China – One of the top 5 oil and gas geopolitical hotspots

Susan L. Sakmar's picture
Susan L. Sakmar, Independent consultant, author and adjunct law professor, University of Houston Law Center
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Over the past week, there’s been no shortage of events rocking the energy and financial markets. Here’s a look at 3 of the top 5 oil and gas geopolitical hotspots:

GREECE – The Future of Europe?

The Greek debt crisis has been the news of the day ever since Greece became the first developed country to default on an IMF loan on June 30. Since then, the financial and oil markets have been in turmoil as talks of a Greek exit (or Grexit) from the EU have called into question the very future of Europe. While a new bailout for Greece was agreed to in principle on July 12, Greece’s ultimate fate in the EU remains unclear. This has stoked fears that Greece could ultimately turn to Russia for support. This could create security issues for Europe and abroad especially since Greece is a NATO member. Another concern for the West is the preliminary agreement Greece signed with Russia in June for cooperation on a pipeline to bring Russian gas to Europe via Greece and Turkey. While the fate of the so-called “Turk or Turkish Stream” gas pipeline remains to be seen, so does the future of Greece.

RUSSIA – Pipelines, Sanctions and Ukraine 

Russia’s state-owned Gazprom, Europe’s biggest natural-gas supplier, announced in May that it had reached a deal with the Turkish government on the construction of the Turk Stream pipeline. The US reportedly has been trying to dissuade Greece from signing on to the project over worries that it would strengthen Russia’s energy dominance in the region. Instead, the US wants Greece to support the Trans Adriatic Pipeline (TAP), which would bring gas from Azerbaijan to Europe via Turkey, Greece, Albania and the Adriatic Sea.

While the US-EU sanctions levied against Russia in response to its actions in Crimea and Ukraine were supposed to limit Russia’s energy ambitions, it appears Russia has only been emboldened to establish new energy and economic partnerships.

CHINA – The World’s Largest Energy Consumer

Last year, China and Russia rocked the energy world when they announced a $400 billion gas deal that would send gas from Russia’s far east to China. The deal is part of China’s broader efforts to create a new Silk Road to increase trade with Central and Southeast Asia. China’s plans include an Asian Infrastructure Investment Bank (AIIB), which was launched earlier this year amid growing tensions between the US and its allies after many of them, including Britain, agreed to join the AIIB. Thus far, China has announced a $46 billion infrastructure-spending plan in Pakistan, which would ultimately create a corridor to transport oil to China through the Baluchistan in Pakistan. For now, however, all eyes are on China to see if the country can sustain domestic economic growth after the recent collapse of its stock market.

Do you agree with Susan? What are the top oil and gas geopolitical hotspots to watch this year? Let us know your views below.

This is part 1 of a two-part article. Shortly we will be posting about the other 2 most significant oil and gas geopolitical hotspots. Follow us to discover more.

Susan Sakmar will be joining us at Gastech Singapore in October.

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