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2005 January 19 Wednesday
China Seeking Indian Ocean Oil Sea Route Naval Bases

Bill Gertz reveals some of the details of a report entitled "Energy Futures in Asia" about China's naval strategy written by Booz Allen Hamilton for the US DOD.

The internal report stated that China is adopting a "string of pearls" strategy of bases and diplomatic ties stretching from the Middle East to southern China that includes a new naval base under construction at the Pakistani port of Gwadar.

...

China is building naval bases in Burma and has electronic intelligence gathering facilities on islands in the Bay of Bengal and near the Strait of Malacca. Beijing also supplied Burma with "billions of dollars in military assistance to support a de facto military alliance," the report said.

The report projects world oil demand growing from 75 million barrels per day currently to 120 million barrels per day by 2025 with 80% of that increase going to Asian customers. Suppose that is correct. It suggests that approximately 80% of all economic growth in the next 20 years will be in Asia. Though possibly the existing Western nations will experience economic growth that provides a higher ratio of increased output to increased energy use. As it stands now China's ratio of economic output to energy use is lower than America's (sorry no cite for this which is from memory). But I would expect their efficiency of energy use to increase with time.

But I have a more basic problem with a projection of such a large increase in oil production. For too many countries oil field production is declining. Between now and 2025 more countries will reach their peak oil production and their production will begin to decline. So the remaining countries (chiefly in the Middle East) will have to massively expand their production. A production increase of 45 million barrels per day is more than 4 times total current Saudi production. So how is such an increase in the cards? I'm skeptical.

Oil is China's Achilles Heel from the standpoint of military strategy. Even if they use their massive economic growth rate to build a much larger blue water navy (and I expect they will do exactly that) it is far easier to deny the use of the oceans to some nation than to protect the sea lanes. On the other hand, even if the US and China clash over Taiwan the US would have a difficult time denying oil to China while still allowing oil to get through to other nations in East Asia. Though conceivably the US could allow tankers with carefully selected crews of known loyalties to go around New Guinea headed toward Japan and South Korea.

Share |      By Randall Parker at 2005 January 19 03:23 PM  Politics Grand Strategy


Comments
Rich Walden said at January 19, 2005 6:16 PM:

I can't comment on on the projected use of energy, (gas, oil, coal) however I can speak to the supply of natural resouces. One of the rules of thumb in mining is that if the real price of a commodity will double the economic resource base will grow tenfold. If you accept that productivity increases will continue for some like timeline as you project energy uses, it becomes economic to extract resources that are not presently profitable. In a like manner the use of energy sources not presently feasible will come into play. An example I read about recently was a flexible organic photovoltaic cell that was thirty percent efficient. This is about five times as efficent as presently available commercially. Conversely if the cost of energy rises, economic theory says useage will fall, however it is also likely that usage efficiencies will increase, thereby cutting cost per unit of product.

Just to keep things in prospective, There are two energy sources in the United States and off shore. In western Missouri and eastern Kansas there is a petroleum resource that could run as high as 100 billion barrels. It is presently non-economic because it is will not flow at its present tempature. Off shore of the Carolinas there are deposits of methane hydrate with possible energy equivalent of one trillion barrels of petroleum. No one wants to touch it because of possible eruptive releases of methane. Just imagine how much carbon dioxide you could generate with that.

Stephen said at January 19, 2005 9:46 PM:

Rich, could also add in the Alaskan reserves that remain untapped, but while could be opened up if the political winds change.

As for the sea lanes issue, China doesn't need sea lanes to transport oil from the middle east - plenty of room for a pipeline or two running entirely overland.

Its the US that is vulnerable to an ocean blockade of oil... Particularly, once China gets its sea legs.

PacRim Jim said at January 19, 2005 11:42 PM:

China's chokehold strategy will have to unintended consequences: Japan and Korea will depend more on nuclear power, and more importantly, Japan will be forced to develop nuclear weapons to maintain its flow of oil. Anyone remember why Japan attacked Pearl Harbor?

Stephen said at January 20, 2005 3:12 AM:

Haven't ever been to Japan, but I won't let that stop me pontificating. My understanding is that there's a massive public aversion to nukes among the Japanese (for obvious historical reasons). That said, I'm sure they've got all of the key ingredients and designs stashed away somewhere and could have a nuke or two within a couple of months of getting the go ahead. But what would Japan actually do with nukes? Given the disparity in area of the two countries, Japan might just realise that a few nukes hitting China would be survivable for China, but a few nukes hitting Japan would turn the entire nation to ashes - MAD just can't apply. In fact, far from trying to secure the resources militarily, maybe the Japanese would prefer to starve than risk a hot war??

The real fight will be between the US and China over Japan. For instance, what if China declares that Japan is now in its sphere of influence, and pressures the United States to withdraw back across the Pacific? Another scenario would be if Japan starts to look toward China as its best customer, thereby lessening US influence. Post cold war there's been plenty of pressure in Japan for the closure of US basis, China might try to stir that up.

Overall, my guess is that China is far too integrated into the world economy for it to want to play the old Soviet / US game of seeing who can piss highest. Anyway, I think the world needs a second superpower - monopolies just aren't good.

And hell, talking about monopoly superpowers, what happened to that peace dividend we were supposed to get once the Soviets collapsed?

Kenelm Digby said at January 20, 2005 3:33 AM:

I believe that China right now is planning a a massive project of building standardised nuclear reactors of the HTGR type, which are inherently safer and more efficient than the coventional water moderated types that predominate in the west.
Here, as in many other ways, China's elevated average IQ per person,strong leadership,good management and disciplined workforce should prevail over any projected "energy crisis".
It is notable that the western nations who did so much to pioneer nuclear technology, have largely abandoned its research and development due to political weakness and much "wooly-minded" thinking.

Stephen said at January 20, 2005 6:01 AM:

Government and the nuclear industry just failed to make a convincing risk / benefit case - not surprising given 3 Mile Island's 'china syndrome', Windscales's radioactive cows and Chernobyl's ghost city. The public just won't buy the 'It can't happen here' argument, or the 'its far enough away that an accident won't effect you' argument. So the public sees the nuclear industry as effectively being dirtier than the coal industry. Also everyone is scared shitless about uranium and plutonium - and I suspect rightly so for Pu.

Its an interesting dilemma for the west - on the one hand we need to find a substitute for oil to wean ourselves off of the middle east, but on the other hand we desperately don't wan't the nuclear industry to grow because the middle east might get their hands on the tech. Catch-22.

Kurt said at January 20, 2005 9:26 AM:

Randall,

Yes, indeed, the Chinese are investing in Burma. They are building an ocean port there (both military and commercial, the commercial one being much larger) and are building an expressway (freeway) from Yunnan province to that port. The Chinese want a port on the Indian ocean, not just for oil and military purposes, but also to increase trade capability in that part of the world (shipping from there to the EU becomes less expensive).

I am not hung up about "peak oil". As Rich has pointed out, there is lots and lots of oil. "Proven" reserves are based on the price of oil and tend to go up as the price of oil goes up. He is also correct that the gas hydrates offer a huge supply of natural gas. There are gas hydrates off the coast of Washington state and in the Juan DeFuca straits. The Japanese are investing heavily in hydrate extraction technology, with the expectation of being energy independent by 2015. Presummably, the Koreans and Chinese are doing the same.

F-T (fisher-tropsch) coal to diesel process becomes cost effective at USD30 per barrel and the Chinese have licensed a "nano-catalyst" technology from an American nanotech start-up that does this conversion for less cost than F-T. The Japanese have a "nano" catalyst technology for converting natural gas into liquid fuel and have built pilot production plants in Iran. Iran has lots of natural gas and close commercial ties to Japan.

Also, there is nuclear power, which is being adopted widely through East Asia.

Another point about the Middle-east is that the Saudies may have "cooked the books" on the actual reserves on their Ganwan oil field. If this is true, much of the world's supply of oil will not come from the Middle-east. You see, the Middle-east has lots of oil, but much of it is in reserves that are as far underground as those in other places, thus making it expensive oil. Everyone buys their oil from the Middle-east because it is the only place with cheap oil, not the only place with oil.

The organic solar cells that convert IR into electricity are a usefull technology. However, it is unclear to me if they will be cost competitive with other energy sources, especially for baseline power (24/7). The average power density of sunlight (presummably, this includes the IR spectrum) at the equator is 1.3KWatts per square meter. In mid-latitudes (like the U.S.) this would drop to around 300 Watts per square meter. For a standard U.S. home, 50 square meters of these organic films is needed, which translates into around 550 square feet of roof space. Then you need the energy storage system for nighttime. If the organic solar cells and the energy storage system is cheap enough, this is actually doable for residential use. However, you would still want to be connected to the grid as back up.

Stephen said at January 20, 2005 8:59 PM:

Looks like fusion is a significant step closer...
http://www.rpi.edu/web/News/press_releases/2004/lahey.htm#cool

Basically its a method to contain the plasma which doesn't need all that messing around with magnetic fields.


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