The LNG project has geopolitical implications in the Pacific region and PNG. I attempt to explain the link between energy and security and foreign policy; and predict future outcomes with some constructive strategies at macro and micro level.
Energy constitutes both renewable and non-renewable resources but is scarce in nature. Energy security is referred to as reliable and adequate supply of energy at reasonable prices, i.e. energy must be supplied without interruption and must meet fully the needs of the world economy.
The limited composite of energy to meet unlimited needs and wants by states at its disposal constructs a global economic and security problem. States need energy to drive their modernization agenda. Since energy is scarce, the problem of allocating it efficiently becomes a security issue. This economic activity itself constructs domino-effects such as price volatility, terrorism, externality (environmental issue) etc.
Energy is both a commercial commodity and strategic tool employed by states to pursue its foreign policies. States strategically use transnational actors as its agent to secure energy resources externally to produce economies of scale to drive its modernization agenda. The unavailability of energy internally and scarcity of energy externally is both an economic and security problem of state which shapes foreign policy. In developing countries, lack of technological efficiency is a problem in utilizing energy resources, for instance, PNG is energy-rich but lack appropriate technology for down-processing and therefore can only export overseas. Big players in most cases seek energy offshore through bilateral or multilateral agreements or arrangements.
Oil and gas has always been states national interest expressed in terms of power projection (capability and capacity or authority) to co-exist in the international system. States will compete antagonistically to secure and protect its supplier sources, i.e. economic and military modernization of a state depends entirely on oil and gas to guarantee its security and survival. Thus, a foreign policy of any state constitutes national interest with an objective to secure and protect energy sources. The thirst and quest for oil is inevitable. Historical evidence strongly supports this hypothesis that imperialism has been the manifestation of “scramble for resources” in resource-rich nations leading to antagonistic competition, conflicts, wars and cooperation. However, today with complex interdependence war is unthinkable.
With globalization, economic development, industrialization, urbanization, demographic challenges, and military capability build-up and market imperatives, the demand of oil and gas will exceed supply. Intriguingly, the biggest consumers are the most advanced industrialized countries (MAIC) and newly industrialized countries (NIC), which will require more oil and gas to drive their modernization agenda. Today, with peaceful rise of China in the global economy, the demand and competition of oil will be steeper than expected with forerunners such as U.S, India, and others.
According to the latest U.S Energy Information Administration (EIA) on International Energy Outlook 2010, the world energy consumption increases by 49 percent from 2007-2035. Total energy demand increases by 84 percent in non-OECD countries than OECD countries with a 14 percent increase. The total energy use rose from 495 quadrillion British Thermal Units (Btu) in 2007 to 590 quadrillion Btu in 2020 and 739 quadrillion Btu in 2035. Oil and gas has approximately 40-60 years life span which constructs a security dilemma.
However, oil supply will be affected given the current unfavorable conditions in the Middle East. The current oil producing field is declining slowly from 2002 to 2030. This can be attributed to factors underpinning conflicts in Middle East, especially Iraq war, terrorism, religious tensions, and political instability. It is this scenario that may induce a foreign policy shift from main importers such as U.S, China, India and EU to other supplier sources such as the Pacific region.
Implications:
Macro Level: The Pacific region in the southern hemisphere is identified by political-economic powers as the last frontier of resource-rich nations, and in fact PNG is one of these key geo-strategic and economic bases or ‘sphere of influence’ for energy supply in international political and economical relations:
1. Geostrategic/military – shift in foreign policies, alliances and military doctrines and structures. As far as geo-strategic relation is concerned competition and tension between US-allies and peaceful China is inevitable. The US assumes traditional hegemonic power in the Pacific through its deputy sheriffs; Australia, New Zealand, Japan and Britain. The return of US in Pacific since Cold War indicates geostrategic shift to contain China’s peaceful rise.
2. Terrorism- there is possibility of terrorist attack on shipment route/pipeline.
3. Re-emergence of Cold War symptom.
4. Transnational crimes (continental and maritime security) – increasing international organized crimes, piratism, illegal immigrants, gun smuggling, money laundering, human rights abuse and trans-border diseases.
Micro Level: It is postulated that LNG project poses a threat and challenge to national security:
1. Terrorism attack in mine sites and in major urban centers.
2. Transnational crimes (continental and maritime security) – increasing international organized crimes, piratism, illegal immigrants, gun smuggling, money laundering, human rights abuse and trans-border diseases.
3. Price volatility – internal conflict can cause price hike affecting global markets.
4. Rebellion against state and MNCs by disgruntled resources which may possibly trigger legitimacy crises and civil violence/war. The Bougainville crisis is a classical case.
5. State graft by government officials and MNCs in siphoning project money covertly into their empires through illegal means.
6. Mercenary (military-like) build-up by resource owners.
7. Re-emergence of Cold War symptom.
8. Externalities or environmental problems.
Challenge
The government’s aspiration to attain a ‘Middle Income Country’ (MIC) by 2050 and thereby, becoming a ‘Wise, Smart, and Happy Society by 2050 may not be fully released if it does not define energy security comprehensively. This new paradigm shift in government thinking is a grand challenge as a nation state in modernization.
PNG is predicted to see a spiraling economic growth rate of about 11 percent annually come full economization of LNG projects by 2014. Although LNG projects may transform PNG into a MIC at forecasted growth rate similar to China echoed by some economic analysts, its security implications are incalculable. Securitization of energy is strategically and economically vital to assess ‘where we are, where we want go and how we will get there’. This will involve analyzing security at macro and micro level that appropriate strategies can be framed to systematically respond thoughtfully to emerging security threats. Security of the state and individual is absolutely vital to fully realize the vision.
Strategies
To effectively manage this security dilemma, a comprehensive strategic package is needed:
Macro level:
1. PNG must play a smart neutral diplomacy with major players in the region;
2. U.S must embrace China’s peaceful diplomacy; and
3. Multilateral cooperation is necessary, i.e. establish a Regional Energy Agency.
Micro level:
• PNG establish must establish an Independent Energy Authority;
• PNG must develop a National Energy Policy;
• PNG Foreign Policy, Defence Policy and Police Policy must embrace energy security comprehensively; and
• PNG must establish a Center for International Security and Strategic Studies.
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