1.0 INTRODUCTION Energy is one of the major inputs for the economic development of any country.

In the case of the developing countries, the energy sector assumes a critical importance in view of the ever increasing energy needs requiring huge investments to meet them. Coal, oil, gas and nuclear energy are the major sources of primary energy, followed by renewable combustible wastes (biomass, animal products, municipal wastes, and industrial wastes), hydro, and other sources.

As demand grows, oil and natural gas become strategic commodities susceptible to being used for geopolitical leverage. Alternative energy sources have the potential to become viable substitutes, but making them available at a scale that reduces global dependence on fossil fuels will take time. Meanwhile, global competition for oil and natural gas is intensifying as new players enter the market; suppliers are increasingly seeking to exploit their resources also for political ends; and consumers are exploring new ways to guarantee sources of supply.

The world energy map is changing. Projected energy demand will come increasingly from developing and emerging economies, as will supply. The global energy future is also distinguished by an increasing concentration of energy suppliers and demand centers, which are geographically farther apart; requiring increased investment, longer transport routes, and raising security and environmental concerns. There are criteria of the global energy scenario which are global energy scenario, the future, the challenges, energy security issues/ challenges of oil and gas security and the geopolitics issues in the aspect of international Oil and Gas Trading in Asia Pacific, Europe and North America, Japan and Asian Country.

2.0 DISCUSSION 2.1 GLOBAL ENERGY SCENARIO Energy is a vital input for economic development and sustenance of modern economy. It is important to global economic stability and growth. Recently, the global energy scenario represents a picture of concern. The adverse effects on environment caused by the production and consumption of energy have resulted in severe environmental impacts across the world. The supply of energy is expected to remain sufficient in the next years. However, imbalance of energy consumption is prevalent around the world. Energy consumption is high in most advanced countries. On the other hand, the developing countries need to consume more energy to ensure economic growth. According to estimates, energy consumption in developing countries is only one-tenth of that in the advanced countries. The economic development of many countries is stalled due to energy insufficiency. In 1999, the total energy supply of primary energy in the world was 9,744.48 MTOE (Million Tons of Oil Equivalent). According to estimates of 1999, the total supply of energy in the world in 2010 is projected to be 11,500 MTOE and that in 2020 is expected to be 13,700 MTOE. The contribution of different energy sources to the total supply of energy in the world is shown in Figure 2.1.
6.80% 2.30% 11.10% 0.50%

Oil 35.10% Coal Natural Gas Renewable Combustible Wastes Nuclear Hydro

20.70% 23.50%

Figure 2.1: The contribution of different energy sources to the total supply of energy in the world (EconomyWatch, 2010). Based on Figure 2.1, the major energy source in the world is oil followed by coal and natural gas. Combustible wastes include animal products; biomass and industrial wastes contributed

11.1 % of the total supply of energy in the world while nuclear, hydro, and other sources only contributed small amount of energy in the world. 2.1.1 Asia Asia is the biggest region in the world and resulted the energy consumption in Asia is the most higher compared to the total energy consumption in the world. The energy consumption among Asian countries reveals a mixed resource-use pattern. Asia is dependent to coal, oil and natural gas as the primary energy sources. Coal, for instance, contributes for 45% of the primary energy in Asia, compared to only 20% in the rest of the world. When China and India are excluded from the overall Asian statistics, the Asia-Pacific region primary energy mix is significantly different; the region becomes a predominant oil consumer, 54% of its energy mix held by oil, compared to 40% of the rest of the worlds energy shares held by oil. 2.1.1.1 Coal in Asia Universal coal consumption currently grows 1.7 times above 1995 levels, with the AsiaPacific regions consumption growing at a faster rate than that of any other region. Although the rest of Asia moves gradually toward a decrease in coal consumption as a share of primary energy needs, China and India will continue to be dependent on coal as the primary fuel source. Asias coal reserves are contributed to one-third of world coal reserves and expected to comfortably meet the projected growth in demand for more than 100 years. Due to reasonably easy transportation and domestic abundance, the region itself supplies most of the coal it consumes. Australia contributes for more than two-thirds of Asias coal exports. Indonesia and China, while abundant in coal, are less likely to continue as major coal exporters. Despite Indonesias current problems slowing from the financial crisis, the states projected growth in domestic coal consumption and possible limitations on the amount of export quality coal suggest a slowdown in the growth of coal exports. Chinas rate of growth of exports is questionable as well due to transportation, extraction, and technological upgrade issues.

2.1.1.2 Oil in Asia Consumption of oil, however, is likely to remain steady at/or perhaps increase beyond about 37% of Asias energy mix. In 1997, the Asia-Pacific region consumed 19,525 thousand barrels of oil per day, or 27% of the world total. Although universal growth in oil demand is 3

expected rising the oil prices over the next two decades (from US$11 per barrel in 1999 to over US$22 per barrel in 2020), oil prices are expected to stay reasonably low. The main reason for such a prediction is that non-OPEC oil-producing countries will be able to continue to develop their export capacities through advances in oil technology. If the price of oil remains reasonably low, oils share of primary energy in Asia could increase by as much as four percentage points, from 37-41% by 2020. By 2000, Asias oil demand alone will contribute for more than 50% of the universal increase. Chinas oil consumption is expected to increase 2.6 times, while Indias and the rest of developing Asias are expected to double. As economic growth recovers in ASEAN countries hit by the current financial crisis, oil demand growth in this sub region is expected to accelerate to 6% annually. Between 1996 and 2010, Asia will require as much as 40 million additional barrels per day (b/d) during the same period in which Asias productive capacity of crude oil is quickly decreasing. 2.1.1.3 Natural Gas in Asia Many resource experts claim that natural gas will serve as the critical primary energy source for the world in the 21st century. Some even refer to the new era as the "Gas Century." Of all other primary energy sources, the universal use of natural gas is expected to grow most rapidly, by 3.3% annually over the next 25 years. Natural gas has fewer negative environmental effects than other fossil fuels and is considered a highly efficient fuel for generating electricity. In fact, much of the future growth in gas demand will be for electricity generation, as combined-cycle gas-fired generators require shorter construction periods and are more efficient than fossil fuel generators or nuclear power plants. Natural gas today provides 9% of Asias total energy needs; when China and India are excluded, Asia consumes 15% of natural gas as a share of its primary energy sources. Presently, the world depends much more on natural gas to meet its total energy requirements (29%) than does the Asia-Pacific region, but that is likely to change given that Asias natural gas market is rich in reserves and as yet largely underdeveloped or untouched. Natural gas consumption in Asia is projected to grow at a rate of 5-6% per year between 1998 and 2020, assuming a regional gas network is well-known in the medium term. The lack of regional pipelines and the infrastructure necessary to transport natural gas to markets remain major obstacles to rapid, short-term consumption of natural gas. A number of pipeline proposals are under consideration by private investors and governments. Rich in 4

oil and natural gas, the newly independent and the worlds largest gas exporter, Central Asian states and Russia are likely to become major sources of energy for Asian markets such as China, Korea, and Japan through a proposed network of pipelines connecting Siberia with Northeast Asia. The more ambitious projects propose to deliver gas from Central Asia through Afghanistan into Pakistan and India. There are currently about nine or ten pipeline proposals that are routed eastward, each project ranging in price between US$1.2-20 billion. Of the proposals under consideration, it is highly unlikely that more than one or two will actually be built. Given the difficulties of extracting and transporting natural gas to the market, this resource alternative still holds more promise for future energy needs than meeting the energy requirements of today. The overall trend in energy resources is toward lower long-term prices, and a more consistent flow of energy supplies. The overall energy mix of the Asia-Pacific region is weighted toward coal due to large coal reserves in Asia and heavy dependence on coal in China and India; crude oil remains the primary energy source for Asia when China and India are excluded. Over the next ten to twenty years, however, Asias energy mix is likely to shift toward greater consumption of natural gas if a regional pipeline network is in place. The potential for alternative hydrocarbon fuel resources such as coal bed methane is high in the region, particularly in China, Australia, and India, but the relatively high costs associated with developing commercial coal bed methane projects make it unlikely to serve as a major resource by 2020. 2.1.2 Asia Pacific

44.1 119 916.2 Oil Natural Gas 1071.5 225.8 Coal Nuclear Energy Hydroelectric

Figure 2.2: Primary energy consumption in the Asia Pacific region, 1997 in MTOE (BP Statistical Review of World Energy, 1998) 5

The Asia Pacific region, led by China, Japan and India, will represent the worlds largest energy market in the next decade. Technological advances and a more sophisticated energy market today have led to a growing reliance on natural gas and nuclear power relative to the regions traditional sources of energy, coal and oil. However, coal and oil remain the regions primary energy sources, with the rate of growth of oil demand set to increase considerably in the next decade. 2.1.3 Europe

13%

4% 41%

Oil Natural Gas Coal Nuclear Energy

18%

24%

Hydroelectricity

Figure 2.3: EUs Primary energy supply, 2004 Europe is a resource-poor region, which possesses only approximately 0.6 % of the worlds proven reserves of oil, 2.0 % of the worlds natural gas reserves and 19.5 % of proven coal reserves. European Union (EU) is therefore a net importer of energy. Apart from fossil fuel resources, 17.8 % of the worlds capacity for refining crude oil into petroleum products and 18.4 % of the worlds electric generating capacity can be found here. However, it should be noted that another source estimates proven coal reserves to be only at about 4 % with similar estimations for proven reserves for oil and gas. Oil provided 41 % of Europes energy in 2004, followed by natural gas (24 %), coal (18 %), nuclear energy (13 %) and hydroelectricity (4 %). Figure 2.3 gives the breakdown for the various energy sources. Total consumption and fuel mix are listed in Table 2.1 for the topfive energy consumers in Europe. Germany, France, UK, Italy and Spain consume more than two-thirds of Europes energy. 6

Table 2.1: Top-five Energy Consuming Countries in Europe

2.1.4 North America

61.9 195 1006.2

560.9

Oil Natural Gas Coal Nuclear Energy

666.2

Hydroelectric

Figure 2.4: Primary Energy Supply in North America, 1997 in MTOE (BP Statistical Review of World Energy, 1998) In North America region, still oil led the primary energy supply with 1006.2 MTOE followed by natural gas (666.2 MTOE) and coal (560.9 MTOE). It showed how the important of oil and gas industry in this decade and this energy sources are expected to rise in the next decade. With the gradually increasing of technological advanced, the oil and natural gas become the primary energy sources. In addition, natural gas has fewer negative environmental effects than other fossil fuels and is considered a highly efficient fuel for generating electricity.

2.1.5 Japan

8.1 83.4 Oil 89.8 266.4 Natural Gas Coal Nuclear Energy 58.6 Hydroelectric

Figure 2.5: Primary energy consumption in the Japan, 1997 in MTOE (BP Statistical Review of World Energy, 1998). Japan, the worlds second largest and Asias most powerful economy remains highly reliant on foreign suppliers for its energy resources. Japans primary energy sources today are oil, coal, and gas. Although Japan was heavily dependent on oil during the 1970s, its share of oil consumption exceeded 70% at times during this decade and it pioneered trade in liquefied natural gas (LNG), sharply increasing the share of natural gas in the countrys primary energy supply from 5% in 1980 to 12% in 1998. Today, Japan is the worlds largest importer of LNG, accounting for 61.2% of total global LNG imports in 1996. Despite the rise in LNG consumption, Japans primary energy source is oil, which accounts for about 53% of its total energy needs, followed by coal (18%), nuclear energy (16%), natural gas (12%), and hydroelectric fuel (2%). Japans energy mix remains heavily oil-reliant because it possesses only incidental indigenous fossil fuel reserves and production. Its heavy reliance on oil is due to direct burning of crude for power generation. In terms of the outlook for Japans resource needs, the share of oil is expected to decrease while that of natural gas will increase, with the role of nuclear power remaining uncertain. Although electricity generation will be increasingly met by LNG imports, Japans consumption of oil is predicted to rise significantly, and a much greater amount of the resource will travel by sea, primarily from the Middle East. While still heavily reliant on oil, Japan in recent years has dramatically reduced its dependency from 77.4% in 1973 to 55.8% in 1995.

2.2 FUTURE GLOBAL ENERGY Future energy demand and supply are subject to numerous uncertainties most of which are difficult to predict. Such as energy prices, particularly oil prices, global economic growth rate, demographic changes, technological advances, government policies and consumer behavior. These studies were published by IEA in the Energy Technology Perspectives 2008-scenarios and strategies to 2050. 2.2.1 Economics Growth Rate and Supply In all IEA scenarios, world economy is expected to grow at annual average rate of 3.3% until 2050 quadrupling world GDP to $227 trillion. The economics growth rates in developing countries are expected to be much higher than the developed ones. For example, European and Japanese economy will double and the North American economy will grow to 2.5 times of the currents level. But in some developing countries such as China and India GDP could grow as ten fold between now 2050. Higher economics growth means higher standard of living for the global community. As peoples incomes, so does their demand for goods and services as well as energy. This will put an unsustainable pressure on natural resources and on the environment unless energy demand is decoupled from economics grow and more renewable resources are used. Even with advances in efficiency, rising populations and expanding economies will produce a net increase in global energy demand. Demand for all forms of energy is projected to rise at an average annual rate of 0.9 percent a year from 2010 to 2040. Oil will remain the worlds top energy source, led by 70-percent growth in liquid petroleum demand in Non OECD nations. The fastest-growing major energy source will be natural gas, with global demand rising by about 60 percent from 2010 to 2040. By 2025, natural gas will have risen to become the second most widely used source of energy worldwide. Demand for coal, on the other hand, will peak around 2025 and then decline, as improved efficiency couples with a shift to less carbon-intensive energies, particularly in the electricity generation sector. This shift will be led by the OECD, but even China, which today accounts for close to 50 percent of global coal demand, will see its coal usage fall by more than 10 percent through 2040. This would mark the first long-term decline in global coal usage since the start of the Industrial Revolution. Nonetheless, oil, gas and coal combined account for about four-fifths of the fuel mix throughout the Outlook period.

Global demand for the least carbon-intensive fuels such as natural gas, nuclear and renewable will rise at a faster than-average rate. Nuclear power will grow on average at about 2.2 percent a year. A substantial increase, but lower than projections prior to the 2011 tsunami damage to the Fukushima plant in Japan. Wind, solar and biofuels also will see strong growth. By 2040, they will account for about 4 percent of global demand. Growth in wind power is especially rapid. Wind is the fastest-growing energy source in the Outlook period, rising at about 8 percent a year or more than 900 percent over the period. The primary energy supply: In the Asian countries especially in China and India, the primary energy supply will be still highly dependent on coal in the forecasting period, while substitution from oil to the natural gas advances in G7 nations. In the entire world, the oil and coal share of the primary energy decreases from the current state by 4-5 points, resulting 34.4% and 21.9% respectively in 2050. On the other hand, the natural gas share expands from 24.4% in 2000 to 34.0% in 2050. According to WEPM, oil resources will not be depleted in the next five decades because the demand simulated by WEPM will be smaller than remaining conventional oil reserves.

Figure 2.6: Global energy demand by type (EIA, International Energy Outlook 2006).

10

Figure 2.7: OECD energy demand versus Non OECD energy demand Global energy demand to be about 30 percent higher in 2040 compared to 2010. While that is a significant increase, and meeting it will require trillions of dollars in investment and advances in energy technology, growth in energy use would be more than four times that amount were it not for expected gains in energy efficiency across the worlds economies. The power of efficiency can be seen most clearly in the more mature economies of the OECD where energy demand will remain essentially flat through 2040 even as GDP nearly doubles. But these gains will not be enough to offset the rise in energy demand associated with having five-sixths of the worlds population accelerating its progress toward better living standards and greater prosperity. Non OECD energy demand rising by nearly 60 percent. However, even by 2040, per-capita energy use in these countries will be about 60 percent less than in the OECD.

2.2.2 Oil Prices

Energy prices normally respond to changes in demand and supply. However, oil prices are affected not only by global demand for oil, but also on the uncertain future of oil supply, the value of U.S dollar, as well as political factors which could lead to short term supply

11

disruption. Oil demand is directly related to economic development. As peoples incomes rise, they will use more energy for heating, cooling, lighting appliances and particularly transportation. They also demand more goods and services. Figure 2.8 illustrates EIA 2008 forecast. As this figure shows, there are three price scenarios. In the reference scenario, oil price will reach $130 per barrel (in 2007 dollars) by 2030. This rise is primarily due to decline in non OPEC production beyond 2016. As this figure indicates, there is a wide gap between the Low and High scenarios. The price of a barrel of oil in 20303 could be low as $50 to as high as %200 per barrel (in 2007 dollars). This wide range of prices is due to uncertainties on the availability and cost of non OPEC OIL, OPEC productions policies and the supply of non conventional liquids.

Figure 2.8: World oil prices, 1980-2030 (EIA, 2008). There is limited supply capability of international oil. On one hand, as a non-renewable energy the total amount of petroleum resource is limited, on the basis of a statistic, it doesnt exist newfound large oil field in recent 20 years, thats the reason why the oil proved reserves is very hard to increase substantially; on the other hand, the oil production capacity, including the capacity of exploration, development, transportation, refining, marketing and other stages, isnt increasing fast enough to keep up with the oil consumption and the capacity of production increasing in oil producing countries is obviously deficient at present; third, oil production cost would affect the supply quantity in the oil market by affecting the inter-period production allocation decisions of producers.

12

This study is to obtain the future trend of world energy supply and demand and energy prices, and evaluate the possibility of resource depletion such as oil in the next five decades. One of the most characterized features of WEPM is that international fossil fuel prices are endogenously determined from the demand and supply balances of world markets. Endogenous price determination enables us to forecast the energy prices that adjusted to the trend of world energy supply and demand. The oil price (2002 US dollar in real term) goes without major change until 2025. From 2025 the oil price rises as supply of the conventional type oil is stringent and OPEC share expands, leading to 36.8 dollar per barrel in 2050. The LNG price of Asia is slightly higher than that of oil prices. Moreover, the coal price will decrease in real term after the latter half of the projection period, because of fuel shifts to the natural gas etc (IEA, 2007). 2.2.3 Global Energy-Related Carbon Dioxide (CO2) Emissions Will Grow Slowly, Then Level off Around 2030 Analyzing the future trend of global energy supply and demand is important for Japan because it depends on energy resource from foreign countries. There are concerns that the energy demand increase in Asia especially in China may accelerate the global warming and the depletion of fossil fuel resource such as oil. Quantitative approach to these points is indispensable to propose Japans energy supply and demand strategy and preventive measures to global warming. The amount of the CO2 emission: CO2 emission originated from energy consumption increases to 1.7 times in 2050 compared to that in 2000, and becomes 38.4 billion tons (CO2 conversion). 70 percent of this increment is due to Asia and this regions share of the emission of the world goes up from 24% in 2000 to 42% in 2050. The CO2 emissions have in fact risen strongly in recent years. Worldwide emission levels in 2008 were 37 percent higher than in 1990 and 25 percent higher than in 2000. While the EU (EU-27) was able to lower emission levels between 1990 and 2008 by 13 percent, those of the United States in that period rose by 8.3 percent. The principal reasons are that under the two scenarios based on established (current policies) or recently amended and/or announced policies (new policies), world primary energy demand would continue to grow strongly, and all fossil fuels would significantly expand. Global warming has already been happening for some time, with major worldwide implications for desertification, water supplies, internal and international migration, and violent conflicts, particularly over access to water and land. This is likely to escalate further: a growth in the concentration of CO2 in

13

the atmosphere in coming years is all but certain. But the implications of this for global and regional climate are full of uncertainties, though with a significant Table 2.2: World primary energy demand, by fuel, different scenarios (IEA World Energy Outlook, 2010) New Policies Scenario 1980 1792 3107 1234 186 148 749 12 7229 2008 3315 459 2596 712 276 1225 89 12271 2020 3955 4346 3132 968 376 1501 268 14556 2035 3934 4662 3748 1273 476 1975 699 16748 Current Scenario 2020 4307 4443 3166 915 364 1461 239 14896 Policies 2035 5281 5026 4039 1081 439 1715 468 18048

coal Oil Gas Nuclear Hydro Biomass Oher renwables total

Figure 2.9: Distribution of world CO2 emissions from energy use (2006)

14

2.3 THE CHALLENGES OF OIL AND GAS INDUSTRY 2.3.1 Asia Pacific Malaysia is one of the worlds largest natural gas and crude oil reserves. Nowadays, Malaysia is currently facing the challenge which is production of gas from indigenous sources is expected to decline in a decade, based on current reserves. In order to keep long term energy supplies, more reserves will be developed to replace gas volume from the depleted fields. However, the future gas development will be more challenges due to the several characteristic of reserve fields such as: High cost of development High CO2 content ranging from 12% to 40% Smaller fields and those fields are scattered far from existing developed fields.

Another challenges for Malaysia is requires technology advance in order to explore new reservoirs and improving the amount of hydrocarbon recovered from existing sources. In addition, one upcoming production is in deep water (water depth more than 1000ft or 30m). To explore the hydrocarbon resources in these area, advanced technology to Malaysia are required. This technology would cover aspect such as the ability to drill wells in deep waters and ability to analyze and install sea bottom facilities to deliver the hydrocarbon to the topside facilities at sea level. Definitely, to install the advance technology will requires high cost (Razmahwata, 2005). 2.3.2 Europe In the Europe countries, the Russian oil and gas industry faces many challenges. Most of the challenges in the Russian is regarding to the transportation of product. In this country, the main transportation after rail is a river. Instead of that, the Russian have winter season. In Siberia, most rivers are frozen for a substantial of the year. So, the rail is only way to transport the products. However, for shipping via rail is an expensive transportation for many oil and oil refinery product and there are limits on the size of equipment that can be transported by rail. Besides that, product pipelines are few. Therefore, few new oil refineries are built long distances from their local markets.

15

Another challenge is to import foreign specialized equipment for the oil industry. Many foreign suppliers are unfamiliar with the Russian system of state standards and the associated required approvals for installation and operation. Moreover, certain Russian companies are not familiar with licensor requirements in the developed world. 2.3.3 North America According to Greg Stringham, Canadas oil sands industry took off in the 1990s and today Canada ranks second only to Saudi Arabia in proven oil reserves. Today Canada is already the number one supplier of oil and natural gas to the U.S. market, ahead of Saudi Arabia, Venezuela, and others. However, there are several challenges facing oil sands developers such as operating costs for oil sands are higher than those for conventional production. Moreover, oil sands production has to compete with domestic conventional crude. The operating cost for oil sand is higher due to the requires new technology to reduce energy consumption, such as injecting light hydrocarbons to dilute the bitumen in the ground to allow it to flow at lower temperatures. The industry requires technologies that could replace natural gas altogether, such as the gasification, which holds the potential to turn petroleum coke into a stable energy supply. Another challenge is shortage of skilled labor in the oil sand industry. According to Ashar, there is currently a need for up to 25,000 skilled laborers. There is a particularly acute shortage of welders, engineers, and specialized construction workers. Besides that, the major issue in this industry is environmental challenge. The growth in production has driven an increase in total net air emissions, land disturbance, and water use. Thus, the oil sand developers must be aware and able to manage the environmental impact of their operations is critical if they are to continue to retain permission to operate 2.3.4 Japan As we know that, Japan is the third largest oil consumer in the world behind the United States and China and third larger net importer of the crude oil. Thus, in order to reduce the consumption of crude oil, Japan has relied heavily on nuclear power for decades, with its reactors providing almost 30 percent of electricity needs. Nowadays, Japan currently has 54 operating nuclear reactors with a total installed generating capacity around 49 GW, making

16

it third largest nuclear power generator in the world behind the United States and France (Japan Energy Data, Statistic And Analysis). So, one of the big challenges that Japan is currently facing is natural disaster like tsunami, flooding and earthquake. The natural disasters can cause some reactors damage and other facilities. Thus, the Japan has stumbled into an energy crisis. The challenge is whether Japan is going to be able to cover its power needs or not. Without power nuclear, Japan has to back on fossil fuel like oil and natural gas that means import. In fact, in 2011 Japan ran a trade deficit for the first time in years largely because of all the fossil fuels it had to import. In the first three months of 2012 alone, Japans natural gas imports increase 18 percent over the previous year, totaling $67 billion. Another challenge is if Japans not going to use its reactors, then it cant just leave them sitting there forever. Decommissioning 52 reactors would be a massive task, including disposing of the leftover nuclear material. Storing nuclear waste on-site was a major reason why the Fukushima disaster was so dangerous. This will take years, maybe decades to clean up (Scott Bittle and Jean Johnson, 2012).

2.3.5 Asian Countries Irans combined oil and gas reserves are probably the highest in the world and are matched only by Russia and Saudi Arabia. Based on official statistics, Irans oil reserves are over 130 billion barrels, which allows the country to produce more than 5 million barrels of oil per day for over 50 years (Ghorban, 2009).

However, there are several major challenges that Iran are facing currently. From day to day, Iran has to address the rapid decline in oil production from the old fields, which is currently estimated to be over half a million barrels per day each year. This major problem lead to the challenge that requires to transfer technology advance in enhanced oil recovery techniques, development of gas resources to be injected into old oil fields, and huge capital investment in developing new oil fields. If the political circumstances improve and the right economic incentives are offered, the transfer of technology and the much needed investment would be forthcoming.

17

Another challenge is the current structure of the oil and gas industry in Iran is not suited to deal with developments in the world oil and gas sector that have taken place in the past 30 years. It can be seen that, after 100 years of oil and gas production, refining and transportation, private and even state Iranian companies are not fully capable of undertaking major upstream or downstream projects without relying on foreign help. Consequently, the Iran government have to depend to the international finance and participation from foreign energy companies to do major projects. Thus, the challenge for Iran is to make big changes in order for present Iranian oil and gas industry to cope with the realities of the domestic and world markets (Ghorban, 2009).

2.4 CHALLENGES OF OIL AND GAS SECURITY Ganova (2007) stated that according to International Energy Agency (IEA), energy security is defined as availability of a regular supply of energy at an affordable price. For energy exporting countries, the term energy security is referred as security of demand in which they emphasize on sufficient access to markets and consumers for the resources they are exporting (Ganova, 2007). 2.4.1 China Chinas oil security faces three major threats including oil deficit, oil pricing risk, and transportation channel risk. 2.4.1.1 Oil Deficit China faces severe challenge in securing its oil supplies due to growing shortage supply of oil. China, however, began to pay serious attention to oil security in 1993 when it became a net oil-importing country. Between 1993 and 2002, Chinas oil consumption surged from 2.9 million barrels per day (b/d) to 5.4 million b/d whereas oil production only grew from 2.9 million b/d to 3.4 million b/d over the same period (Lee, 2005). From 2000 to 2009, Chinas oil consumption rose from 241 million tons to 388 million tons and in the meantime oil imports grew from 59.69 million tons to 199 million tons with oil import dependence increasing from 24.8% to 51.29% (Downs, 2004). The sluggish growth of domestic production of oil and the rapidly rising consumption of the resources in this country resulted in increasing dependence on foreign sources of oil (Lee, 2005). Downs (2004) predicts that Chinas oil imports will continue to grow in future.

18

2.4.1.2 Oil Pricing Risk Chinese analysts also consider oil price volatility to be the main threat to energy security (Downs, 2004). In addition, Lee (2005) stated that the sharp rise in crude oil price in 1999 until 2000 led China to care about its oil security. Surprisingly, it is very unlikely that oil prices would fall below the low levels since there is a rapid growth of oil demand by developing countries such as China and India. The oil price fluctuations will lead to negative impacts on Chinas economy and social stability. In fact, among oil-importing countries, China is more vulnerable to sustained high oil price compared to the industrialized nations (Downs, 2004). According to Lee (2005), China is vulnerable to high oil price because of its high oil intensity. China is a heavily oil-intensive economy consuming 1.56 million barrels per US $1 billion of gross domestic product in 2003 which was nearly twice the world average. This is proved since China is now the worlds third-largest vehicle market after the US and Japan. Cars run almost exclusively on oil products indicate that Chinas oil consumption will be increased to compensate the need of oil demand for transportation. Another reason is China would have to import an increasing amount of oil at relatively high prices. Hence, China suffers more than Japan and Europe from the rising oil price (Lee, 2005). 2.4.1.3 Transportation Channel Risk Over 70% of Chinas current oil imports are shipped through the Straits of Malacca. The traffic volume at the Straits is nearing its full capacity. Hence, any disruption occurs at the Straits will certainly halt the supply of oil to China. Regarding to the security of Chinas oil imports, China is in the uncomfortable position of dependence on the United States as US has expanded the range of its military deployment to the region (Xuchao, 2006). Besides that, as China does not possess the military capabilities, China tends to rely on the United States (US) to guarantee safe passage for transiting majority of its oil imports through the sea-lines. However, this growing reliance on United States may cause the supply of imported oil become more vulnerable to any disruption occurs in the US and its allies which will directly disrupt the flow of oil in China (Downs, 2004).

19

2.4.2 Europe The major challenges of oil and gas security in Europe are energy dependence on exporting countries, the conflict between Russia and Ukraine, the dispute between Russia and Belarus and the competition between EU and developing countries. 2.4.2.1 Energy Dependence on Exporting Countries The intention to reduce energy dependence on net exporter countries is the major challenge to European Unions (EUs) energy security. According to Ganova (2007) EU will be more and more dependent on energy imports from regions characterized by political instability and doubtful reliability as EU will remain as hostage of fossil fuels for the years to come and face the depletion of its own reserves. These exporting countries often marked by geopolitical uncertainties as well as the reliance on long pipelines passing through countries that are highly susceptible to political instability. EU obtains its energy supply mainly from Russia and the Middle East where approximately 70% of global oil and gas supplies originate (Belkin, 2008). Yet, the Middle East which is known to associate with politically unstable, war, terrorism and terrorist attack against energy infrastructure is a real threat to the continuous supply of energy from Gulf region to EUs market. For example, the issue of the nuclear energy program of Iran also has a severe impact on oil security. This is because if Iran is forced to abandon its activities regarding uranium enrichment, Iran will declare to halt its oil export for western countries (Ganova, 2007). 2.4.2.2 The Conflict between Russia and Ukraine Ukraine is a key energy transit state for producers in Russia and Central Asia to European consumers. About 80% of Europes gas imports from Russia transit via Ukraine pipeline (Cohen and Graham, 2009). Therefore, in late 2005, the conflict between Russia and Ukraine regarding on gas supply led to a serious impact on the continuous supply of natural gas to EU. Due to the conflict, Russia declared the new market rules regarding to its gas deals with Ukraine. The new rules caused Ukraine to be charged prices similar to other western countries pay and thus it lost its subsidized price given by Russia previously. This situation proved that Russia did not hesitate to interrupt gas supplies for Ukraine which had indirect implications also for EUs natural gas supply. For example, when Gazprom, Russias state-owned gas utility, temporarily suspended gas flows to Ukraine as part of a dispute over gas price increases, the gas supply to Europe, which is transported through the same pipeline was also disrupted (Ganova, 2007). Several European countries including

20

Austria, Italy, Poland and Germany reported to drop on their own pipeline pressure by as much as 30% within hours of the shut off (Belkin, 2008). 2.4.2.3 The Dispute between Russia and Belarus The supplies of oil to Germany and Poland were greatly affected in January 2007 when Russian oil pipeline operator Transneft cut off oil supplies transiting via the Druzhba oil pipeline through which Germany receives 20% of its oil imports (Belkin, 2008). The dispute began as Russia claimed that Belarus was illegally draining off oil (Ganova, 2007). 2.4.2.4 The Competition between EU and Developing Countries On the demand side, another challenge of oil and gas security for EU is that to face with increasing competition for obtaining access to energy resources due to rapid expansion in energy demand involving developing countries particularly, China and India. The presence of competition between EU and developing countries indicates that there are only limited market share and reserves for EU especially in the competition for the reliable supplies of oil and gas from the Middle East. The competition became worsen as the exporting countries especially those in Gulf region started to tighten their supplies to worlds market (Ganova, 2007). 2.4.3 North America There are four issues regarding to security of energy supply. These issues act as additional challenges to secure energy supply in North America. High degree of dependence on imported oil, extreme climatic changes, terrorism, the control over enormous oil revenues by producing countries as well as political realignments are all major challenges that largely determine the reliability and vulnerability of energy security in North America. 2.4.3.1 High Degree of Dependence on Imported Oil One of challenges in securing oil supply for North America is it is highly depending on imported oil from other regions of the world which is recognized to be unreliable resources of energy. This is a significant problem especially for the United States (US) because it imports 50% of its oil (World Energy Council, 2012). In fact, according to Sovacool (2011), the increased dependence on imported oils which now accounts for more than 60% of total US oil consumption compared to only 20% in 1970 is due to the rapid growth of US oil consumption combined with shrinking domestic oil production.

21

2.4.3.2 Extreme Climatic Changes and Terrorist Attacks North America is said to be one of countries that is vulnerable to extreme climatic such as hurricanes and terrorist attacks. These challenges are relatively affected the reliability of energy supply and thus could not meet the supply-demand (World Energy Council, 2012). In addition, the force of nature can easily disrupt oil market. For example, Gulf Coast hurricanes have caused the price of oil to rapidly increase from $12 per barrel in 1990 to $45 per barrel in 2005 and more than $100 per barrel during 2010 (Sovacool, 2011). North America is also susceptible to external threat like terrorism. For example, in February of 2007, Al-Qaeda is attempted to attack the energy facilities that supply oil to the United States (Deutch et al., 2006). 2.4.3.3 The Control over Enormous Oil Revenues by Exporting Countries The apparent factor that led to detrimental of energy supply security in United States is the net exporter countries adopted to the policies that oppose US interests and values. For example, having enormous oil revenues permit Iran to precede with nuclear weapon. Besides that, since huge revenues from oil and gas exports are available to finance Russia, Russia is able to ignore Western policy (Deutch et al., 2006). 2.4.3.4 Political Realignments Most of importing countries have tendency to form new political realignments in order to secure their oil supplies. However, these new realignments hinder the ability of United States to form its partnerships. For example, China is aligning its relationship in the Middle East such as Iran and Saudi Arabia and Africa such as Nigeria and Sudan to achieve its desire to secure oil supplies. Therefore, these new realignments have further diminished US power particularly in Middle East and Central Asia. Chinese interest in securing oil and gas supplies also challenges US influence in Central Asia, remarkably in Kazakhstan. To add, the consuming countries including US will take an aggressive action against Irans nuclear program as US is more concerned about losing Irans 2.5 million barrels per day of world oil exports (Deutch et al., 2006).

22

2.4.4 Japan The major challenges of oil security in Japan are over dependence on the Middle Easts oil exports and the occurrence of natural disaster such as earthquake. 2.4.4.1 Over-dependence on Middle Easts Oil Exports Japan is the largest oil imports in Asia at over 4 million barrels per day as well as Liquefied Natural Gas (LNG) imports is reaching roughly half of the entire worlds total. Both oil and gas supplies are imported heavily from the Middle East. Japan gets nearly 90% of oil from Gulf region and about one third of Gulf gas supply (Calder, 2007). It is also stated that Saudi Arabia is a net exporter to Japan. During 2009, Japan accounted for 15.7% of Saudi Arabias exports (Alawi and Al-Quati, 2011). Based on the above statistics, Japan seems to over dependence on Middle East therefore the impact of severe energy supply disruptions in the Middle East will be significantly greater. For example, the supply disruptions of oil from Gulf region to Japan may be caused by a partial or complete closure oil transport routes such as the Suez Channel that was closed by president of Egypt, Camal Abdel Nasser due to the Arab-Israel war in 1957 (Sen and Babali, 2006). 2.4.4.2 Natural Catastrophe Recently, the earthquake that measured 9.0 on the Richter scale struck Japan on March 11, 2011 and the resultant tsunami claimed many lives and damaged countrys economy. The most important impact to be concerned is Japan earthquake provides additional challenges in securing oil and gas supply (Alawi and Al-Quati, 2011). Over the medium to long term, the closure of nuclear energy generation capacity led to the increasing demand for petroleum products in Japan. This is because, 11 out of 50 nuclear reactors in Japan have been shut down following the quake. In fact, considering the power supply structure in Japan, producing energy from oil seems to be the most feasible option to make up for the loss in supply from nuclear energy (Alawi and Al-Quati, 2011). As Japan needs to extend its reliance on oil imports from the Middle East, Saudi Arabia, with spare oil production capacity, seems well placed to benefit from this scenario. Therefore, Saudi Arabias oil exports to Japan would surge over the long term. However, it is certainly not a safe strategy in relation to energy security. This is because, when Japan began to extremely depend on the Middle Easts oil exports, Japan will be net-importing country that is vulnerable to oil supply shock due to the political instability, wars, terrorism

23

and other related problems frequently occurred in the Middle East (Alawi and Al-Quati, 2011). 2.4.5 Middle East Security concerns in the Gulf States for oil supply from Saudi Arabia, Iran, Iraq, Kuwait, UAE and Qatar to the world markets is a vital part of the major security issues as Gulf region is one of sedimentary basins of the Middle East known to contribute up to 65-70% of the worlds oil reserves. Besides that, the security of Middle East oil supplies is central to the oil security debate as Middle East is known to be responsible for a large share of global oil production. In fact, security related problems may contribute to significant adverse effects on the importing countries. This is because in 2020, it is expected that North America will import 75% of total oil whereas Asia Pacific oil dependence will also rise up to 78% and in 2030 European Union will import 90% of total oil (Sen and Babali, 2006). Based on Fattouh (2007), the disruptions on global oil supply were caused by various events in the Middle East from 1951 until 2004. The illustrations are shown in Table 2.3. Table 2.3: Global oil disruptions caused by events in the Middle East (1951-2004) (Fattouh, 2007).

24

In contrast, Sen and Babali (2006) simplified that, international competition, wars and conflicts in the Middle East as well as terrorist attacks are highlighted as major challenges of oil security affecting the continuous supply of oil from the Gulf States to the world markets. 2.4.5.1 International Competition International competition can be defined as the competition among the major consumer countries that are highly depending on oil supply from Gulf States to ensure reliable energy supply. Instead of the fact that Gulf States is the largest worlds oil reserves, high oil prices is also one of factors increasing the competition among the importing countries. Having high oil prices will contribute to high oil revenues. Thus, after World War 1, it could be seen that due to these outstanding factors, Turkish, British, French and American were competed each other to fulfill their interests in tracking plenty of oil supply in the Gulf region. The competition was then became more obvious as once Turkey and French withdrew from the competition, United States of America (US) and United Kingdom (UK) continued to compete for reliable oil supply from the Gulf. To add, after the cold world period, French, Russia and China started to compete with US and British for oil reservation in the Gulf and have invested in energy sectors of Iran and Iraq as a result of Saddams attack on Kuwait oil supply (Sen and Babali, 2006). 2.4.5.2 Wars and Conflicts in the Middle East The wars and conflicts happened in the Middle East are primarily due to Arab and Israel war, Iraq-Iran war as well as US-Gulf war (Sen and Babali, 2006). The Arab-Israel war began due to the establishment of Israel. The war led to the shutdown of Mosul-Haifa oil pipeline in 1948 and in 1957, the Suez Channel was closed by president of Egypt, Camal Abdel Nasser. After the Arab-Israel war of 1973, the first oil shock was felt when Arab oil producers cut off the oil supply intended for US and Europe. The transportation of oil from Gulf to the Mediterranean was badly interrupted as the Arab-Israel war over Beirut led to the closure of Tapline (Trans-Arabian Oil Pipeline) in 1983 (Sen and Babali, 2006). The reliability of oil supply was further interrupted due to the Iraq-Iran war. Based on Sen and Babali (2006) in the 1980s, a rapid decline in oil production and serious fluctuations in oil market were the major consequences related to Iraq-Iran war due to many attacks on oil fields, oil infrastructure and oil tankers. The statistics proved that from 1980 until 1988 there

25

were 543 attacks on ships with 200 merchant sailors killed and more than 80 vessels were sunk caused losses more than $2 billion (Sen and Babali, 2006). The crises around Irans nuclear program and Irans support for international terrorism contribute to bad impact on the Iran-US relations. The war significantly affected the oil security in Iran. In 1991, the first Gulf War triggered by Saddams attack resulted in the serious destruction of oil fields in Kuwait. The serious destruction was proved as according to Fattouh (2007) the war resulted in a cumulative loss of 420 million barrels during period 1990-1991. As a result, the Iraq-Saudi Arabia oil pipeline (IPSA) was closed. The Iraqi oil infrastructure has continued to be damaged due to the second Gulf War in April 2003. The war caused the price of oil increased rapidly with the shortage supply of oil as after the second Gulf War, the reconstruction of the country and restoration of the law in Iraq could not be achieved (Sen and Babali, 2006). 2.4.5.3 Terrorist Attacks Terrorist attacks usually have temporary effects as the resulted damages are rapidly repaired. In fact, according to Fattouh (2007), it may be easy for the terrorist to blow up a pipeline in which the impact is minimal due to the limited losses. Yet, terrorist attacks on oil targets remain a serious and more viable threat to energy supply security for regimes in the Gulf region (Fattouh, 2007). For example, the explosion of French oil super tanker offshore Yemen in 2002 and terrorist attacks after second Gulf War in Saudi Arabia targeting foreign oil workers and oil fields have yielded in great interruptions to oil supply as well as oil prices (Sen and Babali, 2006).

2.5 GEOPOLITICS ISSUES Geopolitics is about analysis of the influence of geographic factors on states policy and its interaction with other states. Not undermining such determinants as population, economics, technology and military strength, which may change over time, however size, location, natural resources and communications of a country have to be underlined. Size, natural resources, communications also may alter, but, location of the country seems to be the only constant variable to be taken into account in geopolitics (Stevens, 2010).

The geopolitical factors related with oil and natural gas derive from the mismatch of location between reserves/production and consumption. The majority of oil and natural gas

26

is transported by ship or pipeline Trans-boundary pipelines in oil and gas are growing in relevance to both industrial and academic discourse. While almost 90 % of oil trade relies on ship, nearly 70 % of natural gas trade is shipped by pipeline. It is anticipated that there will be an increase in oil and gas pipelines in the future, due to the increasing discoveries of reserves in remote and land-locked locations, the depletion of reserves close to established markets, and improvements in cost-effective technological methods of exploration and production in previously uneconomic reserves.

For example, the oil and gas reserves of Azerbaijan are far from sea ports or major Western European markets. There are a number of problems that can arise from cross-border oil and gas transportation via pipeline. These problems are more distinct in cases of pipelines having to pass through a transit country. Present and future pipelines face the risk of continuous conflict over economic, legal and political issues. The Baku-Tbilisi-Ceyhan (BTC) pipeline which crossed 3 countries (Azerbaijan-Georgia-Turkey) and been a core driver of rivalry and strategic conflict between the British Empire and the Russian Empire for the supremacy in Central Asia through the 19th century to the beginning of the 20th century. The BTC has relatively few political complications. Burrowing under the Caspian conveniently avoids Iran and Russia, providing a direct route. Also, since the US's main desire is for the oil to reach an open market (it cannot be piped directly to the US, so the US will be dependent on purchasing the oil and transporting it), Kazakhstan and Turkmenistan can feel relatively secure in that they will be able to ask market rate for their resources. However, the underwater BTC would be far more expensive to construct than the overland TAP pipeline (Turkmenistan-Afghanistan-Pakistan). The three countries (Azerbaijan, Georgia and Turkey) are the direct beneficiaries with different interests. Russian interests are affected negatively in contrast to those of the USA and Europe (Mammadov, 2009).

27

Figure 2.10: The Baku-Tbilisi-Ceyhan (BTC) oil pipeline offers an interesting example where the interests of superpowers, landlocked countries and transit countries (Masuda, 2007)

Figure 2.11: Baku-Tbilisi-Ceyhan (BTC) oil pipeline (Stevens, 2010).

28

Other example would be the Eastern Siberia-Pacific Ocean (ESPO) oil pipeline. From geopolitical perspectives, the Eastern Siberia-Pacific Ocean (ESPO) pipeline presents a unique case of tripartite power game among China plans, Japan desire and Russia route. Originally, it was Russia and China that discussed building an oil pipeline from Eastern Siberia to China. But, somehow, Russia approached Japan about a new pipeline plan from Eastern Siberia to the Pacific coast of Russia, Japan became very serious about this pipeline, thus the tripartite power game was kicked off. Among the three countries involved with this pipeline, Russia keeps by far the strong position as the holder of oil reserves. It is interesting to learn that Russia and China have economic, military and strategic interests in common while Russia and Japan shares economic interests (Masuda, 2007).

Figure 2.12: Eastern Siberia-Pacific Ocean (ESPO) oil pipeline geopolitical perspectives (Masuda, 2007)

Looking at the struggle between Iran, Russia, China, and the US over their preferred pipeline routes for Central Asian oil and gas gives a good glimpse as to the world's future geopolitical order. Despite the formidable difficulties in building pipelines, those four powers are converging upon the region with an eagerness that is almost desperate. In previous eras, a country's military was the sole arbiter of her strength, but today her economy has become nearly as important, if not more so, and all industrial economies and

29

militaries run on oil and gas. The US and China desire those resources to fuel their power plants, factories, automobiles, aircraft, and armored vehicles. Iran and Russia want the pipelines to go through their territory in order to claim transit fees and use the resources as political tools. For each country wresting control of the Central Asian oil and gas is necessarily a vital part of its grand strategy.

Figure 2.13: Eastern Siberia-Pacific Ocean (ESPO) oil pipeline (Stevens, 2010).

30

3.0 CONCLUSION The energy consumption in Asia is the most higher compared to the total energy consumption in the world. Asia is dependent to coal, oil and natural gas as the primary energy sources. Coal contributes for 45% of the primary energy in Asia, compared to only 20% in the rest of the world. When China and India are excluded from the overall Asian statistics, the region becomes a predominant oil consumer, 54% of its energy mix held by oil, compared to 40% of the rest of the worlds energy shares held by oil. In Asia Pacific, Europe, North America regions and also in Japan, oil has become the primary energy source. When it comes to energy, the future is not predetermined. Regarding discussion above the future of energy contains three aspects which are demand and supply, price fluctuation and global warming. How much and what types of energy the world will use through 2040 and beyond will depend on the actions taken by everyone including policy makers and consumers. The Outlook for Energy publicly, we can all make informed decisions about our energy future. In the oil and gas industry, there are a lot of challenges that have to face. If the above-mentioned challenges are swiftly resolved, there will be a huge investment in the oil and gas industry, which would lead to a major positive impact on the economy and the standard of living around the world. For example, the challenge to install the advance technology in oil and gas industry can make the country well developed. It also can be concluded that Gulf oil and gas supply is the key to robust world economy and its growth. In fact, it is obvious that the stability of the Middle East specifically Gulf Region and the netimporting countries of the world are highly depending on security of supply of Gulf oil and gas. Therefore, the hindered free flow of oil and gas to the world markets led to adverse effects to the world. Geopolitics too plays an ever-increasing role in energy investments as political situations influence supply and demand of non-renewable energy. The difficulty of a cross-border pipeline exists in its geopolitical complexity. It is not only oil or natural gas but political messages that flow through a pipeline. While economic rationale may justify the construction of a cross-border pipeline, geopolitics can kill it. However, geopolitics alone cannot materialize a cross-border pipeline without economic rationale.

31

4.0 REFERENCES Alawi, A., & Al-Quati, S. (2011). Impacts of Japans natural disaster on Saudi Arabia: Challenges and opportunities. Retrieved May 8, 2012 from

http://www.aljaziracapital.com.sa/jaziracapital/report_file/ess/ECO-7.pdf Belkin, P., (2008). The European Unions energy security challenges. Retrieved May 15, 2012 from http://www.fas.org/sgp/crs/row/RL33636.pdf Calder, K.E., (2007). SINO-Japanese energy relations: Prospects for deepening strategic competitions. Retrieved May 3, 2012 from

http://eastasianstudies.research.yale.edu/japanworld/calder.pdf Cohen, E., & Graham, O. (2009). European security and Russias natural gas supply disruption. Retrieved May 12, 2012 from

http://www.heritage.org/research/reports/2009/01/european-security-and-russias-naturalgas-supply-disruption Deutch, J., James R.S. & David, G.V. (2006). National security consequences of U.S oil dependency. Retrieved May 12, 2012 from

www.cfr.org/content/publications/attachments/EnergyTFR.pdf Downs, E.S., (2004). The Chinese energy security debate. Retrieved May 12, 2012 from http://ecologic-events.eu/hertie-school 2008/reading_lists/download/downs_chinese_energy_security.pdf EconomyWatch (April 30, 2010), World Industry Directory: Energy Industry: World Consumption of Energy. Retrieved on May 18, 2012 from EconomyWatch website: http://www.economywatch.com/energy-economy/scenario.html Fattouh, B., (2007). How secure are Middle East oil supplies? Retrieved May 12, 2012 from http://www.oxfordenergy.org/wpcms/wp-content/uploads/2010/11/WPM33 HowSecureAreMiddleEastOilSupplies-BassamFattouh-2007.pdf Ganova, A., (2007). European Union energy supply policy: Diversified in unity? Retrieved May 3, 2012 from www.ie-ei.eu/bibliotheque/memoires/MemoireGANOVA.pdf Gas today Australia. (2008). Retrieved May 16, 2012 from

http://gastoday.com.au/news/safety_challenges_for_the_offshore_gas_industry

32

Ghorban, N. (2009). Potential and challenge in the Iranian oil and gas industry. Retrieved May 17, 2012 from http://www.mei.edu/content/potentials-and-challenges-iranian-oil-gasindustry Lee. P.K., (2005). Chinas quest for oil security: oil (wars) in the pipeline? The Pacific Review, 18, 267-269. Retrieved from http://www.ezaccess.library.uitm.edu.my/ Mammadov, I. (2009). Azerbaijans Challenges: Geopolitics of Energy in the Caspian Sea Region: Master Thesis Masuda, T. (2007). Security of energy supply and the geopolitics of oil and gas pipelines: European Review of Energy Markets: volume 2, issue 2. Maull, H. W. (September 2011). The Challenges of Energy Interdependence and climate change. 18. Mike Ashar, Greg Stringham, David W.C. (2005). Discovering the possibilities for North American petroleum production. Outlook, B. E. (2011). BP Statistical Review of World Energy. 18. Outlook, B. E. (January 2011). World Energy Outlook (WEO). London: BP,: International Energy. Razmahwata. (2005). The Malaysia oil and gas industry, p.9. Scott Bittle and Jean Johnson (2012). The great energy challenge. Retrieved May, 17, 2012 from http://www.greatenergychallengeblog.com Sen, S., & Babali, T. (2006). Security concerns in the Middle East for oil supply: Problems and solutions. Energy Policy, 35, 1517-1520. Retrieved from

http://www.ezaccess.library.uitm.edu.my/ Song J. (January 15, 1999), Energy Security in the Asia Pacific: Competition or Cooperation? Retrieved on May 18, 2012 from Asia PacificCenter for Security Studies website: http://www.apcss.org/Publications/Report_Energy_Security_99.html Sovacool, B.K., (2011). Seven suppositions about energy security in the United States. Journal of Cleaner Production, 19, 1147-1157. Retrieved from

http://www.ezaccess.library.uitm.edu.my/

33

Stevens, P. (2010) Oil and Gas Pipelines: Prospects and Problems. The Intersection of Demand, Energy Markets, and Supply Routes: Pipeline politics in asia:nbr special report #23 Urfer A., October 2005, Energy Scenarios-Europe, Technology Assessment Report 45. Australian Governments Cooperative Research Centres Program. World Energy Council. (2012). Energy policy scenarios to 2050. Retrieved from http://www.worldenergy.org/publications/energy_policy_scenarios_to_2050/default.asp Xuchao, Y., (2006). Chinas oil security faces four major threats. Retrieved May 8, 2012 from http://en.ce.cn/subject/EnergyCrisis/ECcomment/200605/31/t20060531_7166144.shtml

34