Natural Gas

Natural Gas is expected to be the second fastest growing component of world energy
consumption, behind goal. Growth is projected in all regions, rising from 100 trillion cubic
feet in 2030. In particular, we will see robust growth in non- OECD Asia., Central Asia, and
Russia, with non- OECD Asia projected to have the highest growth rates. Natural Gas is
increasingly the fuel of choice for power generation.
Seventy -five per cent of the worlds natural gas is located in the Middle East, Central Asia,
and Russia. As for oil, the world gas consumers in Asia, North America, and Europe are
destined to be increasingly dependent on the Middle East for gas as its reserves-to-production
ratio far exceeds any other region. It is also worth noting the low reserves to-production
ratio in North America, which will drive the United States to be a significant future importer
of natural gas.
Increased dependence on extra-regional gas imports will transform the current natural gas
markets from regional to inter-regional markets: with new consumers entering the
marketplace. Three dynamics will change the market: consumption in India and China will
outpace domestic production within the next decade, making them majors players in the
natural gas market: new liquefied natural gas (LNG) infrastructure and tanker technology will
make longer-haul shipping cost-effective. The United States will be importing LNG from
Africa and the Middle East, and possibly Asia in the possible gas pipelines are connecting
regional markets, such as Russia and Kazakhastan to Chinese and East Asian Markets, or Iran
to India, and Myanmar to China.
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Coal
Coal consumption is projected to increase by 74 per cent between 2004 and 2030, and non-
OECD Asia, specifically India and China, will account for 85 of this growth. With abundant
indigenous coal supplies by both countries are well positioned to displace more expensive
fuels with coal in the power generation sector. Interestingly, China is exploring innovative
ways to use its abundant coal supply by investing in coal-to-liquid liquefaction technology

1
Andrew Forbes, Asian Energy Security: Regional Cooperation in the Malacca Strait(Canberra, Sea Power
Centre- Papers in Australian Maritime Affairs No. 23 , 2008), 6.

that turns low-quality coal into diesel. The first coal-to-liquid plant is scheduled to commence
production by the end of 2007.
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Nuclear
A number of non- OECD Asian countries operate nuclear power plants including China,
South Korea, India , Taiwan and Pakistan. In the past, plans for expansion have been
thwarted by opposition at the local level, financial constraints, safety concerns and
proliferation risks. However, the region is poised to experience robust growth in the nuclear
sector, with China , India and South Korea all planning to build many more plants. For
Example, China announced an ambitious plan to build new two sectors each year through to
2020 bringing Chinas total number of reactors to nearly 40. India has similar plans, which
may grow even larger when the Indo- United States civil nuclear nuclear agreement comes to
fruition.
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Third, Asia will replace North America and Europe as the critical markets for Arabian Gulf
Oil. Arabian Gulf exports to non- OECD Asia are set to triple by 2030. During the same
period, their exports to North America will double, but in contrast to Asia, North America
and Europe will depend on oil markets from a more balanced mix of suppliers. The United
States will import most of its energy from the Western Hemisphere and West Africa. And
Europes stagnant demand will be met by the North Sea , Russia, and North and West Africa.
We might anticipate as the Arabian Gulf- Asia geo-strategic link strengthens, United States
and European influence in the region might wane, depending on how events in Iraq, Iran and
Saudi Arabia unfold. The outlines of this strategic shift is already evident with King
Abdullahs first foreign trip to Asia in 2007, including visits to China, India, Malaysia where
energy agreements featured in the bilateral talks in each country. Saudi Arabia and other
producers are investing in downstream projects in Asias major markets to secure future
markets from their crude oil. These deals serve to solidify and deepen economic linkages that
could take on increasing strategic significance.
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Sixth, given Asias voracious demand for energy, countries will be faced with multiple
energy fronts, as opposed to the one or two they faced in the past few years. For Example, in

2
Andrew Forbes, Asian Energy Security: Regional Cooperation in the Malacca Strait(Canberra, Sea Power
Centre- Papers in Australian Maritime Affairs No. 23 , 2008), 6,7.
3
Andrew Forbes, Asian Energy Security: Regional Cooperation in the Malacca Strait(Canberra, Sea Power
Centre- Papers in Australian Maritime Affairs No. 23 , 2008), 7.
4
Andrew Forbes, Asian Energy Security: Regional Cooperation in the Malacca Strait(Canberra, Sea Power
Centre- Papers in Australian Maritime Affairs No. 23 , 2008), 8.
a decade India could import gas from three or four directions from the Middle East, Central
Asia, Bangladesh and Southeast Asia. Or in the case of China, its energy is already coming
from all directions the Middle East, Central Asia, the Russian Far East, Southeast Asia,
Africa and Latin America.
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Seventh, these multiple energy fronts will endanger significantly security vulnerabilities that
present a wide range of military challenges. The growing dependence on long-haul sea lanes
and offshore energy resources will ensure that energy strategies increasingly have a defensive
military component, particularly with a naval focus. A growing pressure to protect energy
transport routes will intensify if Indonesia destabilizes or if incidents of maritime terrorism in
the region increase, which is also a growing concerns among the Asian States. Plans for
ambitious pipelines projects, which are viewed as an alternative to dependence on the sea
lanes, also present security challenges. The proposed pipelines are projected to cross rugged
terrain, harsh climates, and politically unstable or remote areas. Pipelines linking the Russian
Far East to China or Japan; Central Asia to China; the Caspian and Iran to India; or a
complex gas pipeline network crisis- crossing Southeast Asia could be targets for terrorist
attacks or military competitors. The infrastructure will require protection and contingency
plans for responding to disruptions. Even more vulnerable will be the expanding energy
infrastructure across the region, such as refineries, LNG terminals, and sophisticated offshore
exploration and production facilities throughout Southeast Asia, the South and China Seas,
and the Bay of Bengal. The facilities cost millions, even billions of dollars, and in some
cases, are located in remote locations, making them difficult to protect. American Energy
analysts argue that an attack on an LNG terminal, refinery, or offshore installation could take
months to repair and bring back online and could cause severe environmental damage.
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Asias growing Appetite for hydrocarbons confronts regional militaries will energy security
vulnerabilities that will require a range of military capabilities, regional cooperation and
deliberate planning to be prepared for the potential range of military and emergency response
contingencies.
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5
Andrew Forbes, Asian Energy Security: Regional Cooperation in the Malacca Strait(Canberra, Sea Power
Centre- Papers in Australian Maritime Affairs No. 23 , 2008), 9.
6
Andrew Forbes, Asian Energy Security: Regional Cooperation in the Malacca Strait(Canberra, Sea Power
Centre- Papers in Australian Maritime Affairs No. 23 , 2008), 9.
7
Andrew Forbes, Asian Energy Security: Regional Cooperation in the Malacca Strait(Canberra, Sea Power
Centre- Papers in Australian Maritime Affairs No. 23 , 2008), 10.


Energy Supply
The Persian Gulf Countries produce over a quarter of the worlds oil while holding over half
of all crude reserves. Ninety per cent of Persian Gulf oil is transported by tanker through he
Strait of Hormuz into the Indian Ocean. Fifteen Million barrels per day (mbpd) transit the
strait, of which 13 mbpd is bound for Asia. LNG exports from the Persian Gulf come from
Oman, Qatar, and the UAE; while those from Africa predominantly use the Red Sea and
come from Algeria, Egypt, and Libya, with Nigerian exports primarily bound for Europe and
North America.
Oil tankers exiting the Strait of Hormuz, and oil and LNG tankers/ carriers departing from
African ports, are predominantly on the open ocean when transiting the Indian Ocean , except
where Strait of Hormuz traffic skirts the Malabar Coast near Bassas se Pedro off India before
passing Dondra Head near Sri Lanka. Tankers from the Red Sea skirt the island of Suqutra
before transiting via the Eight Degree Channel to Dondra Head, and around the Andaman and
Nicobar Islands near entrance to the Malacca Strait.
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Imperatives of Cargo and Energy Flows
The Indian Ocean forms the main transportation route for oil and liquefied natural gas from
West Asia and parts of Africa, to India, China and Japan. These energy importing states view
the SLOCs as their lifelines. At current consumption levels, the oil import dependence for
India is expected to become 82.2 per cent by 2010 and rising to 91.6 per cent by 2020, and
for rest of South Asia is expected to be 95.1 per cent and 96.1 per cent respectively.
Notwithstanding Chinas attempts at diversifying its energy supplies, its oil import
dependence is estimated to become 61 per cent in 2010 and 76.9 per cent in 2020.
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Country 1997 2010 2020
North America 44.6 52.4 58
China 22.3 61 76.9
India 57.4 85.2 91.6

8
Andrew Forbes, Asian Energy Security: Regional Cooperation in the Malacca Strait(Canberra, Sea Power
Centre- Papers in Australian Maritime Affairs No. 23 , 2008), 60.
9
Andrew Forbes, Asian Energy Security: Regional Cooperation in the Malacca Strait(Canberra, Sea Power
Centre- Papers in Australian Maritime Affairs No. 23 , 2008), 189
Rest of South Africa 87.2 95.1 96.1
Table 1: Oil import dependency of selected countries(%)
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The Energy and Resource Institute