When speaking of energy and Asia, it is been referered mainly to three vectors: 1. Hegemonic regional rivalry China-Japan (which affects all economic and political spheres) 2. Territorial water disputes, mainly in the South China Sea (with vast reserves of natural resources around located in its depths) 3. Distribution of the gas-oil channels from the Middle East to Asia: emphasizing political instability in Central-South Asia and the control of the Straits.
In addition to these vectors, crucial to the security in the region, we should not lose sight of other factors that influence and help us to understand the complexity of the region:
-It represents the highest population density of world (4.3 billion people).
– China’s nominal GDP is $ 5,815,501,800,000 and Japan with $ 5,497,812,400,000.
– In the period comprehended between 2011-2016, about 70% of oil demand comes and will come from Asia.
– The two of the most important Straits for the traffic of energy, Hormuz and Malacca, are located in this geographical area, where 80% of the transportation flow of oil goes to North Asia (Strait of Malacca, with approximately 70,000 boats passing by ) and 20% of global crude, particularly flowing through the Strait of Hormuz.
Regional Picture of the Area
The U.S. and Saudi Arabia have been responsible for the global order, speaking in terms of energy market. Saudi Arabia provides oil and the U.S. provides the protection for the distribution channel. For exporters and importers, the objectives set on the oil policy agreement were to achieve a certain grade of stability in the level of prices, and thus satisfy the market’s major players. It was understood that the oil price would cover a range with a minimum price, low enough to prevent from hurting the oil companies and oil states and reach that maximum which does not affect oil consumers. One factor to intervene must take into account the situation of Asian countries and their need for oil. Disturbances in the supply chain from the Middle East to Asian countries could have had and will have global consequences.
A possible scenario of supply disruption from the Middle East, could derive from the ethno-religious conflicts located in Central Asia. The U.S. tries to prevent any development in that direction, but may not be able to stop. In the U.S., the issue is not just about Iraq or Afghanistan or Pakistan. They are all interconnected, and as such, all decisions that could affect the entire region. Which would have the following effects :
– East Asia and the supply of oil and gas in the Gulf to South Asia;
– The possible ramifications for the global economy;
– The security of sea lanes of communication in the Indian Ocean;
– The U.S. policy of containment of China.
The People’s Republic of China has territorial disputes with Japan over those areas of the East China Sea that are rich in oil and gas. For now, this problem has been left aside by an agreement signed among all ASEAN countries, with the intention of applying internationally agreed standards for the peaceful resolution of conflicts.
U.S. faces the challenge of maintaining a balance between its role as global hegemony and its presence in Asia and the relevance that it has for the current challenges in the region.
One of those challenges is located in the South China Sea. The U.S. does not take part in the claims of the parties involved in the disputes over territorial waters. However, these disputes are directly affecing U.S. interests in Asia, namely $ 1.2 trillion of the U.S. trade flows through the waters of the South China Sea every year. It is more about the role of China in relation to its neighbors.
The rapid growth of China and India, in a business expansion face ( with import rates of about 30 % and 20 % respectively over the period comprehended between 2003-2008) and increasing their consumption of energy and other commodities, is revealing the importance of the South and East Asia, and can affect the equilibrium of the world economy that existed before the global crisis.
Another possible imbalance comes from the great influence exerted by China, and partly India, in the global energy markets and other critical raw materials by increasing their level of demand, causing an immediate rise of the prices.
On the other hand, we must not forget the region of Central Asia, with Kazakhstan and Azerbaijan, whose trade surpluses grow thanks to the rapid expansion of oil exports and high oil prices.
Thanks to the high and sustained growth rates of some of the major Asian economies, the economies of the region have a greater weight in the global economy.
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