Skip to 0 minutes and 0 secondsThe main source of energy insecurity is the dependence on the Middle East. Currently nearly two-thirds of the Gulf’s oil exports go to Asia, as demand there rapidly absorbs a growing share of the Gulf’s export due to lower transportation costs and a perennial “Asian Premium” in oil prices compared to the “west of Suez” markets. This level of dependence makes Asia Pacific economies extremely vulnerable to policy change, political upheaval, or warfare in Middle-Eastern countries that could disrupt oil supplies.
New Asian energy security challenges
In Asia, Russia was expected to compete with the Middle East, North Africa, and Latin America as the provider of same-grade crude oil, and with the US, in particular, regarding LNG exports.
Russian efforts to advance into the South Korean and Japanese energy markets have been less successful.
The post-Fukushima impact
Long-standing energy concerns of China, Japan, and South Korea were roused again with the Fukushima nuclear disaster in 2011. The Fukushima disaster resulted in the disruption of nuclear power operations. This, in turn, sent Japanese utilities scrambling to offset the shortfall in nuclear capacity. Japan swapped out nuclear fuel in favor of liquefied natural gas (LNG). The increase in LNG and oil consumption in Asia further pulled up the prices. The Fukushima disaster and the energy challenges arising from it have prompted Tokyo to refocus its attention on the Middle East. Japan also planned on maximizing its savings by importing inexpensive fuel from the United States.
The low oil price impact
China aggressively worked to enhance its energy security by forming an alliance with Russia and diversifying its piped natural gas(PNG) suppliers, for instance, by introducing gas from Turkmenistan in 2010 and Myanmar in 2014.
Oil imports from Saudi Arabia fell from more than 19 percent of the Chinese energy mix in 2013 to almost 15 percent in 2015, largely due to increased supplies from Russia . By 2020, an estimated 68 billion cubic meters (bcm) of Russian gas will be supplied through pipelines based on PNG contracts signed in May and November 2014.
© Younkyoo Kim, Hanyang University