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61 the national bureau of asian research nbr conference report | october 2009 The New Energy Silk Road: Implications for the United States Mikkal E. Herberg Panelists for this discussion were DAN BLUMENTHAL, U.S-China Economic and Security Review Commission; EDWARD CHOW, Center for Strategic and International Studies; and MIKKAL HERBERG, The National Bureau of Asian Research. 63 IMPLICATIONS FOR THE UNITED STATES u HERBERG T he conference papers and discussion broadly confirmed the view that the Asian energy importers, particularly China, will play an increasingly important role in the energy development of the Middle East and Persian Gulf that is also likely to drive an expanding political, economic, and diplomatic role for these states. This ultimately is bound to have major strategic and energy security implications for the United States, the dominant outside power in the region for the past 50 years. The United States is the reigning global energy superpower, the leader in establishing the global institutions and arrangements governing energy today, and the guarantor of the sea lanes of communication (SLOC) in the Gulf region. The United States is also deeply embedded in the strategic future of the region through the U.S.-Saudi strategic alliance, costly ongoing engagement over nearly two decades in Iraq, as the leader in the Western effort to isolate Iran and frustrate that country’s nuclear development, and as the key power in efforts to resolve the Arab-Israeli conflict. And the Middle East is destined to remain at the center of global oil and liquefied natural gas (LNG) production capacity, markets, and prices. Until now Asia has played only a significant energy role in the region through substantial Japanese and Korean investment as well as by providing enormous markets for Gulf crude oil and LNG, and more recently, through growing oil and gas exports to and investment from China and India. Asia’s political and strategic footprint in the Gulf, however, has been quite muted. Japan and Korea, for a wide range of reasons, have neither been capable nor interested in seeking to project power and influence in the region and have been content to rely on U.S. efforts to maintain stable and reliable energy flows from the region. China’s and India’s more recent involvement in the region, following on their growing energy security interests, has also been modest, with neither country being interested in taking responsibility for a complex and conflict-prone region and also largely content to freeride on the United States. Nevertheless, both states have been reluctantly drawn into the region’s conflicts through energy ties with Iran, forcing these countries into a difficult balancing act between their energy security interests and the risks of seriously damaging relations with the United States. But as Asia’s dependence on Gulf energy inexorably grows over the next decade and the Gulf states increasingly see their energy market and investment future growing in Asia, it seems likely that this “new silk road” is sowing the seeds of significant change in the underlying terrain on which the United States has been operating for the past 40 years. The implications span both the global energy markets and the future of regional and global geopolitics. For energy markets, while the Gulf has been and will remain the “swing producer” for world oil supplies; developing Asia, and especially China, have now become the global “swing consumer,” replacing the United States in this role. This is fundamentally changing the outlook for global energy investment, resource access, oil prices, and the role of national oil companies (NOC), particularly in an era likely to be characterized by much higher energy prices and intense competition to access supplies. In particular, China’s enormous and fast-growing demand for oil and petrochemicals and its burgeoning investment capacity, combined with the growing competitiveness and capabilities of the Chinese NOCs and oil services industry, suggest that China’s future energy investment role and impact in the Gulf will far outweigh any role in the past played by Japan or Korea. Chinese as well as Indian NOCs are likely to be far more successful and competitive than Japan’s NOCs and more ambitious in scale than Korean energy companies. This converges closely with the Gulf’s, particularly Saudi Arabia’s, long-term vision of transforming into a global energy and petrochemical superpower—a new stage of Saudi ambition and growth strategy in which China 64 nbr conference report u october 2009 and India are key huge growth markets. The energy...


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