but it is not achievable. The huge number of national players, the challenge of sovereignty issues as China seeks to create “facts on the ground” in the South China Sea to solidify its sovereign claims, and the inevitable tension between an “Asian” approach versus a trans-Pacific approach make this an aspiration too far. 

As both a major energy producer and consumer, the United States is well placed to advance shared energy interests through a high-level Northern Pacific multilateral framework on energy. Leading such an effort would serve as a useful confidence-building arrangement for both U.S. allies and for China in the region. It would also leverage investment terms and commitments among members, complementing the TPP trade and investment agreement – or offer an alternative, if more limited, multilateral framework if TPP is not ultimately achieved. For China, it will signal that the United States does not seek to exclude China from key regional fora, and that the United States sees broad-based energy security cooperation and not just climate change as areas for mutually beneficial collaboration. By the same turn, the United States should frame the PEF as complementary to China’s AIIB and One Belt, One Road projects, rather than posing China’s development initiatives as inherently threatening. Cooperative engagement will help the United States understand the commercial, political, and other goals and impacts of these institutions, and will enable the United States and its partners a voice in shaping their energy agenda and the foreign policy influence the energy agenda may confer.

Such a forum can also help to promote commercial cooperation among members through the articulation of basic principles and energy market goals, and a focus on greater energy data generation and public disclosure. For China, Japan, and South Korea, which are engaged in tense security competition, affirming and finding strategies to advance shared energy interests may be useful commercially and also offer a measure of de-escalation in an otherwise highly competitive set of relationships. Additionally, this forum will affirm and advance a technical framework for constructive engagement on commerce and trading in the Northern Pacific maritime region, balancing the heavy focus on security competition among key stakeholders. 

To start, the forum should focus on gas security and efficient energy trading, which are issues of interest to member countries on which a PEF could play a role not currently addressed by other forums. 

Develop and articulate strategies to enhance natural gas security. All of the countries of the Northern Pacific see an important, and often growing, role for natural gas in their economic inputs or revenue generation. Additionally, gas trade in this region is expected to expand significantly in the years ahead, which will have an effect on pricing mechanisms, infrastructure, and trade terms in the region. Internationally available data and analysis of gas markets and supply disruptions and response are much less robust than for oil and must be strengthened, particularly in this region, to expand market insight and security for all stakeholders. Leaders from the PEF should do the following: 

  • The administrator of the U.S. Energy Information Administration should publish more regular data and analytical reports on international gas markets, particularly on expanding trade in the Asia-Pacific. To the extent possible, counterpart energy ministry officials in other countries of the region should also prepare and publish similar data. This will help to advance the conversation on global gas markets and strengthen the foundation on which policymakers and commercial investors base their assumptions and objectives. 
  • Energy Ministers from the PEF should meet periodically to discuss gas security and shocks, including the way that supply disruptions may manifest in their countries, lessons learned, and transferable lessons to expand resilience. This will promote better planning for consumers and suppliers alike, and may help mobilize policy support for private sector initiatives to ameliorate gas shocks. 

    For instance, the ministers could explore how to create an emergency waiver to lift LNG supply contracts restrictions on onward sales in a market shock scenario. Additionally, they could consider public strategies to mobilize public and private capital in a market shock scenario to help mitigate shock conditions, whether through emergency support for critical infrastructure or to better link emergency response to longer-term planning in energy supply and generation infrastructure. Finally, Energy Ministers can contemplate how public initiatives can accelerate the gradual private sector–led process of de-linking gas contracts from an oil price peg, and shifting to shorter-term contract lengths. Supporting these trends will help markets react more quickly and efficiently in a shock scenario.
  • Experts from Pacific Energy Forum countries should meet annually to establish and share selected contingency plans for a gas market shock scenario, and develop protocols for real-time communication mechanisms to implement during a shock. They can plan limited joint exercises that simulate a gas shock scenario, to institutionalize some emergency response protocols similar to those relatively well-planned protocols for oil shock scenarios. 

Explore a combined strategic reserves agreement to coordinate the release of emergency oil stocks in a supply crisis. Given the size of the strategic stocks held in PEF countries, energy leaders should create a framework and push for an eventual agreement on release of strategic stocks. Such a framework may best be grounded in a market-based approach whereby these countries commit a specified amount of their oil stocks to the framework and they, or others in the region, can buy options for accessing the pool at market prices in case of supply shortages. PEF countries could explore options to make oil available at below-market value in an instance of mutually agreed emergency, with trigger points to limit the use of such mechanisms. 

Promote transparent energy trading in the region. The ministers and technical experts of PEF countries should promote transparent, efficient energy trading in the region, specifically for natural gas. In addition to trading volume and liquidity, as well as the port, storage, and interconnection infrastructure to move energy in the region, a true energy trading hub requires market transparency and reliability, rule of law, and an active financial center. To support transparent, efficient trading in the Northern Pacific, particularly in China, commercial and public-sector decision makers may require technical assistance from more established markets overseers. The U.S. Department of Energy, the Commodities Future Trading Commission, and the Federal Energy Regulatory Commission should establish a unique technical assistance initiative to share information on facilitating and overseeing more transparent trading activity with regulatory counterparts in the Forum, particularly in China, as well as with counterparts in Singapore that may also be positioned to develop a more robust gas trading hub in the Asia-Pacific. 

Expand energy technology and efficiency exchanges in the region. Experts of the Northern PEF countries should also build on existing technology cooperation in various forums and expand professional exchange on unconventional hydrocarbon development, renewable energy and efficiency, and climate change mitigation and adaptation efforts through new expert working groups that can bring together public and private-sector representatives. Nations of this region lead globally on energy efficiency and low-carbon energy development, and have some of the largest amounts of public and private capital to deploy on such efforts. Collaboration in this domain tied to the U.N. climate negotiations and agreement of 2015 are a good precedent for innovative collaboration in this area and may serve as a model for further coordination. While intellectual property theft and Russian sanctions have served as an impediment to technical information sharing in the past, the strategic and economic value of establishing greater information flow between these countries demands creative solutions to manage at least the intellectual property concerns. 

4. Expand bilateral energy cooperation between the United States and China. 

As the United States and China recognized at the 2015 bilateral Strategic and Economic Dialogue, “as the world’s largest producers and consumers of energy, [we share] common interests and responsibilities to ensure energy security and face common challenges.” Building on limited existing bilateral collaboration on energy that currently occurs, and a major success in uniting the two economies on climate change mitigation commitments as leaders of the Conference of the Parties to the U.N. Framework Convention on Climate Change meetings, U.S. policymakers should promote expanded energy trade with China; deepen exchanges of data and expertise on energy issues, including assisting China in playing a greater role as a price-maker in regional energy markets; and strengthen coordination on market stability mechanisms, especially strategic petroleum reserves. Many of these issues are discussed above in the context of recommending the establishment of a PEF, but given the deep confluence of shared energy and climate interests in the U.S.-China relationship, and the unique value that cultivating such interests may have on balancing other forms of competition between the two powers, we recommend a uniquely elevated focus on energy in the bilateral relationship. Additionally, expanded potential for bilateral investment will affirm for China the attractiveness of closer energy ties with the United States over Russia, a strategy that will clip Russia’s investment options and positively influence Washington’s strategic interests vis-a-vis Moscow. These various energy issues have, of course, been the subject of discussions between energy and economic officials from the U.S. and Chinese governments, including at the energy and finance ministerial level, as well as between energy diplomacy leaders, but this must be a greater priority at a higher level for foreign policy and security officials in the two governments as well. Specific recommendations include the following. 

Elevate discussion of conventional oil and gas trade and shared interests on energy markets in high-level U.S.-China engagements. This administration and the next should more strongly signal to Xi Jinping and the rest of China’s leadership the value and priority that the United States places on facilitating expanded energy trade between the two countries and on ensuring a secure energy commodity market for the United States and China, as well as other partners abroad. U.S. officials should elevate this key issue of discussion in the annual Strategic and Economic Dialogue as well as in State visits, and increase exchanges on the matter between the countries’ top diplomats and top energy ministry officials. For the U.S. policy establishment, delivering on this recommendation requires a broader belief in, and articulation of, the value of expanded bilateral trade in the first instance. This is an effort that is particularly challenging given the cooling tenor toward foreign trade in the U.S. domestic political arena as well as the deep U.S. security resistance toward engaging China on any strategic issue, including energy, given concerns about the threat China may pose to U.S. interests. 

U.S. and Chinese energy and financial regulatory counterparts must also begin a dialogue on energy trading activity globally and the need to apply basic regulations to growing Chinese trade in energy. Open interest in energy commodity trading on largely unregulated Chinese commodity exchanges is growing significantly, and several of the largest commodity contracts in the world are traded on Chinese exchanges. Given that interest in commodity trading in China will grow, and with it Chinese influence in energy commodity pricing, the U.S. policy leaders at the Commodity Futures Trading Commission and the Federal Trade Commission should engage counterparts in China in a technical dialogue about managing speculative and manipulative market activity. 

Support U.S.-China trade and investment. In addition to abetting China’s move away from coal, expanded U.S.-China trade in oil and gas, as well as energy efficiency technologies, would generate economic benefits for both sides, provide ballast in an increasingly competitive bilateral relationship, and may lessen some of the logic for China-Russia energy trade. The latter is of particular importance for the strong signal it will send globally about the value of transparent, market-related deals with U.S. entities rather than non-transparent deals with Russian counterparts that lack a commercial basis. 

The U.S. Trade Representative and the Treasury and State departments should move ahead with efforts to advance a U.S.-China Bilateral Investment Treaty that includes a framework for U.S. companies to make energy investments in China. Concluding this effort could catalyze greater energy commerce between the two countries by lending useful legal and policy parameters to this arena. Additionally, the dedicated bilateral negotiation necessary to finalize the treaty would, in practice, become a very useful forum for leaders from the two countries to affirm their positive orientation toward greater energy investment and their policy intent to enable greater activity in this area. 

At the ministerial level, continue to welcome Chinese investment in the U.S. energy sector and clearly communicate the process for approval of U.S. energy export projects, emphasizing the lack of political impediments to U.S.-China trade. U.S. energy resources are free to flow to China, pending Department of Energy findings that individual LNG export projects are in the public interest. However, many in China – even in NOCs and elite policy circles – labor under the misperception that China is, officially or secretly, banned from importing U.S. energy and will be among the first to be cut off from U.S. energy in a supply crisis. The United States should use existing U.S.-China high-level dialogues to persist in their efforts to correct this error. In such settings, U.S. officials can explain the export license application process in detail, including the delays to which non–free trade agreement countries are subject, and the criteria for a public interest finding. 

Additionally, U.S. officials should more strongly encourage the Chinese government to urge its own NOCs to bid for commercial projects in the United States beyond some of the minority shares and non-operator ventures in which Chinese companies are currently engaged. To give greater credibility to this encouragement, and feasibility that such investment could work, the U.S. Treasury Department could lead an effort to design and implement a legal regime modeled on the Defense Department’s Foreign Ownership, Control, or Influence regime to work with companies with foreign ownership or controlling interests operating in the United States. This regime would project a more constructive disposition toward Chinese investment efforts in the United States, with a focus on managing U.S. national security concerns related to sensitive technologies, and move away from the assumption that such security concerns are merely used as a barrier to prevent Chinese investments. 

Beyond in-country bilateral investment, U.S. officials could encourage bilateral energy cooperation in third countries through a forum to bring together commercial delegations active and interested in future investment abroad. U.S.-China joint energy ventures already exist in the Middle East and Southeast Asia, for example. Beyond this, and looking forward to a rebound in energy prices and investment activity, U.S. policymakers could promote greater bilateral commercial engagement related to emerging opportunities from the Middle East to the Asia-Pacific, two of the areas for future growth in upstream production as well as in downstream petrochemical and processing activities, that may be especially interesting to U.S. and Chinese investors over the coming years. 

The Treasury Department, in consultation with White House policy staff, should offer strategic guidance to the Export-Import Bank of the United States to consider and prioritize projects, particularly in the natural gas or LNG arena, that can support Chinese gas procurement and use. Specifically, this would focus on overseas LNG liquefaction projects, rather than receiving terminals in China, for which the Chinese do not require financing help. The Ex-Im Bank has historically been very active in LNG projects due to the involvement of U.S. companies as producers, builders, or equipment suppliers to LNG projects, and is in the position to unlock one of the United States’ greatest assets – finance – to contribute to energy security and U.S. strategic goals. China’s economy, industrial base, pollution profile, and perhaps retail energy market could benefit from such U.S. support, which would also build bilateral commercial and strategic ties in the energy domain. 

The State Department, USAID, Department of Commerce, and other agencies should pursue opportunities to work cooperatively with China on the One Belt, One Road initiative, as well as with the countries along the OBOR routes, on financial, commercial, and security matters. This effort should include information sharing between the United States and China related to Islamic extremism in Central Asia and other countries along the routes, to support China in acting if necessary. This can advance U.S. leverage in the region and help U.S. security planners to better understand dynamic changes occurring there. 

Deepen exchanges of data, research and development, and expertise. The United States should seek to deepen official data-sharing and technical exchange on energy market development beyond existing lines of effort to foster greater understanding of each other’s energy usage and demand and supply trajectories. The United States maintains an exchange program through which the Energy Information Administration (EIA) trains Chinese energy officials – 100 in 2015 – on data gathering and management. The EIA should expand this program in-step with its greater focus on international energy data and analysis, and EIA and DOE officials should urge China to share the fruits of its improved data capacity through public disclosure and in the bilateral relationship. More reliable and comprehensive data, particularly on demand for current fuels and demand growth projections, will better help China plan for and meet its climate goals. In combination with more robust dialogue on energy security, it will also help both sides foster greater understanding and limited coordination on shared energy market and supply interest.

The United States should also expand its Clean Energy Research Center with China to cover natural gas research. This may involve an expansion of the mandate of this Center to focus on natural gas as a bridge fuel to a lower-carbon economy. It would also help to align the research effort of this center with existing U.S.-China coordination on shale gas, enabling a greater focus on this energy area and the potential to take on larger collaborative initiatives by merging work from these two cooperative efforts. 

Strengthen coordination on oil market stability mechanisms. The United States should expand its existing limited cooperation with China on strategic petroleum reserves in an effort to establish shared principles for managing a supply disruption scenario. Particularly since global spare oil productive capacity is waning with lack of OPEC investment, and inventories and strategic reserves will be an increasingly important relief valve in a more volatile market and in any supply disruption scenario, it is more important than ever to bring the two largest oil consumers onto the same page on strategic reserves. China, as an associate member of the IEA, is not compelled by import coverage or supply coordination requirements as are full IEA members. Should it undertake hoarding behavior in a supply crisis, this would present a challenge to other consumer nations and the world economy. Particularly because efforts through the IEA on China’s strategic reserve have offered little practical progress, the United States should work directly with Beijing on this topic.

5. Address Russian coercive energy market activities abroad by expanding cooperation with European and other partners to bolster European energy resilience. 

U.S. energy diplomacy toward Europe, particularly over the last decade, has been heavily focused on constraining Russia’s commercial expansion into the European consumer market, rather than on prioritizing European energy resilience as the best means to counteract manipulative pricing arrangements. The latter would be a more pragmatic, less politicized, and more achievable goal and would effectively limit Russia’s freedom of action to dominate Eastern European energy pricing and economic conditions. A robust, well-resourced U.S. energy diplomacy strategy prioritizing European market resilience demands a greater focus on bolstering intra-European, national-level energy market reforms to expand competition, remove restrictions on pipeline interconnectors between European states, and promote commercially viable storage and transit investment, rather than focusing so exclusively on merely checking Gazprom’s pipeline expansion plans into Europe. Framing U.S. energy diplomacy in Europe as a strategy to constrain Gazprom’s pipeline investments has caused strife with European allies who see commercial benefit to the Nord Stream II project, for example, and it may allow European counterparts to demand concessions from the United States in exchange for opposing aspirational pipelines into Europe that Gazprom is unlikely to build in any case. Furthermore, an unyielding opposition to Gazprom may be more ideological than practical, distracting from market-based strategies that have proven effective at forcing Gazprom to decrease its prices – and manipulative leverage – in Eastern Europe. 

Some innovative leaders in the U.S. government have rightly adopted a technical focus on intra-European energy trading efficiency, and accessibility and diversity of supply, as the most effective way to build resiliency to Gazprom’s pricing threats or supply cutoffs, or indeed to any other energy market shock. However, this policy framework is not widely understood in the U.S. policymaking community, and is overshadowed by a focus on the tough security posture designed to counter Russian aggression in Europe with sanctions and a strengthened NATO. A focus on European energy market resiliency is not inconsistent with an aggressive security policy toward Russia, however, and these two frameworks should be leading facets of the contemporary U.S. approach to Russia. Specific recommendations follow. 

Elevate a focus on European energy resiliency in U.S. strategy toward Russia and transatlantic support to security allies. U.S. foreign policy, as well as energy diplomacy leaders, should elevate a focus on European energy resiliency as a pillar of U.S. strategic posture toward Russia. Primarily, this involves making the case, and exerting influence through diplomatic messaging, technical assistance, and development aid, to engage European political and regulatory officials in national capitals to advocate for opening markets to greater competition and freer flow of intra-European energy, particularly natural gas and electric power. Additionally, U.S. foreign policy and diplomatic leaders must leverage their expertise and assistance as security and economic partners to encourage investment in European pipeline spurs, storage facilities, and reverse-flow capacity to be able to move energy in more open energy market conditions. While special interests and incumbent business and political leaders, particularly in Eastern Europe, resist greater market competition for the loss of local influence it may confer, it is precisely this competition that will forcefully undermine Russian influence projection in the region. As an added benefit, a technical focus on European energy market resiliency as a powerful counter to monopolistic and manipulative pricing influence will send an important signal to China and others internationally about the value placed on liberal market norms by the United States and Europe. 

Exchange information with Saudi Arabia on its strategy to displace Russia’s energy supply share in Europe. U.S. leaders from the Energy Information Administration and the Department of State should engage Saudi Arabian oil ministry and state energy company Aramco leaders regarding their new push to expand oil delivery into the European market, focusing specifically on the competition this new Gulf oil supply presents to Russian oil delivery into Europe. Gathering information about the Saudi strategy to claim more of the European market, and the way in which Aramco contract pricing may force Russian suppliers to discount prices for their crude will give U.S. policymakers a more comprehensive understanding of Russia’s economic leverage in its key export market. In turn, this will better inform U.S. policy toward Russia, including the maintenance of sanctions and particular initiatives to liberalize European energy markets. Furthermore, it may give greater scope to U.S.-Saudi Arabia strategic cooperation if officials from both countries can incorporate both security considerations and commercial opportunities and challenges into their discourse. 

6. Maintain security commitments in the Asia-Pacific to protect energy market stability. 

The world energy map and the players shaping it are in flux, but maintaining stability in global markets is as important as ever. The United States should continue its historic role as the physical guarantor of global energy trade while adjusting to new realities. Broadly speaking, this means maintaining military superiority and forward presence necessary to ensure the free flow of energy through the strategic sea lanes of the Indian and Pacific oceans. The allocation of forces between the two regions will depend on many factors, of which SLOCs are only one. In particular, Washington should prepare to continue rebalancing its forces to the Western Pacific in response to heightened security competition there even though it means assuming somewhat more risk in the western sectors of the SLOCs. 

Meanwhile, both energy and geopolitical trends point to the inevitable growth in Chinese economic and security involvement outside of the Western Pacific. This greater scope of U.S.-China interactions presents new horizons for both cooperation and competition, and the United States should seek the former while also preparing for the latter. Through innovative security cooperation and low-cost presence enhancements, Washington should build multilateral, rules-based efforts to address nontraditional threats against Indian Ocean energy trade. It should acknowledge China’s legitimate interest in energy security and invite Beijing to join these initiatives. However, these arrangements will also enable flexibility in U.S. policy should China’s push beyond the Western Pacific generate security tensions.

On the Russia front, energy trends identified in this report will have different implications for which Washington will have to prepare. In the short term, modest China-Russia security cooperation will complicate U.S. defense planning for Asia-Pacific contingencies. In the long term, should Russia’s energy trade – and therefore its economic lifeblood – decline, Russia may either become more cooperative internationally or engage in diversionary aggression. In order to understand dynamic changes, U.S. civilian and military leaders should engage in the following strategy, security cooperation, and force posture activities. 

Comprehensively integrate economic energy analysis into the defense planning scenarios and other Defense Department planning processes. U.S. military planning cannot ignore economic and especially energy concerns. The government should provide appropriate resources for developing the requisite human capital and assimilating energy and economic analysis into defense scenario planning. This will help officials anticipate the full range of implications of military contingencies and U.S. responses to them. Planners should pay special attention to the potential consequences of disruptions to both seaborne and land-based energy trade, including those initiated by the United States itself. Installing these processes and capabilities in the Office of the Secretary of Defense is of highest priority, but it should also be put in place at the Joint Staff and considered in the composition of future administrations’ National Security Council staffs.

Retain U.S. and allied military superiority in the Western Pacific. China’s growing dependence on seaborne fossil fuels will tempt some to pursue defense strategies that cede the first island chain and instead rely on a distant blockade of Chinese shipping in the event of conflict. Doing so would not only do great damage to U.S. global prestige as a protector of markets, but also invites salami-slicing tactics that could raise the propensity for serious conflict further down the line. Instead, the United States should take the necessary steps to assure access to the first island chain and maximize freedom of action in the maritime, air, cyber/electromagnetic, and space domains. Washington should also weigh the benefits of building Asian partners’ independent capacity to deter Chinese coercion so as to reduce the likelihood of involvement in low-level crises.

Expand partnerships to bolster a transparent, rules-based system along increasingly consequential – and congested – trade routes. Engaging with the actors most affected by changes in the energy system will both amplify the benefits of cooperation and help to limit the downside potential for destabilizing competition. The United States should pursue constructive engagement at the bilateral and multilateral levels, and should include both dialogue and practical elements. It should:

  • Institute both energy- and China-related official dialogues with countries that lie along the Maritime Silk Road and Silk Road Economic Belt. These exchanges will help Washington understand and adapt to the security, as well as commercial, macroeconomic, and diplomatic developments associated with the implications of energy shifts, especially China’s increasing activism beyond the Western Pacific. Such relationships will also give the United States a broader array of options to exert influence, where appropriate, to counter gestures by Russia to project its influence in Central Asia or in countries of the Middle East.
  • Increase official engagement on energy and security issues with multilateral institutions along key energy trade routes. Following on its elevated relationship with ASEAN, Washington should seek expanded, if less comprehensive, engagement with the South Asian Association for Regional Cooperation, the Indian Ocean Rim Association, the East African Community, the Arctic Council, and others. Multilateralism demonstrates U.S. dedication to the region in question, signals commitment to a transparent, rules-based framework for regional governance, and helps shape the security agenda to elevate pressing issues.
  • Join with allies and partners to leverage technology and build networked transparency in key regions. For countries to arrive at solutions to common problems, they must first be aware of what is happening in increasingly crowded seas. The United States should lead its partners in using new technology to create “common operational pictures:” information-sharing networks that can address shared challenges that imperil energy trade, from piracy to extreme weather.

Seek opportunities for greater partnership with China on nontraditional security threats to sea lane security. Operating within the limits of U.S. law and with due attention to politically sensitive areas, U.S. defense leaders may be able to establish limited coordination with Chinese counterparts that can help to sustain communication and establish shared protocols on common threats. Due to tensions over China’s ongoing campaign to redefine freedom of the seas in maritime Asia, cooperation will be significantly easier outside the Western Pacific. As a result, it should expand gradually westward from the Gulf of Aden, where China has made significant contributions to international anti-piracy efforts. In order to forestall fears of a condominium, U.S.-China cooperation in sea-lane defense should occur within multilateral frameworks modeled on successful interactions between PLA forces and the Combined Maritime Forces under the U.S. Navy’s 5th Fleet. To ensure such exchanges are conducted in a safe and professional manner, both sides should ensure existing confidence-building and risk-reduction measures, such as the Code for Unplanned Encounters at Sea, are applied beyond the Western Pacific. 

Involving China extensively in U.S. provision of maritime security, including for energy shipment, through the crowded shipping lanes of the Asia-Pacific is infeasible and not attractive for the foreseeable future. The United States should plan to accept the greater share of responsibility and costs of providing this public good, reaping in return maritime influence and leadership, and the direct and indirect economic benefits of a secure flow of oil globally. 

Expand access and rotational presence agreements for U.S. forces along strategic energy trade routes. Implementing all of the above recommendations and enhancing U.S. leverage requires expanded but sustainable presence. As China and other players assume a greater role in the new power politics, Washington needs to ensure it has the appropriate foundation from which to pursue either outcome. Therefore, building on achievements of recent years, the United States should focus on attaining or expanding access and presence on such nodes as Australia’s Cocos Islands, India’s Andaman and Nicobar Islands, Diego Garcia, the Maldives, Seychelles, and Comoros.

The various policy recommendations outlined above can be of use implemented in whole or in part. They may support policy planning and execution at the executive and legislative level, and they may also be of use to the transition teams for the next U.S. president as they contemplate various policy choices on pressing energy and foreign policy issues linked particularly to Russia and China. 

  1. Calculations based on U.S. Energy Information Administration (EIA) “Short-Term Energy Outlook” Custom Table Builder, released April 12, 2016, using figures for 2015 production and historic figures for 2005 production.
  2. “BP Energy Outlook, 2016 Edition: Outlook to 2035,” (BP, 2016), 13.
  3. The World Bank Group, China Economic Update, June 2015 (updated July 3, 2015), http://www.worldbank.org/content/dam/Worldbank/document/EAP/China/ceu_06_15_en.pdf, 3.
  4. Amy Myers Jaffe, “Why the World’s Appetite for Oil Will Peak Soon,” The Wall Street Journal, May 5, 2015, http://www.wsj.com/articles/why-the-worlds-appetite-for-oil-will-peak-soon-1430881507.
  5. Alexander Korolev, “The Strategic Alignment between Russia and China: Myths and Reality,” The Asan Forum Open Forum blog, April 30, 2015, http://www.theasanforum.org/the-strategic-alignment-between-russia-and-china-myths-and-reality/; Alexander Gabuev, “Sino-Russian Trade After a Year of Sanctions,” ChinaFile, September 14, 2015, https://www.chinafile.com/reporting-opinion/features/sino-russian-trade-after-year-sanctions.
  6. In his 1980 State of the Union Address, President Jimmy Carter stated, “Let our position be absolutely clear: An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force,” which came to be known as the Carter Doctrine. See “The State of the Union Address Delivered Before a Joint Session of the Congress,” January 23, 1980, http://www.presidency.ucsb.edu/ws/?pid=33079.
  7. “Towards Energy Union: The Commission presents sustainable energy security package,” European Commission press release, February 16, 2016, http://europa.eu/rapid/press-release_IP-16-307_en.htm; James Henderson, “Gazprom—Is 2016 the Year for a Change of Pricing Strategy in Europe?” “Oxford Energy Comment” (Oxford Institute for Energy Studies, January 2016), 2.
  8. Selina Williams, Summer Said, and Benoit Faucon, “Russia and Saudi Arabia Battle for Control of European Oil Market,” The Wall Street Journal, December 1, 2015, http://www.wsj.com/articles/russia-and-saudi-arabia-battle-for-control-of-european-oil-market-1448947982.
  9. Dmitry Zhdannikov, “Iran’s oil storage struggle holds back exports to Europe,” Reuters, March 24, 2016, http://www.reuters.com/article/us-iran-oil-storage-idUSKCN0WQ1HR.
  10. Liquids and Refined Product Export Volume (Million Barrels Per Day, 2014 figures) U.S. reserve data is from EIA; Russia and Saudi Arabia reserves figures are from the Oil and Gas Journal. Crude data is from EIA Short-Term Energy Outlook, released May 10, 2016, https://www.eia.gov/forecasts/steo/query/, Lejla Villar, Oil Market Analyst at the Energy Information Agency, via email correspondence. Liquid data is from EIA Short-Term Energy Outlook, released May 10, 2016, https://www.eia.gov/forecasts/steo/query/; Lejla Villar, Oil Market Analyst at the Energy Information Agency, via email correspondence. Global rank for liquids EIA, International Energy Statistics, accessed April 13, 2016, http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=5&pid=53&aid=1&cid=regions&syid=2010&eyid=2015&unit=TBPD. For dry gas reserves data see EIA for the United States and Oil and Gas Journal for Russia and Saudi Arabia. For dry natural gas production see EIA, Barclays, “Saudi: Key Gas Start-Ups Increase Oil Field Flexibility,” MEES, 59, Issue 13 (April 1, 2016). For global rank of natural gas production see EIA, International Energy Statistics, accessed April 13, 2016, http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=3&pid=26&aid=1. For U.S. and Russia Liquids and Refined Product Export see BP Statistical Review of World Energy (June 2015), 19, http://www.bp.com/content/dam/bp/pdf/energy-economics/statistical-review-2015/bp-statistical-review-of-world-energy-2015-full-report.pdf, for Saudi Arabia see JODI Oil World Database (Primary Products Table) full version, accessed May 15, 2016, http://www.jodidb.org/TableViewer/tableView.aspx?ReportId=57431. For U.S. and Russia natural gas data see BP Statistical Review of World Energy, “Natural Gas,” (June 2015), 28-29, http://www.bp.com/content/dam/bp/pdf/energy-economics/statistical-review-2015/bp-statistical-review-of-world-energy-2015-natural-gas-section.pdf. For U.S. and Russia LNG production see BP Statistical Review of World Energy, “Natural Gas,” (June 2015), 28-29, http://www.bp.com/content/dam/bp/pdf/energy-economics/statistical-review-2015/bp-statistical-review-of-world-energy-2015-natural-gas-section.pdf. For U.S. oil production see “New York State Oil, Gas and Mineral Resources 2001,” Twenty-Ninth Annual Report (New York State Department of Environmental Resources, 2001); For Saudi Arabia see “History,” Chevron, accessed on May 10, 2016, https://www.chevron.com/about/history; For Russia see C. A. Drahulsky, “The Birth of Oil Production in Russia,” Standard and Quality, November 1, 2010, http://www.ria-stk.ru/mi/adetail.php?ID=45523.
  11. Ernest J. Moniz, Secretary of Energy, “Testimony of Secretary Ernest J. Moniz,” Statement to the Committee on Energy and Natural Resources, U.S. Senate, October 6, 2015, 3–4.
  12. Ernest Moniz, “Testimony of Secretary Ernest J. Moniz,” 5.
  13. Ibid.
  14. “Quadrennial Energy Review: Energy Transmission, Storage, and Distribution Infrastructure,” April 2015, 4–9.
  15. In a highly dynamic region, such a forum would bring together the world’s three largest economies, three of the four top global energy producers, and four out of the seven strongest global military powers. The World Bank, “GDP ranking,” accessed April 18, 2016, http://data.worldbank


  • Elizabeth Rosenberg

    Former Senior Fellow and Director, Energy, Economics and Security Program

    Elizabeth Rosenberg is a former Senior Fellow and Director of the Energy, Economics, and Security Program at the Center for a New American Security. In this capacity, she publ...

  • Ellie Maruyama

    Former Research Associate, Energy, Economics and Security Program

    Ellie Maruyama was a Research Associate in the Energy, Economics and Security Program at the Center for a New American Security (CNAS). Prior to joining CNAS, Ms. Maruyama wor...

  • Alexander Sullivan

    Adjunct Fellow, Indo-Pacific Security Program

    Alexander Sullivan is an Adjunct Fellow in the Indo-Pacific Security Program, where he focuses on US-China relations, maritime security, regional military modernization and U....

  • David Gordon

View All Reports View All Articles & Multimedia