IAGS logo Energy Security
Prepared by the
Institute for the Analysis of Global Security

May 24, 2004

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Useful Reference:

Iraq Pipeline Watch

Iraqi pipeline attacks go unreported

Blasts target Iraqi oil terminals

Why Gas Prices May Stay Sky High

BW: The Trouble With Gushing Oil Demand

Sea anti-terror law could disrupt OPEC oil exports

Gaddafi Used Oil Wealth to Fund Terror Groups

Islamic terror group in Hungary received Saudi funding

Call to Jihad rising on Europe's streets

The growth of radical Islam in Central Asia

35 Churches destroyed by Muslim mob in Kosovo

WSJ: Asia's Thirst for Oil

LNG: A clean fuel, but a potential terror weapon

Sino-Iranian LNG deal in pipeline

Booming China's crude oil imports soar

SEC questions oil giants' reserves

China: Daqing faces oil output exhaustion

Oil declining, Colombia offers new deal in Houston

Maritime Sector Vulnerable to Devastating Terrorist Attacks

Bangaladesh: Armed forces deployed at 4 key oil, gas installations

China's parliament demands action oil crisis

Government of Equatorial Guinea accused Of pilfering millions Of oil dollars

Andrew Sullivan: Tax gas more

Charles Krauthammer: Tax and drill

IEA urges phase-out of biofuel import tariffs

Electricity from coal GE Energy Ups Ante in Coal Gasification

Breathing new life into coal industry

Electricity as a transportation fuel DaimlerChrysler's plug-in hybrid electric van

Hybrid Vehicles

Car list: Top Ten Fuel Misers

Fuel Cell Developers

Summary of changes to leaner energy bill

2003/2004 Energy Legislation

Back Issues

IN THIS ISSUE: (summaries below, click links for full articles)
Around the world

China and US should set up a strategic dialogue on energy issues
Interview with Dr. Gal Luft of the Institute for the Analysis of Global Security, originally published by 21st Century Business Herald in Chinese.

A crude threat
Conduits to 40 percent of the world's oil across some of the world's most volatile regions, pipelines are a real prize for terrorists. A simple explosive device can put a critical section of pipeline out of operation for weeks.
The terrorist campaign against Iraq's pipelines demonstrates that pipeline attacks are no longer a tactic but part of a sustained, orchestrated effort that can deliver a significant strategic gain. They can also cause significant damage to the global oil market.
Next in line to emulate the insurgents in Iraq could well be Islamist terrorist groups operating in Central Asia, among them Chechen separatists and the Islamic Party of Liberation, a group that seeks to carry out a holy war against the West and is a suspect in the recent wave of deadly attacks in Uzbekistan.

Chilly response to U.S. plan to deploy forces in the Strait of Malacca
Testimony in a congressional hearing by the top U.S. military officer in the Asia Pacific region, Admiral Thomas Fargo, saying that American counter terrorism forces might be deployed in the Malacca Strait has sparked a wave of angry responses from Indonesia and Malaysia, the countries separated by the strait.
Whether something is profoundly wrong in the dialogue between the U.S. and the two Asian powers is an important question in itself, but the real issue is what is the best mechanism to secure the world's most important shipping corridor. One quarter of world trade and half of the world's oil and two thirds of liquefied natural gas move through the Strait of Malacca each day. Terrorism experts have long feared for the safety of shipping traveling the strait. In recent years al-Qaeda-linked groups have already proved that they see ships as potential targets. Following the attack on the French tanker Limburg off the coast of Yemen in October 2002 al-Qaeda issued a statement saying: "by hitting the oil tanker in Yemen the Mujahadeen hit the secret line-the provision line-and the feeding to the artery of the life of the Crusader nation."

Highlights from the Department of Energy’s International Energy Outlook 2004-2025
The Energy Information Administration (EIA,) the analytic arm of the U.S. Department of Energy, released its annual International Energy Outlook 2004-2025 (IEO2004). The report projects that world energy consumption will increase by 54 percent by 2025, with fastest increase in energy consumption among the developing nations of the world, primarily China and India.
Overall, the EIA projects a positive future for the energy market. Though demand for energy is growing at a staggering rate, EIA projects it will be met by supply, albeit at higher prices. The EIA analysis is based on the assumption that the world's oil resource base is substantial and that it will not peak before 2037. If true, there is enough room for significant expansion of the oil market. But the EIA, by its own admission, has no mechanism to conduct reliable, independent reserve data analysis. Like other agencies it relies on data provided by petroleum ministries of oil producing countries, which are often deliberately exaggerated, and on data provided by oil companies. As the recent Royal Dutch/Shell scandal showed, reserve data by major companies may be overstated. On March 18, the company slashed its reserve estimate by 21%.

North Sea oil is declining
Since the 1970s North Sea oil has not only been a major source of wealth for both the British and Norwegian economies but also a way for Europe to cut its dependence on Middle East oil. With severe wind gusts and waves 30 metres high, the North Sea has been one of the most challenging areas of oil exploration and recovery. Despite the challenges, the North Sea has been a key component of the increase in non-OPEC oil production over the last 20 years. Now many of the major fields in the North Sea are in decline and the North Sea is about to lose its prominent role as one of the world's leading oil domains.

Terror's Big Prize
Since September 11, pipelines, tankers, refineries and oil terminals have been attacked frequently. In October 2001 Tamil Tigers separatists carried out a coordinated suicide attack involving five boats on an oil tanker off the coast of northern Sri Lanka killing seven people. A year later, Al Qaeda attackers badly holed the French supertanker Limburg off the coast of Yemen, killing a sailor. Except for a sharp increase in maritime insurance premiums in these regions these attacks had marginal strategic consequences. But as Gal Luft explains in a recent NY Sun article, in at least two cases oil terrorism could have rattled the world.

Libya: changing its spots?
As the second-largest oil producer in Africa behind Nigeria, Libya holds 36 billion barrels of proven oil reserves, almost three percent of the known world total. But analysts say that only 25 percent of the country has been explored for oil and gas, and up to 100 billion barrels can be found. Libyan crude oil is particularly attractive due to its very low sulphur content, which requires much less refining than higher sulphur oil. It is extremely high quality crude, whose characteristics are not easily found elsewhere. Despite its unique treasure, Libya's production capacity is relatively small, standing on 1.5 mbd of crude, or 2% of world supplies. This is less than 50% of the country's 1970 production peak level, which was around 3.3 million barrels per day.
One reason the country's oil production has been so modest in relation to its reserve base is that since the 1988 Lockerbie bombing Libya had been under U.S. and UN sanctions which hindered its ability to generate enough investment to develop its oil sector. Libya's decision to embark on a rapprochement with the U.S came at unsurprisingly perfect timing, just as concessions for major U.S. oil companies were about to expire. IAGS Associate Fellow Dr. Cyril Widdershoven discusses.

On the technology front

Fuel Cell power plant installed at NJ College
FuelCell Energy, Inc. and its U.S. distribution partner, PPL Energy Plus, which controls about 11,500 megawatts of generating capacity in the United States, announced the installation of a Direct FuelCell® (DFC®) power plant at New Jersey college. The DFC300A power plant will provide 250 kilowatts of electric power as well as heat, to several buildings on the campus. The fuel cell will supply about 90 percent of the daily power requirements for three buildings. It also will supply 20 percent of the heating for the college's central heating loop of six buildings. The college estimates saving approximately $60,000 in annual energy costs by generating electricity on-site and recovering waste heat from the fuel cell.

Biomass-to-Ethanol Progress
Ethanol, also known as grain alcohol, is an alcohol fuel that can be used to power flexible fuel vehicles. Today, ethanol is made by fermenting agricultural products such as corn, sugar cane, or sugar beet. These feedstocks, however, account for but a small portion of the total crop. Production of ethanol from cellulosic biomass such as corn leaves and stalks has the potential to augment the feedstocks in the existing industry and become the technology of the future for fuel ethanol production. The enzyme costs of converting cellulosic biomass into sugars for fuel ethanol production have been reduced approximately twenty-fold with technology developed by the National Renewable Energy Laboratory (NREL) and Denmark based Novozymes, biotech-based leader in enzymes and microorganisms.

EU study: Methanol from biomass - competitive with gasoline
A study of a new patented Swedish technology concluded that the alchohol fuel methanol can be produced from biomass via black liquor gasification at a cost competitive with that of gasoline and diesel. Methanol, also known as wood alchohol, can be used to fuel flexible fuel vehicles, and since it is rich in hydrogen and has physical characteristics similar to gasoline, can also be used as a hydrogen carrier fuel to power fuel cell vehicles.

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