Mr Joergen Oerstroem Moeller sharing on the supply and demand of fossil fuels in the world and the repercussions on geopolitics and geoeconomics. (Source: ISEAS – Yusof Ishak Institute)
SUMMARY OF THE SEMINAR
In 2012, US was the third biggest net importer of fossil fuel. In 2023, it will be a net exporter. This is a swing over 10 years of global net import/net export of fossil fuels on a scale never seen before.
The main reason is an almost explosive rise in US production of Liquefied Natural Gas (LNG) based on fracking technology. The higher supply cannot be sold at a reasonable price unless some existing suppliers are squeezed out and a market ready to buy found.
On the supply side this explains US policies in the Gulf vis-à-vis Qatar and Iran both major suppliers of fossil fuel with Iran coming back to the market after the agreement about nuclear issues led to sanctions being lifted.
On the demand side the Chinese market will show the highest demand growth and turn into the biggest importer of LNG. China will demand something in return for giving US a share of its market and not go so far as being dependent on the US. China and the US look for mutual advantages, but the situation is asymmetrical. China can turn to other suppliers, while it will be difficult for the US to sell its higher output at a reasonable price without access to the Chinese market.
Dr Tang Siew Mun, moderator of the seminar, with Mr Joergen Oerstroem Moeller. (Source: ISEAS – Yusof Ishak Institute)
It looks likely that the US – Saudi Arabian understanding to manage the global energy market, which existed until 2014 will be revived. It collapsed due to an attempt by Saudi Arabia to make fracking unprofitable, which failed, and the nuclear deal with Iran, which created ambiguity about US strategy in the Middle East. A new understanding will position US as the main global supplier of LNG and Saudi Arabia as the main global supplier of oil.
Two opposing ‘military’ alliances have emerged in the region. One around the US, Saudi Arabia, United Arab Emirates, Bahrain, and Egypt with some kind of tacit Israeli support. Another one among Iran, Turkey, and Russia. Proxy wars in Yemen, Syria, and Lebanon have been underway for some years. What is on stake is who shall be the main power in the region and control a major share of the world’s output of oil and gas.
Energy is the canary in the coal mine announcing a US wanting to be less dependent on the rest of the world and realigning commitments to the global system with benefits. The response is a US less globally orientated and more ‘autarkic’.
Geoeconomics and geopolitics undergo its biggest change over the last 25 years with huge implications recasting economic weight among countries, breaking up existing alliances, and pointing to nations increasingly pursuing own interests downgrading efforts to maintain the global steering system.
A total of 45 people attended the seminar. (Source: ISEAS – Yusof Ishak Institute)