US may quit Gulf: India's loss, China's gain
The withdrawal of US troops from Iraq by the year-end will probably be followed by a much bigger US withdrawal from the Persian Gulf. Policy analysts have long assumed that the US must have a dominant military presence in the Gulf to secure its oil supplies. But new technologies and oil discoveries suggest that by 2020, the US will import all its oil from the western hemisphere, ending its dependence on the Gulf. That will sharply reduce its strategic interest and spending in the region.
Till now, the US navy has ensured secure oil movement from and beyond the Gulf. India has been a free rider, getting oil security at no cost.
China's presence in the region has till now been minimal.
But a US withdrawal, even if partial, will usher in Chinese dominance. India will view that with trepidation.
Foreign policy analysts have long believed that US troops in the region (and two invasions of Iraq) were "all about oil." That is only partially true. The US is quitting Iraq after eight years without any oil windfalls. Iraq's oilfields remain government-owned , and foreign companies hired to rehabilitate fields are getting a puny fee of $2 per barrel.
After the rise of OPEC in the 1970s, all Gulf oilfields owned by foreign oil companies (including US ones) were nationalized, converting US giants like Exxon and Chevron from owners to mere traders of oil. But the Gulf still mattered strategically to the US, since it (and Nato) depended substantially on oil imports from the region.
However, that is about to change dramatically. US imports of oil from Saudi Arabia and other Gulf countries have already fallen from a peak of 2.76 million barrels per day (mbd) in 2001 to 1.71 mbd in 2010. Fast-rising US production of shale oil is the big new surprise, helping oil imports to decline from 60% of consumption to an estimated 47% this year. Much of that is being met by rising Canadian oil production from tar sands.
The US has enormous shale oil deposits that were unviable earlier: oil did not flow in such "tight" rock formations . But a new technology, fracking, combined with horizontal drilling, increases the oil flow and makes production profitable. US shale oil production has zoomed from almost nothing to 0.9 mbd in 2010, and should more than triple to 2.9 mbd by 2020. By comparison, US imports from Saudi Arabia are currently just 1.1 mbd.
Meanwhile Canadian oil production from tar sands is rising fast and should cross 3 mbd by 2020. If the US opens up its east and west coasts to drilling, says Ed Crooks of the Financial Times, oil production in US and Canada by 2020 could touch 22 mbd, virtually equal to the oil consumption of the two countries last year!
US may quit Gulf: India's loss, China's gain - The Economic Times
US is maintaining balance between Dictator sheikhs and extremists in gulf.
Any instability or rise in extremism is not in the favor of civilized world - India.
The withdrawal of US troops from Iraq by the year-end will probably be followed by a much bigger US withdrawal from the Persian Gulf. Policy analysts have long assumed that the US must have a dominant military presence in the Gulf to secure its oil supplies. But new technologies and oil discoveries suggest that by 2020, the US will import all its oil from the western hemisphere, ending its dependence on the Gulf. That will sharply reduce its strategic interest and spending in the region.
Till now, the US navy has ensured secure oil movement from and beyond the Gulf. India has been a free rider, getting oil security at no cost.
China's presence in the region has till now been minimal.But a US withdrawal, even if partial, will usher in Chinese dominance. India will view that with trepidation.
Foreign policy analysts have long believed that US troops in the region (and two invasions of Iraq) were "all about oil." That is only partially true. The US is quitting Iraq after eight years without any oil windfalls. Iraq's oilfields remain government-owned , and foreign companies hired to rehabilitate fields are getting a puny fee of $2 per barrel.
After the rise of OPEC in the 1970s, all Gulf oilfields owned by foreign oil companies (including US ones) were nationalized, converting US giants like Exxon and Chevron from owners to mere traders of oil. But the Gulf still mattered strategically to the US, since it (and Nato) depended substantially on oil imports from the region.
However, that is about to change dramatically. US imports of oil from Saudi Arabia and other Gulf countries have already fallen from a peak of 2.76 million barrels per day (mbd) in 2001 to 1.71 mbd in 2010. Fast-rising US production of shale oil is the big new surprise, helping oil imports to decline from 60% of consumption to an estimated 47% this year. Much of that is being met by rising Canadian oil production from tar sands.
The US has enormous shale oil deposits that were unviable earlier: oil did not flow in such "tight" rock formations . But a new technology, fracking, combined with horizontal drilling, increases the oil flow and makes production profitable. US shale oil production has zoomed from almost nothing to 0.9 mbd in 2010, and should more than triple to 2.9 mbd by 2020. By comparison, US imports from Saudi Arabia are currently just 1.1 mbd.
Meanwhile Canadian oil production from tar sands is rising fast and should cross 3 mbd by 2020. If the US opens up its east and west coasts to drilling, says Ed Crooks of the Financial Times, oil production in US and Canada by 2020 could touch 22 mbd, virtually equal to the oil consumption of the two countries last year!
US may quit Gulf: India's loss, China's gain - The Economic Times
US is maintaining balance between Dictator sheikhs and extremists in gulf.
Any instability or rise in extremism is not in the favor of civilized world - India.
Tibet will be our energy box.
