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Prepared by the
Institute for the Analysis of Global Security

July 31, 2006
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Energy Security Current Issue

Wrestling the Russian Bear
Russia's curtailing deliveries of natural gas to Ukraine goes far beyond the bounds of a common commercial dispute between an energy supplying and an energy consuming nation. It is indicative of Russia's foreign policy vis-à-vis the Soviet Union's former allies spread across Central and Eastern Europe not to mention a warning shot across the bow of Central Asian energy exporters. IAGS Senior Fellow Dr. Kevin Rosner outlines necessary steps to neutralizing Russia's energy weapon.

Sino-Japanese competition for Russia's far east oil pipeline project
There are two significant energy trends underlying the competition between China and Japan for Russia's Far East oil pipeline project: the need to seek additional energy supplies and to pursue greater energy diversification. And for both China and Japan, Russian energy offers a significant additional supply source and contributes to greater diversification. But these trends in energy interests are matched by an equally dynamic and intense geopolitical rivalry, defined by a complex and contradictory set of converging and diverging national interests. Within this context, the competition between China and Japan, as well as the Russian role in exploiting this rivalry, is driven by the distinct energy interests of each country. IAGS Associate Fellow Richard Giragosian analyzes.

Sino-Japanese oil rivalry spills into Africa
China and Japan - the two giants of East Asia - are competing for energy resources around the globe. Their rivalry in the East China Sea, Russia, Central Asia and Southeast Asia has been well documented. Yet little has been written in Washington about the impact of Sino-Japanese rivalry in Africa.
With one-third of its top 15 oil suppliers in Africa, the United States ignores the challenges of this geopolitical dynamic at its peril. Joshua Eisenman and Devin T Stewart discuss.

China deals a blow to India's aspirations in Kazakhstan
The "unconditional" final ruling of October 26 2005 by the Alberta Court of Queen's Bench, Canada, in favour of China's China National Petroleum Corporation (CNPC) dealt a severe blow to the last Indian hope of acquiring PetroKazakhstan. The defeat in securing an important energy deal does not bode well for India's energy security concerns considering its growing energy needs and illustrates India's vulnerability in competing and securing depleting international energy sources. At the same time it opens up for greater debate the Indian energy minister's fervent argument that Asia's two emerging economic giants should co-operate rather than compete in securing international energy deals.

Oil puts Iran out of reach
As diplomatic rumbles regarding sanctions against Iran fill the airwaves, IAGS' Gal Luft notes that given Iran's key position as an oil supplier and the tightness of the oil market, Iran's influence on the world's economy makes it virtually untouchable.
No doubt, Iran is heavily dependent on petrodollars and denying it oil revenues would no doubt hurt its economy and might even spark social discontent. Oil revenues constitute over 80 percent of its total export earnings and 50 percent of its gross domestic product.
But the Iranians know that oil is their insurance policy and that the best way to forestall U.S. efforts in the United Nations is by getting into bed with energy hungry powers such as Japan and the two fastest growing energy consumers, China and India.
Threatening Iran with sanctions may well force it to flex its muscles by cutting its oil production and driving oil prices to new highs in order to remind the world how harmful such a policy could be.

On the technology front How utilities can save America from its oil addiction
Utility companies which have traditionally viewed themselves as providers of "power" for lighting homes or powering computers, can now break the dominance of Big Oil in the transportation energy sector and introduce much needed competition in the transportation fuel market. Gal Luft explains how.

Comparing Hydrogen and Electricity for Transmission, Storage and Transportation

Study: Coal based methanol is cheapest fuel for fuel cells
A recently completed study by University of Florida researchers for the Georgetown University fuel cell program assessed the the future overall costs of various fuel options for fuel cell vehicles. The primary fuel options analyzed by the study were hydrogen from natural gas, hydrogen from coal, and methanol from coal. The study concluded that methanol from coal was the cheapest option, by a factor of almost 50%.

Major improvement in fuel economy and range of Honda's fuel cell vehicles
The 2005 model Honda fuel cell vehicle achieves a nearly 20 percent improvement in its EPA fuel economy rating and a 33 percent gain in peak power (107 hp vs. 80 hp) compared to the 2004 model, and feature a number of important technological achievements on the road to commercialization of fuel cell vehicles.

Biodiesel fueled ships to cruise in Canada
A Canadian project will test the use of pure biodiesel (B100) as a fuel supply on a fleet of 12 boats of various types and sizes, 11 boats on pure biodiesel (B100) and one on a 5-percent blend (B5).

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Back Issues

India's Hidden Civil War: Consequences for Energy Security

Indian Prime Minister Manmohan Singh, an Oxford and Cambridge-trained economist not given to careless exaggeration, recently referred to a domestic political crisis as "the single biggest internal security challenge ever faced by our country". Yet despite the longtime prominence of this problem within India and its potentially catastrophic effects on India's energy sector, many energy analysts outside of India are unaware of its existence. The security challenge in question is posted by the Naxalites, a loosely organized group of "Maoists" who now have an estimated 20,000 soldiers under arms and are waging a war against the Indian state, terrorizing and destabilizing much of the Indian countryside. The success or failure of their campaign against the government will have profound consequences for India's stability, and, most particularly, its energy security. For the Naxalite insurgency is strongest precisely in the areas of India with the richest natural resources, especially the coal which powers the Indian economy.

Singh's blunt statement brought rare foreign coverage (including a New York Times article, which described the struggle as "looking increasingly like a civil war") to the Naxalite rebellion, which has festered for more than three decades in India's countryside. While the struggle is taking place far from Delhi's glitzy new suburbs or Bangalore's booming technology hub, its effects are increasingly being felt across India.

The motivations behind the Naxalite rebellion are complicated and are influenced by many local factors – and many "Naxalites" are merely criminals and mercenaries who have adopted a revolutionary pose for strategic reasons, But in essence, the core of Naxalite rebellion can be seen as a response by many India's poor (particularly in tribal communities) against a perceived expropriation of their natural resources by the Indian state. India's "coal mafias" largely control the industry, notorious for its poor infrastructure and corruption, while union leaders, mine managers and politicians routinely skim substantial profits from India's state-owned coal companies. Meanwhile the poor, largely tribal communities that make up much of the heart of India's coal country see precious little of the profits while suffering substantial environmental destruction and feeling the effects of public corruption.

The Naxalites have at least some presence in almost half of India's twenty-eight states, and in some of the poorer and most heavily tribal states, particularly Chhattisgarh, Andra Pradesh, Orissa, Jharkand and West Bengal they are a major political force. These five states account for approximately 85% of India's coal resources, and continued disruption and deterioration of the political environment in could have profound consequences for both India and its neighbors. Coal constitutes approximately 55% of India's current primary energy supply and approximately 75% of it's electricity generation, and a prolonged or excessively costly resource war in these states could cripple the Indian economy and alter the global import balance if India had to look elsewhere for energy resources.

In other words, while the U.S. worries about imported oil, which makes up roughly a quarter of U.S. primary energy supply, Naxalism puts almost half of India's total energy supply is at serious political risk. Much of the problem lies with the fact that the government of India owns the subsurface rights to all minerals including coal, a fact which infuriates the destitute tribal communities. Organizations such as the South Asian Intelligence Review have noted a high correlation between those districts with high natural resources, particularly coal and iron, and those districts facing Naxalite violence.

In recent months and years, there have been an increasing number of direct attacks by Naxalite rebels on the energy industry. Naxalites recently killed coal mine security officers in Chhattisgarh and last December, they burned vehicles from a coal survey team the Mineral Exploration Corporation of India. In a coal rich region of Andra Pradesh, Naxalites destroyed vast quantities of mining equipment in one of the state's most coal rich districts. In February, an explosive Depot (used for mining) in Chhattisgarh run by the National Mineral Development Corporation was attacked by rebels who killed eight members of the security force while making off with tons of ammunition.

And the Naxalite energy-related violence is expanding—India's Oil and Natural Gas Company (ONGC) has recently dramatically beefed up security at its facilities in Jharkand and Eastern Coalfields Limited, Central Coalfield's limited, Singareni Coalfields Limited and Neyveli Lignite Corporation, have all boosted security in response to warnings from government officials about Naxalite attacks. Meanwhile, Chhattisgarh's government last year signed almost $3 billion in agreements to build power plants and other energy-related infrastructure. But such agreements will surely be at risk (particularly those involving multinationals) if the violence does not cease. Naxalites frequently levy their own "taxes" on resource extraction on districts they control and many more ideological Naxalites are opposed to the development of additional coal mines and power plants at any price.

I recently spent a week in India's remote Chhattisgarh state, described by the Times as "the deadliest theater of the war" and while I attempted to see coal mining operations, my guide refused to take me on account of the extreme danger in coal-mining and production areas. While our surroundings were outwardly placid, we could not travel at night, and our overall itinerary and visit were dramatically truncated because of the danger of armed attacks. It was clear that rebel groups controlled much of the countryside, where according to numerous accounts, they essentially run a parallel government and administration. The local newspapers were filled daily with accounts of fatal battles between Naxalites and government forces. In parts of many districts, government officials have not visited for years, in fear of their lives.

The intensifying civil war in parts of India's countryside will have profound effects not just for India's energy security, but for the global economy as well. The growing Naxalite insurgency will bear close scrutiny over the coming months—and continued deterioration of security in India's coal heartland could have a significant impact on energy security in India and beyond.

Jeremy Carl, a former resident of New Delhi whose research focuses on energy in India and China, is a Ph.D. Candidate in the Interdisciplinary Program in Environment and Resources, Stanford University.