Energy Risks in North Africa and the Middle East
May 24, 2012
The Burke Chair is issuing a new, expanded edition of its overview of Energy Risks in North Africa and the Middle East. This analysis is available on the CSIS web site at http://csis.org/files/publication/120524_MENA_Threat_Brief.pdf
Section One focuses on demand issues and their impact on global and regional demand for liquid fuels, impact on supply, price issues, and the special conditions affecting US demand for energy imports. It indicates that growth in Asian demand for MENA oil and gas exports will be high through 2035 (the cutoff date for projections), creating a “demand vulnerability” in periods of moderate to high economic growth that will keep prices high and stimulate major increases in production. It also shows that US political posturing about energy independence is just that – dishonest political opportunism that does not reflect the total different results of US government modeling and analysis.
Section Two deals with the risks that MENA dependence on oil exports creates for MENA states. It highlights the economic problems of over-dependence on petroleum exports, the problems created by energy subsidies and their imp0eact in cutting export capacity, and the growing risk posed by gross inefficiency in energy use and pollution.
Section Three covers North Africa. It indicates that the projected growth in Algerian and Libyan supply will he limited by global standards, but be of importance to Europe. It also indicates that Algeria and Libya are moderate risk countries because of the political uncertainties in each state and their uncertain ability to attract sustained energy investment over time.
Section Four Covers Egypt and the Levant. It indicates that Egypt will increase some aspect of gas projection, but that both Egypt and Syria are steadily declining oil producers, and increases in Egyptian gas exports may have a local impact but only a token impact on world markets. Egypt emerges as a moderate risk country and Syria as a high risk country.
Section Five covers the Gulf and Yemen. It shows that the Gulf remains the key source of additional oil and gas production in spite of major projected gains in the rest of the world’s output. It also shows that these increases are highly dependent on two high risk countries – Iran and Iraq. Yemen is a high risk country, but one with negligible and declining impact on world exports. The Southern Gulf producers –Kuwait, Oman, Qatar, the UAE and Saudi Arabia -- face some individual problems but are rate as low risk with the exception of the potential impact of a future conflict in the Gulf.
Section Six covers the risk of a war involving Iran. There is no way to predict the form such a conflict might take or to estimate a probability in any meaningful mathematical model. The risk of some clash in the coming three years is, however, at least moderate and the risk of a serious clash over time will rise to high if Iran does not abandon its nuclear program, and improve its relations with its neighbors.
The first five sections attempt to summarize and quantify key trends in energy production and exports and the key factors shaping risks in a given country and area. Section Six focuses on the build-up and capability of Iranian forces “to close the Gulf” and present a range of threats from low-level asymmetric warfare, to a Gulf-wide conflict that could involve the use of long-range missiles..
Several related Burke Chair studies provide additional information:
- The Underlying Causes of Stability and Unrest in the Middle East and North Africa: An Analytic Survey provides a comprehensive overview of the broader problems in security, internal stability, demographics, economics, and governance causing instability in the MENA region and each oil exporting state. It is available on the CSIS web site at http://csis.org/files/publication/120514_MENA_Stability.pdf
- The Gulf Military Balance describes the overall military balance affecting the security of Gulf oil and gas exports. It is available on the CSIS web sties at http://csis.org/files/publication/120518_Gulf_Military_Balance_2012.pdf
- US and Iranian Strategic Competition: The Conventional and Asymmetric Dimensions provides a detailed analysis of the range of threats Iran poses to the secure flow of exports through the Gulf. It is available on the CSIS web sties at http://csis.org/files/publication/120221_Iran_Gulf_MilBal_ConvAsym.pdf
- US and Iranian Strategic Competition: The Missile and Nuclear Provides a detailed analysis of the threat Iranian ling-range missiles and nuclear programs , and the tisk of preventive war and an Israeli-Iranian nuclear arms race, pose to the secure flow of exports through the Gulf. It is available on the CSIS web sties at http://csis.org/files/publication/120222_Iran_Gulf_Mil_Bal_II_WMD.pdf.