Energy

Turkey’s Dependence on Russian Energy, and Its Recent Natural Gas Discoveries

Article-Grid, Economic Geography, Energy, Russia, Ukraine, and Caucasus, Southwest Asia and North Africa / By

Turkey (officially, Türkiye) is an energy-poor country. Roughly 85% of its energy supply comes from fossil fuels, roughly equally divided among coal, oil, and natural gas. Coal is mined domestically and imported, but almost all of Turkey’s natural gas and oil comes from other countries. Russia supplies roughly half of its natural gas. Unlike most NATO countries, Turkey has not placed sanctions on Russia, and as a result its natural gas imports continue unabated.

Turkey also figures prominently in Russia’s global energy strategy. Two major pipelines transport Russian natural gas to Turkey, one of which (TurkStream) was recently completed (2020). Moscow and Ankara have hoped to turn Turkey into a major natural gas hub, allowing Russia to export gas to southern Europe without having to move it across Ukraine. The Ukraine War has complicated but not undermined such plans. As recently reported by Natural Gas Intelligence, “Russia is turning to Turkey as a potential natural gas hub partner with a new sense of urgency to find new export outlets for volumes left stranded by damages to the Nord Stream pipelines in September.” The Russian-Turkish energy partnership extends beyond natural gas. In 2021, Russia was Turkey’s second largest supplier of coal, following Colombia. Turkey’s first nuclear power plant (Akkuyu), has been jointly built by the Russian firm Atomstroexport and the Turkish construction company Özdoğu; it is expected to come online in 2023.  Financing has been almost entirely provided by Russian investors.

Political tensions between Russia and Turkey have periodically intruded on their energy collaboration. Most recently, Ankara irritated Moscow by asking for a 25 percent discount on natural gas payments and requesting that all payments be delayed until 2024 due to domestic economic problems. Building a Turkish hub for Russian gas exports also faces external economic and geopolitical obstacles, particularly from other NATO countries. As recently noted by Natural Gas Intelligence:

A Russia/Turkey gas hub would have to secure financing for the billions of dollars needed to construct new subsea pipelines under the Black Sea, which is currently in a war zone. Without access to Western technology and financing, a new pipeline project could take years to build.

Turkey’s energy prospects, however, have recently been transformed by substantial natural gas discoveries in its Black Sea Exclusive Economic Zone. In the final week of 2022, an estimated 170 billion-cubic-meter gas reserve was found at the Çaycuma-1 field. Combined with previous recent discoveries in the Sakarya field, Turkey’s natural gas reserves have been elevated to 710 billion cubic meters. Gas from these fields should become available sometime in 2023, alleviating Turkey’s energy crunch. Discoveries to date, however, are not adequate to meet long-term needs, as the country consumes 50 to 60 billion cubic meters of gas every year. To put recent Turkish discoveries in global context, Russia has proven natural gas reserves of some 50,000 cubic kilometers.

Coal remains one of Turkey’s major energy sources, thwarting its ability to decrease its carbon emissions. Turkey’s domestic coal industry is highly subsidized in order to reduce natural gas imports. Lignite, the least energy-dense and most polluting form of coal, predominates. Coal production surged from 2015 to 2019 but has declined since then. To meet the country’s growing demand, imports have surged in recent years. The war in Ukraine, however, has disrupted supplies and increased costs, generating economic hardship. Particularly hard hit is Turkey’s large and energy-intensive cement industry. CemNet reported in March 2022 that the Turkish cement industry was facing an “imminent crisis.”  In 2014, Turkey was the world’s fifth largest cement producer, following only China, India, the United States, and Iran.

Turkey has made relatively modest investments in renewable energy. Hydropower has long provided roughly 20 percent of its electricity, but recent droughts have reduced the supply. Turkey’s has good climatological potential for solar and wind, and wind power is now growing, providing about 10 percent of the country’s electricity. In 2021 the energy think tank Ember reported that “it is now cheaper to build new wind or solar for power generation in Turkey than running even the most efficient hard coal power plant that relies on coal imports.” Ember’s analysts thus foresee an accelerating transition to renewable power, with a “win-win-win situation” resulting in “lower import bills, lower emissions, [and a] lower carbon levy by the EU.” Such hopes may be overstated. Energy intermittency and the lack of economically feasible storage still poses a major obstacle to solar and wind energy development in Turkey – as in the rest of the world.

Urbanization, Economic Productivity, and the Industrial Revolution

Article-Grid, Economic Geography, Energy, Population Geography / By

Levels of urbanization and levels of economic development roughly correlate. As can be seen on the paired maps, countries with very low levels of urbanization tend to have low levels of economic productivity (as measured by per capita GDP in Purchasing Power Parity). Burundi, for example, has the world’s second lowest urbanization rate (13.7 in 2020) and the lowest level of per capita GDP ($856 in 2022). Conversely, Singapore is completely urbanized and has the world’s second highest level of per capita GDP ($98,526 in 2022). The linkage is strong enough that urbanization is sometimes used as a proxy for economic development, especially for earlier time periods. Consider, for example, this passage from a recent study published by the Hoover Institution at Stanford University:

We find that a vector of exogenous factors that were binding constraints on food production, transport, and storage within the densely populated nuclei from which nation states later emerged account for 63 percent of the cross-country variance in per capita GDP today. Importantly, this vector accounts for progressively less of the variance in economic development (as measured by urbanization ratios) going back in time. [emphasis added]

 

This maneuver is understandable, but its validity is questionable. Historical urbanization rates are difficult to determine, and the figures produced are often controversial. Even today, measuring urbanization is often tricky, due mainly to variations in the population-size and population-density thresholds for urban standing. More important, the correlation between urbanization and economic development is not particularly strong. Some primarily rural countries have moderately high levels of developmental, while some primarily urban countries have low levels. One finds such deviations at both the top and bottom of the urbanization spectrum. Germany, for example, is more than twice as economically productive as Argentina, but is significantly less urbanized. Sri Lanka is (or was, in 2020) is almost six times more economically productive than The Gambia, but is far less urbanized.

Non-urban areas can be very economically productive, especially if they have relatively high population density, good transportation networks, and proximity to larger markets. Britain’s industrial revolution itself began in rural landscapes. Although maps of the industrial revolution usually emphasize coal and iron ore deposits, industrialization was originally dependent on hydropower, which requires abundant precipitation and significant drops in elevation. Areas around the Pennine Chain, the “backbone of England,” were thus selected for the first mechanized mills, despite their lack of urban infrastructure. The first modern factory, a water-powered cotton spinning mill, was built in the village of Cromford in Derbyshire, England in 1771; others quickly followed elsewhere in the Derwent Valley. Factory owners had to build housing for their workers due to the region’s rural nature. Despite its early economic productivity, Cromford never urbanized, and today has fewer than 2,000 residents

 

 

As industrialization proceeded and coal supplanted hydropower, small and mid-sized towns in northern and central England transformed into major cities. Proximity to markets and ports allowed the factories of Lancashire to supplant those of Derbyshire, and by the second half of the nineteenth century the water-powered mills of the Derwent Valley were mostly abandoned. Today the area is a world heritage site, commemorating the industrial revolution. Currently, hydropower is being restored to make the site more economically sustainable. On August 1 of this year, the BBC reported that :

 

 

Hydroelectric power is due to return to a textile mill which helped spark the industrial revolution.

Cromford Mill in Derbyshire – built in 1771 by Sir Richard Arkwright – was the world’s first successful water-powered cotton spinning mill.

The Arkwright Society has secured a total of £330,000 from Severn Trent Water and Derbyshire County Council.

Work is due start in September with the aim of being fully operational by June 2023.

The project will involve reinstating a waterwheel and installing a 20kW hydro-turbine to power the buildings…

Tatarstan: A “Hostage of Freezing Relations between Russia and Turkey”?

Article-Grid, Asya Pereltsvaig, Autonomous Zones, Education, Energy, Ethnicity, Guest Posts, Linguistic Geography, Myth of the Nation-State, Religion, Russia, Ukraine, and Caucasus / By

[Many thanks to Ekaterina Lyutikova for most helpful discussions of some of the issues discussed in this post, as well as for the photos, some of which are used as illustrations below. I’m also grateful to Martin W. Lewis for helpful discussions and edits and for modifying the Wikipedia map of Percentage of Ethnic Tatars, used below.]

Tatarstan_location

Tatarstan has not been much of a geopolitical hotspot in recent years and has largely remained “under the radar” for most mainstream Western media. This may soon change, however, if the present trends continue. Rapidly worsening relations between Russia and Turkey, as well as Tatarstan’s ambivalence in relation to both, lead experts such as Rais Suleimanov to doubt its continued peaceful existence; the quote in the title of this post is from Suleimanov’s recent article titled “Tatarstan can not decide: is it a part of Russia or a governorate of Turkey”. (All translations from Russian in this post are mine.)

nutrition

As can be seen from the maps in the previous posts (see here, here, and here), Tatarstan is one of the most economically and socially developed regions of the Russian Federation. Although it lags in per capita GDP behind such resource-rich yet sparsely populated regions as Nenets Autonomous Okrug or Chukotka, Tatarstan registers lower alcoholism and crime rates, as well as longer life expectancy for both genders. According to maps reposted from Kommersant.ru, an average resident of Tatarstan receives a reasonably balanced diet (blue map), and the overall obesity rate in the republic is relatively low (orange map).

 

Russia_Percentage_students

According to the data from the Federal State Statistics Service, Tatarstan ranks 9th of 83 regions by the percentage of university students (4.7% of total population). Two of the country’s three dozen national research universities are located in Kazan, Tatarstan’s capital: Kazan State Technological University (founded in 1890) and Kazan State Technical University named after A. N. Tupolev (established in 1932). Moreover, Kazan (Volga region) Federal University, founded in 1804, is Russia’s second oldest university. The eminent mathematician Nikolai Lobachevsky served there as the rector from 1827 until 1846, and the list of the university’s famous students includes Vladimir Lenin (expelled for revolutionary activity), Leo Tolstoy (quit his studies), and composer Mily Balakirev (graduated in 1855).

Kazan, TatarstanKazan, Tatarstan 2Further contributing to its livability is the extraordinary cleanliness of Tatarstan’s cities, towns, and villages, including its capital Kazan, a metropolis of nearly 1.2 million, as can be seen from the photos of city center on the left. The striking cleanliness of the Tatars, noticeable particularly in the lack of rubbish on the streets and the general appearance of houses and yards, has caught the attention of many a traveler to the region. A good example is Jonas Stadling, who wrote an account of the famine in Eastern Russia in 1892, published in The Century magazine (volume 46, p. 560). As Stadling wrote: “The Tatars made a very favorable impression by their cleanliness and politeness”. Similar mentions of exceptional cleanliness are made also in David Lewis’ After Atheism (p. 126), Paul William Werth’s At the Margins of Orthodoxy (p. 164), and in many other sources. dvornik-2The character of a Tatar yardman/caretaker, sweeping the grounds of some large building in Moscow or Saint Petersburg, makes frequent appearance in Russian 19th-century fictional and memoir literature, including Dostoyevsky’s works.* (The Volga Tatars’ ethno-linguistic “relatives”, the Crimean Tatars, made the same impression on travelers such as German explorer Gustav Radde, who traveled to Crimea in 1850s and noted the “special care about cleanliness of [Crimean Tatar] homes and bodies” in his ethnographic treatise about the group.)

Not only does Tatarstan manage to optimize economic and social development, but its economy is more balanced than that of Russian regions with higher per capita GDP. In the 1970s-80s, Tatarstan was one of the largest oil producing areas in the USSR, but starting in the mid-1990s, the Republic has managed to diversify its economy. Tatarstan’s overall GDP is less than a third of that of Tumen or Sakhalin oblast, but much less of it, only 21.3%, comes from natural resources (chiefly unrefined oil), compared to 54.6% in Tumen oblast, 61.6% in Sakhalin, or the whopping 71% in Nenets Autonomous Okrug. According to Deputy of the State Council of Tatarstan Rafael Khakimov, “since 1996 … we switched to the deep processing of oil, to the development of industry as a whole, to the high-tech manufacturing, aeronautics and IT‑technologies. We succeeded in doing that and today we depend on crude oil exports only minimally.” A substantial share of Tatarstan’s GDP comes from manufacturing (18.3% in 2012), trade and real estate operations (24.1%), construction (10.4%), and agriculture (6%). Several sources note a 5% growth in Tatarstan’s agricultural output in 2015, particularly in crop and milk production. (The latter makes sense since Tatarstan has the highest dairy consumption rate in Russia, 364 kg, or over 800 lbs, per capita per year.) Tatarstan was also ranked highest in “innovation activity” in 2015, well ahead of Moscow, St. Petersburg, Nizhny Novgorod, and Novosibirsk.

But Tatarstan’s economy may take a serious hit in the near future as a result of rapidly worsening relations between Russia and Turkey. A significant contributing factor to Tatarstan’s prosperity in recent years has been investments by Turkish businesses, to the tune of $1.5–2 billion, according to different sources (see here and here), which constitutes one fourth of all foreign investments in Tatarstan, and one sixth of all Turkish investments in the Russian Federation. Among those Turkish investments are “about a dozen of major enterprises built by Turkish investors … located in the Alabuga special economic zone” in north-central Tatarstan, notes Russian News Agency TASS. Unlike the case with many Chinese-owned business in Russia’s Far East, “98% of workers [in Turkish-owned businesses in Tatarstan] are Russian nationals”.

For the last 15 years, the relationship between Russia and Turkey has generally been very productive. But on November 24, 2015, the relations between the two countries took a nose-dive after Russia’s Su-24 bomber was shot down in Syria by an air-to-air missile fired from a Turkish F-16 fighter jet. Russia’s President Putin responded harshly, calling the attack “a stab in Russia’s back delivered by terrorists’ accomplices”, according to Russian News Agency TASS. Two days later, Russia introduced economic sanctions against Turkey, which prohibited “the imports of many Turkish food products including fruits, vegetables, poultry and salt and imposed a ban on hiring Turkish nationals”, as reported in The Moscow Times. According to an early RBC report, other measures considered by the Russian government include freezing of economic cooperation programs, restrictions on financial operations and commercial transactions, the revision of customs duties, and “interventions” in tourism, air transportation, and shipping. Several large-scale cooperative projects also fell under these restrictive measures: for example, the proposed “Turkish Stream” natural gas pipeline was suspended by Russia and subsequently terminated by the Turkish side. Similarly, the fate of what was to become Turkey’s first nuclear power plant, located in Akkuyu in southern Anatolia, is now unclear. The abovementioned RBC report concluded that these measures would “unavoidably hit both Turkish and Russian businesses”. Because of Tatarstan’s extensive economic ties with Turkey, it is liable to be among the worst-hit regions of the Russian Federation.

Tatars

However, Tatarstan’s relations with Turkey go far beyond their economic ties. Speaking of Turkey in December 2015, Tatarstan’s President Rustam Minnikhanov (note the title, more on that below!) reportedly said: “We are in the same language group, of the same religious identity”. The Republic’s titular ethnic group, the Tatars (or more precisely, the Volga Tatars), who constitute 53% of Tatarstan’s population, speak a Turkic language. According to the 2002 census, moreover, 96.3% of Tatars still speak their ancestral language, making them one of the most successful minority groups in Russia in preserving their linguistic identity.** Although little-known outside Russia (and indeed to many people in Russia), Tatar is the 7th largest Turkic language globally and the largest Turkic language in the Russian Federation. In fact, with over 5.3 million speakers, it is the 2nd most widely spoken native language in Russia. The Tatar and Turkish languages are traditionally classified as belonging to different branches of the Turkic language family (Kipchak and Oghuz, respectively); nonetheless, there are many linguistic similarities between them and the internal classification of Turkic languages remains controversial. While I disagree with Bernard Lewis, who wrote in The Middle East. A Brief History of the Last 2,000 Years that “the differences between these various languages were no greater than between the vernaculars spoken in the Arab lands from Iraq to Morocco”, similarities between Tatar and Turkish are much greater than those between languages from different branches of the Indo-European family, such as English and Russian.

Another link between Tatars and Turks is that of religion: both groups are Sunni Muslims. Rais Suleimanov, an expert on influences of foreign Muslim groups within Russia, particularly in the Middle Volga region, has written extensively on how “Turkish emissaries for decades influenced the minds and hearts of our [Tatar] compatriots” (his multi-part article can be read here and a shorter version here). Moreover, the Grand Mufti of Tatarstan Kamil Samigullin studied in Turkey under Mahmut Ustaosmanoğlu, the leader of influential İsmailağa Jamia.

Yet historical and cultural links between Tatarstan and Turkey go deeper still. Symbolic of this connection is the planned installation of a monument to the prominent statesman and scholar Sadri Maksudi Arsal, a Tatarstan native who moved after the Bolshevik Revolution to Turkey where he worked as an advisor to the first President of the Turkish Republic Mustafa Kemal Ataturk. The monument was supposed to be opened in Kazan’s Istanbul (!) Park in December 2015 by Turkish President Recep Erdoğan. After the events in late November, Erdoğan’s visit was cancelled. Around the same time, the Yunus Emre Institute for Turkish Studies at the Kazan Federal University, opened as a Turkish “soft power” initiative in 2012, was closed. As part of the anti-Turkish measures, the Russian Ministry of Culture circulated a “recommendation” to all republics with Turkic titular populations, including Tatarstan, to break off relations with the International Organization of Turkic Culture (TÜRKSOY).***

As a result of this confrontation between Russia and Turkey, Tatarstan found itself between Scylla and Charybdis, and its response has been rather cautious and ambivalent. According to Rais Suleimanov,

most federal subjects [in the Volga region] exhibited solidarity with the federal center. The only exception was Tatarstan, which adopted a not-completely-loyal attitude in relation to the federal center, preferring not to spoil its relations with Turkey, simultaneously sending clear signals to Ankara: “we are not on the side of Moscow”.

Moreover, Suleimanov points out that Tatarstan’s “run with the hare and hunt with the hounds” position has been in marked contrast to that of Bashkortostan, a neighboring region that also has a substantial Turkic-speaking Muslim population (in addition to its Turkic titular ethnic group, the Bashkir, Bashkortostan also has a significant Tatar population and a smaller group of Chuvash, which combined constitute 57.6% of the republic’s population). Yet, Bashkortostan’s authorities, Suleimanov says, “have chosen not to depart from the political line of the federal center”. After adopting a wait-and-see position for some time, Tatarstan ultimately refused to follow Minister Vladimir Medinsky’s “recommendation” regarding TÜRKSOY, and the Republic’s officials questioned whether the federal Ministry of Culture can “dictate” to regional cultural authorities. Tatarstan’s cultural authorities certainly have good grounds for their resistance, which can be understood through a brief historical excursion.

The Expansion of Russia

Tatarstan has a long history of being under Russian rule. After a brutal siege and assault, Kazan was taken in 1552 by Ivan the Terrible (Saint Basil’s Cathedral at the edge of Red Square in Moscow commemorates the event). The conquest of Kazan marked the second wave of non-ethnic-Russian territories annexed by Moscow (shown in green on the map on the left). (The first wave, shown in purple, included Finnic-speaking groups, such as Merya, Meschera, Murom, and Veps, which were largely absorbed in the 11-12th centuries, as well as the still-surviving Komi and Nenets populations.) Although technically a sovereign tsardom in personal union with Russia, Tatarstan was henceforth administered from Moscow. In 1708, in the course of Peter the Great’s administrative reform, the Kazan tsardom was transformed into a gubernia (governorate), to be administered by a governor sent from Saint-Petersburg. The first governor was Peter Apraksin, a close associate of Peter I, handpicked to oversee the strategically important area. At the time, Tatarstan supplied timber for naval use and horses for the cavalry, and its workshops on the Volga River built ships for Peter’s new navy. Revealingly, the Wikipedia list of governors contains no Tatar names. Quite a few of the region’s governors, however, were of German descent. After the Bolshevik Revolution, Tatarstan became an Autonomous Republic within the Russian Union Republic, but despite this title, it had little real autonomy. Several proposals were considered to upgrade its status to that of a union republic, but all were rejected. But despite their lack of self-rule for over four centuries, the Tatars managed to retain a sense of ethnic and cultural identity, and, as mentioned above, their indigenous language (nearly all Tatars speak it as their mother-tongue, compared to only less than half of the Khanty people, a quarter of the Mansi, and 12% of the Itelmen, according to the 2002 census).

On the eve of the fall of the Soviet Union, in August 1990, Tatarstan issued a Declaration of State Sovereignty, and after the dissolution of the USSR in 1991 it continued on the course for separation from Russia. In a referendum conducted in March 1992, over half of the votes were cast for the independence, and in November of the same year a Constitution of the Republic of Tatarstan was adopted, declaring it a sovereign state. However, the Constitutional Court of the Russian Federation declared those documents to be illegal. In February 1994, Russia offered an autonomy agreement to Tatarstan, promising a broad range of rights and policy-making abilities, but stopping short of full independence. (The same agreement was offered to Chechnya, which did not accept it.) Tatar authorities accepted the deal, giving Tatarstan many of the institutions of a full-fledged sovereign state, including a constitution, a legislature, a tax code, a national bank, and its own citizenship system. The Kazan government can conduct its own relations with other subjects of the Russian Federation and even foreign states, and can set its own foreign economic policy and trade relations. But it remains to be seen how much actual economic independence will be allowed by Russia.

Tellingly, the head of state in Tatarstan is called “President”, again in marked contrast to Chechnya and other ethnic republics within Russia. (This would be analogous to having a “President of California” who would nonetheless be under the power of President of the USA.) While it may seem a trivial matter, labels can matter a great deal, and Tatarstan fought tooth and nail to preserve its right to call its head a President. A Russian law adopted in 2010, however, allowed for only one president—that of the Russian Federation. All internal republics, except for Tatarstan, switched to calling their heads of state glava, “head”. Tatarstan has ever since been lobbying to keep its “President”, most recently by using the 94.4% vote in favor of President Minnikhanov in the September 2015 election. (These election results may have been falsified, claims Rais Suleimanov.) While the issue has not yet been closed, it appears that Tatarstan has more leeway than Russia’s other federal subjects. This unbalanced situation “allows one to consider Russia an asymmetrical ethno-federation”, according to Suleimanov, thus forming another example of the “myth of nation state”, which GeoCurrents has written about extensively.

Kazan Kremlin

The currently brewing confrontation between the Kremlin in Moscow and the Kremlin in Kazan (see photo of the latter on the left) is not the only issue threatening Tatarstan. Suleimanov and other experts talk about a possibility, even likelihood, of exploding terrorist activity in the region. The most frightening scenarios involve an expansion of radical Islamism in Tatarstan and further forging of connections between such home-grown groups and extremist organizations based elsewhere in the Muslim world, including Hizb ut-Tahrir and ISIS.

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As indicated in ISW map of ISIS activity, discussed in an earlier GeoCurrents post, Russia has been one of the main sources of ISIS recruits. While many of them have come from the Caucasus region, a substantial number—over 200, according to some sources—are from Tatarstan and the rest of the Middle Volga region. Ironically, ISIS recruitment for the war in Iraq and Syria is said to be the chief reason for the sharp decrease in terrorist attacks within Tatarstan: while several brutal attacks shook the Republic in 2012 and 2013, there has been a relative calm in 2014-2015. But some of these ISIS fighters are now coming back from Syria to Tatarstan. Moreover, according to Suleimanov, in November 2015, ISIS propagandists released two videos in which Tatarstan is explicitly mentioned as a target of radical Islamists. Future developments in the conflict in Syria will, no doubt, have a critical impact on the situation in Tatarstan, which remains for the time being “a place to watch”.
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*One source even claims that the entire cleaning staff of the Winter Palace, over 100 people, consisted of Tatars.

**According to the same census, 96% of Tatars also know Russian to some extent.

***Although some anti-Turkish protests occurred across Russia, even in the Middle Volga region, many people felt that the Russian government’s reaction was too strong, leading several journalists and bloggers to post tongue-in-cheek proposals to “prohibit” or “rename” Turkish coffee, Turkish sweets, the espionage thriller (book and film) titled “Turkish Gambit” (set in the 1877-1878 Russo-Turkish War), Mozart’s Rondo alla Turca, and even the music group Turetsky Choir (whose director’s last name means “Turkish” in Russian).

 

Argentina’s Controversial Energy Policies

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Argentina Oil Natural GasAs noted in the previous post, the most economically productive areas of Argentina depend heavily on the extraction of oil and natural gas. Argentina, however, is not a major fossil-fuel producer, and its reserves of conventional oil and natural gas are modest. Although it still exports some crude oil and until recently sold large quantities of natural gas to Chile, Argentina has been a net importer of both gas and oil since 2011. Its economy is also heavily dependent on fossil fuels, with natural gas alone supplying 55 percent of its total energy supply. Considering Argentina’s high inflation rate and other economic difficulties, this situation generates considerable concern.

 

Argentina does, however, possess massive quantities of unconventional oil and natural gas. Such deposits are locked up in shale formations and are Shale Gas and Tight Oil by Countryonly economically recoverable through hydraulic fracturing (“fracking”). According to most estimates, Argentina’s shale gas reserves are second only to those of China, while its tight oil reserves are the world’s fourth largest. Most of the country’s shale gas and tight oil deposits are found in the Vaca Muerta (“dead cow”) formation, located mostly in Neuquén province. A year ago, optimism ran high in this region, as many experts predicted a boom similar to the one that had had emerged in the Bakken Formation of North Dakota. As noted in The Economist in 2014:

Argentina Vaca Muerta MapNeuquén is readying itself for a boom. Shopping centres have sprung up; so have clean new hotels that boast English-speaking staff and American-style food. Horacio Quiroga, the city’s mayor, compares its residents to expectant diners who have tied on their bibs. Argentina’s president, Cristina Fernández de Kirchner, is equally hopeful. “I shall no longer call [it] Vaca Muerta,” she said last year. “I shall call it Vaca Viva (‘Living Cow’).”

But at the same time, other observers were urging caution. Shale-gas deposits elsewhere in the world were proving more difficult to tap than those of North America, in part because of local geological particularities but also because of the large amounts of capital and high levels of technical expertise required for successful fracking. In most cases, substantial foreign investment would be necessary. Argentina’s history of fraught relations with overseas-based energy companies, however, has created major investment obstacles.

But despite such problems, significant investments have been made in in the Argentine energy field over the past several years. A recent report from the U.S. Energy Information Administration contends that outside of North America only China and Argentina have produced commercial volumes of gas and oil from fracking. As detailed in the report:

In Argentina, many international companies hold leases and have drilled wells in shale formations. Much of the initial activity has targeted shale oil and natural gas in the Neuquen Basin’s Vaca Muerta shale formation, located in west-central Argentina. National energy company Yacimientos Petroliferos Fiscales (YPF), the largest shale operator in the country, reported production in April 2015 of 22,900 barrels per day (b/d) of oil and 67 million cubic feet per day (MMcf/d) of natural gas from three joint ventures in Vaca Muerta: one with Chevron at the Loma Campana field, a second one with Dow Chemical at the El Orejano field, and a third joint venture with Petronas at La Amarga Chica field. In addition, China’s national oil company Sinopec and Russia’s national oil company Gazprom have recently signed a memorandum of understanding with YPF to jointly develop shale from the same basin.

Considering its economic difficulties, the Argentine government is not surprisingly eager to frack for natural gas and oil. The steep drop in the global price of oil over the past year, however, threatens the viability of the industry. Argentina has responded, as it often does, by manipulating the market. In particular, its government has fixed the local price of oil at US$ 77 a barrel, a figure almost twice that of the world market. Such policies aid producers, but harm consumers. As explained by Bloomberg Business:

South America’s second-largest* and most enigmatic economy is marching to its own drummer. In most of the developing world, governments subsidize fuel prices. In Argentina, motorists now are subsidizing oil and gas producers.

“This is not sustainable in the long term,” said Agustin Torroba, senior analyst at Montamat & Associates, an energy consulting firm. “It is the most expensive oil in the world.”

The policies of President Cristina Fernandez de Kirchner, whose second four-year term ends in December, are rarely considered conventional. In addition to energy, Argentina’s unusual approach to economic management includes currency and import controls, export taxes, reneging on sovereign debt commitments and general acceptance of 25 percent inflation.

 

As is true elsewhere, fracking has generated considerable controversy in Argentina, as can clearly be seen in the website ASF Argentina Sin Fracking. Opposition to the process by Pope Francis has gathered considerable attention, both in Argentina and abroad. In eastern Argentina, many communities have instituted fracking bans. As was recently reported in Free Speech Radio News:

The red carpet treatment for foreign energy companies has met resistance in various parts of Argentina.

Authorities in around 50 municipalities have enacted local fracking bans in response to public pressure. This has, in turn, created a power struggle between national and local officials over what steps communities can take to prevent energy projects.

“We want to have the right to protect our water from pollution, to keep living in our hometowns,” says Ignacio Zabaleta with the Assembly of Fracking-Free Territories, a network of groups opposed to the extraction technique. “It’s a response to the sidelining of the will of the people. It’s about people who have lived in certain areas for centuries being displaced for the benefit of two or three corporations and for the benefit of corrupt and immoral officials.”

Most of the municipalities that have rejected fracking are in the province of Entre Rios, home to part of the Guaraní Aquifer — one of the world’s largest underground bodies of freshwater. The aquifer spans the borders of Argentina, Brazil, Uruguay and Paraguay.

 

Argentina will be holding a presidential election in late October of this year. Some observers think that the outcome could significantly influence the country’s economic and energy policies. A recent Stratfor report, however, argues to the contrary. Its forecast runs as follows:

  • Regardless of election outcomes in October, Argentina’s next government will begin liberalizing its economy, potentially loosening restrictions on the repatriation of funds, reducing the enforcement of price controls and reducing subsidies.

  • Despite slight changes to Argentina’s regulatory framework, the government will continue to bar some investment and businesses to stem capital flight and to maintain a positive trade balance.

  • Though the next administration may begin laying the groundwork to attract greater energy investments, the country’s barriers are unlikely to be completely lifted during the next presidential term.

* This assertion is questionable. Although most data assembled by international economic organizations place the Argentine economy above that of Colombia in both nominal and purchasing-power-parity terms, a 2014 International Business Times article came to a different conclusion:

Argentina, once the third-strongest economy in the western hemisphere, extended its decades-long decline by ceding the No. 3 spot among Latin American economies to Colombia later this year — thanks to the second-weakest currency in the region, soaring inflation, weak economic growth and chronic political problems, Capital Economics said on Monday. Brazil and Mexico remain No. 1 and No 2, respectively.

 

Oil, Coal, and Economic Development in Colombia

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Although Colombia is not usually classified as a major oil-producer, it ranks 19th in the world according to the Wikipedia, turning out more than a million barrels a day in late 2014. Although this figure was well below that of Venezuela (2.5 million barrels a day), it surpassed those of such well-known oil exporters as Oman and Azerbaijan. It is no surprise, therefore, that Colombia has taken an economic hit from the recent decline in the price of oil. Compounding Colombia’s woes are the continuing strikes on its oil infrastructure by leftist rebels. According to a recent Financial Times article, “rebel attacks on pipelines cost state-controlled oil company Ecopetrol $430m in lost output last year.” As a result of such problems, the “Colombian peso [is] one of the weakest freely-traded currencies in the world, rivalling the rouble and the Brazilian real by falling 36 per cent over the past 12 months.”

Colombia exports treemapBut as another Financial Times article notes, Colombia has been able to weather the recent economic storm better than most oil exporters. The Colombian economy is buffered by its broad production of other goods. As its currency has fallen, exports such as coffee, flowers, car parts, and textiles have surged ahead. Columbia is particularly competitive in swimwear and Venezuela Exports Treemapunderwear; in 2013, its international sales in these categories brought in some US$ 133 million. As the export treemaps posted here show, Colombia is much less dependent on oil than Venezuela, its neighbor and rival. (Tensions between these two countries have intensified in recent weeks, as Venezuela has closed the border and deported hundreds of Colombians.)

Colombia GDP per capita mapBut despite the profitability of some of Colombia’s other exports, oil still looms large. Its significance is readily apparent in the map of per capita GDP posted to the left. As the map shows, the value of goods and services produced per person in Colombia’s 32 departments varies by more than an order of magnitude. The Colombia oil mapmost economically productive departments, Meta, Arauca, and Casanare, form the heartland of the Colombian oil industry. All are relatively lightly populated Colombia GDP per capita map 2lowland departments; Casanare, for example, has only around 350,000 inhabitants. Their economic productivity runs counter to the more general Colombian pattern, as the country’s elevated plateaus tend to be more prosperous than its lowlands. This pattern is apparent on the next map, in which the highland zone is outlined within dark black lines.

Per capita GDP figures, however, do not necessarily tell us much about the actual economic conditions found in particular places. At the sub-national level, wealth from extractive industries in peripheral areas often flows to more politically powerful regions. Unfortunately, more economically revealing statistics on such measures as average household income are not readily available for Colombia. Colombia Reports, however, has posted a Colombia poverty mappoverty-distribution map, which unfortunately lacks a key and excludes Arauca, Casanare and other eastern departments. As can be seen, oil-rich Meta has a relatively low poverty rate, but not to the extent that one might expect based on its raw economic output. Meta’s per capita GDP figure is roughly three times that of Cundinamarca, yet Cundinamarca, located near the capital city of Bogotá, has a lower poverty rate. Poverty is most pronounced in the distressed Pacific coastal department of Chocó, moreover, even though Chocó is more economically productive on a per capita basis than such departments as Nariño and Sucre.

Colombia kidnapping mapIn some respects, Colombia’s oil-rich departments are more troubled than many much less economically productive areas. The oil industry apparently attracts not just attacks on infrastructure by rebels, but also other forms of crime and violence. As the Colombia Reports kidnapping map shows, Meta, Arauca, and Casanare rank at the top of this unfortunate indicator. Kidnapping in Chocó, a department noted for drug smuggling and corruption, is also elevated.

Colombia’s oil industry is associated with a significant amount of environmental degradation, although its severity is much debated. Many locals even attributed a severe drought that hit Casanare Department in 2014 to oil extraction. Although oil drilling itself has no influence on precipitation, it is possible that a variety of oil-extraction activities reduce dry-season stream flow. Informed observers, however, are more inclined to blame such problems on deforestation in the headwater areas located in the Cocuy Highlands. More recently, however, the problem has been one of excess rain, as floods in early and mid-August 2015 forced many people in Casanare to flee to higher ground.

Colombia coal graphOil is by no means Columbia’s only major source of energy. The country has a fair amount of natural gas and significant hydroelectric potential. Coal is even more important. Colombia ranks 11th in the world in coal production, and its standing in terms of coal reserves is similar. Colombia’s reserves are almost entirely composed of high-quality anthracite and bituminous coal. Colombia coal mapAs a consequence, both production and exports have surged ahead in recent years. Colombia’s largest coal mines are located in the northern departments of La Guajira and Cesar, but deposits are widely scattered across the northwestern half of the country.

Global coal prices have dropped significantly, and the use of the fuel is of course increasingly opposed due to concerns about climate change. Some coal producers operating in Colombia, however, remain committed to expansion. As was recently reported in BloomburgBusiness:

Murray Energy Corp. plans to increase output at the Colombian coal mines it bought from Goldman Sachs Group Inc. this month, betting it can lower costs enough to withstand the prospect of several more years of low prices.

The U.S. coal producer founded by Robert E. Murray intends to push up the annual output rate at the La Francia mine in northern Colombia to 3 million tons by the end of the year from about 2.5 million tons now, Murray said in a telephone interview Monday from his headquarters in St. Clairsville, Ohio.

The industry is in a “very distressed and dangerous condition,” with low prices set to last through the end of 2017, he said. “Murray Energy has done its planning to contend with and compete in this depressed market.”

Local activists, not surprisingly, have leveled harsh criticisms against foreign-based coal producers operating in Colombia. Glencore PCL in particular has been accused of “whisking profits out of the country, while causing environmental and labor issues.”

 

 

Energy Issues in the Ukrainian Crisis

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Ukraine pipelines mapEnergy issues figure prominently in many discussions of the conflict in Ukraine. As is often noted, Europe’s reliance on Russian natural gas gives Moscow significant leverage. Ukraine, moreover, is weakened by its own dependence on Russian energy, and its situation is complicated by the Russian natural gas pipelines that transverse its territory. Less often noted are Ukraine’s own significant gas deposits, several of which are threatened by Russian actions. To be sure, Ukraine’s proven natural gas reserves—which ranked 24rth in the world as of 2010—are dwarfed by those of Russia: 1,104 billion cubic meters vs. 48,600 billion cubic meters. But Ukraine’s reserves are still substantial, and the country had hoped to emerge as a gas exporter. Many of its recent initiatives, however, have focused on offshore deposits in the Back Sea, which are now under effective Russian control. As was recently explained in B92:

The new authorities in Crimea decided to nationalize the oil and gas company Chornomornaftogaz, a part of Ukraine’s Naftogaz. Chornomornaftogaz owns 17 fields and has 13 offshore platforms, in the Black Sea and Sea of Azov, employing 4,000 people … [T]he company [will] soon be put up for privatization and Gazprom has expressed an interest. Chornomornaftogaz’s deputy chief executive Volodymyr Plechun told Forbes that “representatives of the new authorities took the helm of the company on March 13, accompanied by gunmen,” adding that four representatives of Gazprom were also there, and “immediately began to study documents.”

Crimea Natural Gas MapThe fate of Ukraine’s off-shore gas deposits remains to be seen. So does the eventual position of the de facto maritime border between Russian-dominated Crimea and Ukraine proper, a potentially vexatious issue.

Ukraine’s unconventional onshore gas deposits, however, may prove more important in the long run. The issue here is shale gas, trapped deposits that can only be released by hydraulic fracturing (fracking), a technique honed over past decade in the United States. According to 2011 data from the US Energy Information Administration, Ukraine’s “estimated recoverable shale gas resources” amount to 42 trillion cubic feet. This figure is the 18th highest in the world, although it is dwarfed by the 1,275 trillion cubic feet of China and the 862 trillion cubic feet of the United States. According to a 2012 Reuters article, Ukraine had hoped to start commercially production of shale gas by 2017. But again, Ukraine’s shale gas deposits are not necessarily geopolitically secure. Robert Kaplan, in his Time essay analyzed in Monday’s post, emphasizes this point, claiming that Putin has sought to “demonstrate Russia’s geographical supremacy over the half of Ukraine … Ukraine Shale Gas Mapblessed with large shale-gas reserves” (p. 33). In actuality, the situation is more complicated. As can be seen on the map posted here, the eastern Dniper-Donets shale-gas basin extends almost to Kiev, well inside the Ukrainian core, whereas the Lublin Basin, which may hold even more gas, is located in the heartland of Ukrainian nationalism in the west.

Shale Gas in Ukraine MapShale gas, however, is a notoriously controversial issue. Some optimistic expectations have been dashed, as tight gas can be difficult to extract even through the most advanced fracking techniques, and initial deposit estimates have not always panned out. Public opposition, moreover, can be even more challenging.

The failure of the shale-gas industry to develop as anticipated has been especially sharp in Poland. As reported in November 2013 by Krakow Post:

Two years ago, shale gas was being heralded as the key to a prosperous, energy independent Poland, and Central Europe as a whole was looking forward to a shale gas revolution like the one that has transformed the US economy. Today, several multinational energy companies have withdrawn from the region, disappointed by poor exploration results, excessive red tape, and protests by residents over the controversial gas-extraction process known as ‘fracking.’

Fracking is indeed controversial, regarded by green stalwarts as an abomination, assaulting Earth through the injection of toxic chemicals deep into its veins. Eco-modernists, on the other hand, tend to grudgingly support fracking, as the natural gas that it unlocks is much less carbon-intensive than the coal that it generally supplants. Debates between the two groups often focus on technical issues, such as the amount of methane that is inadvertently released during fracking operations.

In Europe, green opposition to the practice has generally prevailed. Fracking is banned in France and Bulgaria and under moratorium in Germany. Bulgaria’s decision to ban hydraulic fracturing in 2012 was particularly contentious, as it has been argued that pro-Russian forces organized the oppositional movement, fomenting protests and lobbying the Bulgarian parliament. If hydraulic fracturing were to prove as economically successful in Europe as it has in the United States, Russia’s clout in the region would be diminished. As a result, anti-Russian Bulgarian nationalists were appalled by the decision to ban the practice. Green activists, on the other hand, were thrilled.

The connection between energy and the Ukrainian conflict extends beyond the fracking debate. Critics charge that Europe’s—and particularly Germany’s—energy policies have played into the hands of Vladimir Putin, making the region unnecessarily dependent on Russian gas. In a recent article in the Financial Times, Bjørn Lomborg argues that:

The Ukrainian crisis has again put German energy policy in the spotlight. As long as Europe’s green energy is expensive and unreliable, it favours Russian gas and leaves the continent’s energy policy unsustainable. Germany’s energiewende, the country’s move away from nuclear and fossil fuels towards renewable energies has been regarded by some commentators as an example for the rest of the world. But now Germany shows the globe how not to make green policy. It is failing the poor, while protecting neither energy security nor the climate.

Germany New Coal Powerplants MapLomborg is an extremely controversial figure in environmental circles. A self-styled “skeptical environmentalist,” he is regarded by most members of the green movement as a mere apologist for polluting industries. Yet some of his charges against Germany’s energiewende are difficult to deny, as the program has faltered not merely on economic but also on environmental grounds. Certainly the country’s production of solar and wind power has surged, but neither renewable source of electricity provides the baseload that must be maintained when the sun is not shining and the wind is not blowing. Due to both to a drop in natural gas use and the phasing out of nuclear reactors, Germany has had to increase its use of of coal, especially of dirty lignite, swelling its emissions of carbon dioxide. The country has also turned extensively to biomass burning, which also has distinctly negative environmental consequences. Faced with a major squeeze on consumers due to its high energy costs and burdened by its failure to meet its own environmental goals, Germany is poorly prepared to face possible Russian retaliation in the gas market.

Germany’s energiewende has many defenders, who argue that it is much too soon to dismiss the program, as steady progress is being made in renewable energy efficiency. New York Times columnist Thomas Friedman takes a particularly optimistic position:

Anyone following the clean power industry today can tell you that there is something of a Moore’s Law now at work around solar power, the price of which is falling so fast that more and more homes and even utilities are finding it as cheap to install as natural gas. Wind is on a similar trajectory, as is energy efficiency. China alone is on a track to be getting 15 percent of its total electricity production by 2020 from renewables, and it’s not stopping there. It can’t or its people can’t breathe. If America and Europe were to give even just a little more policy push now to renewables to reduce Putin’s oil income, these actions could pay dividends much sooner and bigger than people realize.

It is too soon to tell whether Friedman’s sunny predictions will come to pass, but they strike me as somewhat naive. Germany is giving a huge “policy push to renewables,” and thus far its dividends have been rather meager. The idea that solar and wind power are at the verge of becoming economically competitive, moreover, has been repeated now for decades; I was taught exactly the same when I was an environmental studies major at the University of California at Santa Cruz in the 1970s. It is true that substantial progress has occurred in the intervening years, but a renewable energy panacea still eludes us. The biggest problem is that of storage. Although progress is also being made on this front, battery and other storage technologies remain inadequate—and batteries themselves are extremely environmentally damaging.

Considering Europe’s dependence on Russian energy and the current abundance of natural gas in the United States, many voices are now calling on the U.S. to drop its ban on exports and to begin shipping liquefied natural gas (LNG) to European markets. This proposal is strongly opposed by mainstream environmental groups, which condemn fracking and fossil fuels more generally, by American consumer organizations, which favor low domestic prices, and by the U.S. chemical industry, which also benefits from cheap gas. Some European countries, however, are keen to acquire non-Russian LNG from whatever source is possible. Currently, a major South Korean-made floating import terminal is being prepared for Lithuania. But the overall effects of lifting the U.S. export ban would probably be minimal, in large part because LNG prices are higher in East Asia than in Europe, likely making East Asia the favored export market.

Whatever the fate of LNG exports, the problems with Germany’s energiewende, are leading to some profound re-thinking. Eco-modernists, for example, are increasingly accepting nuclear power as the best near-term option, hoping that fusion power is not too far off in the future. But to the committed greens, nuclear power remains anathema. Their challenge is to devise alternatives that are environmentally, economically, and technologically viable.

Despite such problems, Europe has achieved much success on the energy front. As reported in The Economist, the region has partially filled its gas-storage reservoirs and has been integrating its gas pipeline network, thus reducing its vulnerability to sudden moves by Russia. Western Europe’s energy efficiency, and especially that of Germany, is also striking. Ukraine uses almost twice the amount of energy that Germany does per unit of GDP. As such, the government of Ukraine has been advised to study German techniques. Meaningful reform would probably necessitate phasing out its generous subsidies. As was recently argued in The Economist:

A major target for reform were Ukraine’s cushy energy subsidies. The state gas company, Naftogaz, only charges consumers a quarter of the cost of importing the gas. Cheap gas discourages investment: Ukraine is one of the most energy-intensive economies in the world and domestic production has slumped by two-thirds since the 1970s. The IMF ended up freezing the deal in 2011 after Kiev failed to touch the costly subsidies.

Reducing energy subsidies, however, is always a politically perilous maneuver, as it puts a new burden on consumers. Considering Ukraine’s current instability, action on this front will likely not be a high priority. Ukraine’s subsidies to Crimea, however, will almost certainly come to an end, and it will be interesting to see if Russia offers the peninsula a favorable subsidy scheme to prevent any further instability, or if Crimea will now have to pay more expensive Russian prices for its energy supply.

Nuclear Reactors Ukraine mapUnlike Germany, Ukraine is not abandoning nuclear power—despite having suffered the world’s worst nuclear disaster (at Chernobyl in 1986). Almost half of the country’s electricity supply currently comes from nuclear plants. Plans drawn up between 2008 and 2012 call for a major expansion of the industry. Most financing, however, was to come from Russia. According to the World Nuclear Association, moreover, “Ukraine receives most of its nuclear services and nuclear fuel from Russia.”

All in all, Ukraine faces a difficult energy situation in the near future.

Egypt and the World Diesel Price Map

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World Diesel Price MapThe price of fuel in Egypt, and especially that of diesel, has been featured in many recent news stories, owing to the perilous state of the Egyptian economy. As an April 1 article in Financial Times notes:

Egypt imports up to 70 per cent of its diesel, which it uses to fuel cars, farm equipment and power plants. In addition, it subsidises diesel to the tune of at least $1.5bn a month, draining the country’s already perilously low hard currency reserves. A spate of shortages in recent weeks has raised questions about Egypt’s ability to keep the lights on, feed its people and prop up its moribund economy in the coming months.

But Egypt is not the only country that subsidizes diesel. In fact, at US$ 0.32 per liter, diesel is expensive in Egypt compared to what it costs in some other countries. In Venezuela, Iran and Saudi Arabia, the corresponding figures are $0.013, $0.016 and $0.067 respectively. Those three countries, or course, are major oil exporters, unlike Egypt. Egypt is now a net importer of oil, although it does have abundant natural gas deposits. In no other net oil importer is the price of diesel even close to that found in Egypt. Although Sri Lanka appears on the map in the same color as Egypt, its diesel price is as at 0.66 US$ per liter.

As can be seen on the map, based on data from the World Economic Forum’s Travel and Tourism Competitiveness Report, diesel is generally expensive in the major industrialized countries and inexpensive in the major oil exporters. Oil-exporting Norway, however, has the world’s second highest price level, exceeded only by that of Turkey. Canada and especially the United States stand out for their relatively low prices. Prices vary greatly in Latin America and especially sub-Saharan Africa, which reflect governmental subsidies more than anything else.

I would like to post a world map of natural-gas prices, but I have not yet been able to find one, or the data necessary to construct my own.

 

The Controversial Global Boom in Dam-Building and Hydroelectric Power

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In scanning the global news for potential GeoCurrents posts, I am often struck by the repeated appearance of dam-building controversies.  The construction, or proposed construction, of massive dams has been a major issue of late in countries ranging from China, to Burma, Laos, Gabon, Ethiopia, Brazil, and Canada. The emerging Belo Monte Dam on the Xingu River in northern Brazil has generated world-wide controversy, with concerted opposition from environmental and indigenous-rights groups. As opponents note, the dam, which is will be the third largest hydroelectric facility in the world when completed, “will displace up to 20,000 people while diverting the Xingu River and flooding as much as 230 square miles [596 square kilometers] of rainforest in Brazil.” For the past several weeks, work has been slowed by a sit-in of some 300 Brazilian Indian activists; on July 11, however, the occupation was called off after the project’s organizers promised to “help monitor Indian lands to keep outsiders at bay and establish committees to monitor the environmental impact of the dam.”

Yet when it comes to truly massive reservoirs, the major surge of development ended a generation ago. As the map posted above shows, none of the world’s ten largest reservoirs (by surface area) have been built in the last 30 years. The projected flooding of almost 600 square kilometers of land by the Belo Monte dam may seem gargantuan, but compare that to the 8,482 square kilometers inundated in 1965 by Lake Volta in Ghana, formed behind Akosombo Dam. This huge lake almost dominates the map of Ghana.

Lake Volta and the Akosombo Dam have been harshly criticized on environmental and human-rights grounds. Some 78,000 people were displaced by the rising waters. Fertile, river-bottom lands were lost, and the prevalence of bilharzia, river blindness and malaria increased. But the project has also delivered abundant, renewable power to Ghana and neighboring countries. Whether such power is adequate for the rapidly growing regional population of is another matter. As a recent report in GhanaWeb frames the issue:

 It beggars belief that since the Akosombo Hydro Electric Dam was completed in 1966, we still have some Ghanaians in the villages and rural areas who are not connected to the national grid. Consider the fact that we cannot boast of any substantial manufactures yet our domestic demand for power far outstrips the supply.

One of the main problems with the Akosombo project is its relatively low power to size ratio. Although Lake Volta is the world’s largest reservoir by surface area, its generators produce only about 1,000 megawatts of power, which pales in comparison to the 22,500 megawatts generated by China’s Three Gorges Dam. Even the world’s 50th largest hydroelectricity facility, Iran’s Karun I, produces twice the power that Akosombo does. Dams are of course built for a variety of purposes, but Akosombo was designed specifically for power generation, focused initially on the aluminum smelting industry, with minimal provisions for irrigation, navigation, or flood control. Its power limitations are imposed in part by Ghana’s topography, which has relatively modest differences in elevation.

Over the past several decades, dam construction over much of the world has come to emphasize hydroelectric power generation more than it did in the past, focusing on large rivers with significant elevation drops. In such circumstances, relatively small lakes can lie behind dams with giant turbines. Compare, for example, the dates listed on the map of the world’s largest reservoirs posted above with those listed on the map of the world’s largest hydropower facilities, posted to the left. Most vast reservoirs were constructed decades ago, whereas many of the largest hydropower facilities have emerged recently. As can easily be seen, China has been a crucial player in this process. It is thus hardly surprising that Chinese firms have been instrumental in pushing the global dam building agenda, particularly in mainland Southeast Asia.

By global standards, even the largest reservoirs and hydroelectric facilities in the Unites States are relatively modest affairs. The country’s most extensive reservoir is Lake Sakakawea on the Missouri River, which covers 1,550 square kilometers, a figure that does not come close to making the global top ten list (the world’s tenth largest reservoir, Venezuela’s Lake Guri, covers 4,250 sq. km.) A similar situation obtains in regard to water volume. In this regard, the largest U.S. reservoir is Lake Mead on the Colorado River; its the capacity of 35.7 cubic km. is dwarfed by Lake Kariba’s 180 cubic km., found along the Zambia-Zimbabwe border. In regard to hydropower, the U.S. does have one dam in the top ten, fourth-placed Grand Coulee. Its 6,809 megawatt capacity, however, is not so impressive compared to the 22,500 megawatt capacity of China’s Three Gorges Dam. The next highest entry in the U.S., Chief Joseph Dam, also on the Columbia, ranks 28th. China has eight hydropower facilities larger than Chief Joseph, Brazil five, Russia five, and Canada four.

Most large reservoirs and hydroelectric stations in the United States, moreover, were constructed decades ago. The only major project completed in the past thirty years is the Bath County Pumped Storage Station in northwestern Virginia. The same year saw the initiation of the New Waddell Dam project in Arizona, the most recently constructed of the largest 120 reservoirs in the country. In the U.S., news stories about dams are generally about dismantling, not construction.

Yet at one time, much larger dams were envisaged for the United States. In the 1950s, the U.S. Army Corps of Engineers pushed the Rampart Dam on the Yukon River in Alaska, which would have created a reservoir more than three times the size of top-placed Lake Volta. The proposed dam was often linked to a vastly larger project, the North America Water and Power Alliance (NAWAPA), which would have re-engineered the hydrological system of much of the continent, entailing 369 separate construction projects and creating dozens of new reservoirs. In some versions of the project, most of the 990-mile long Rocky Mountain Trench in British Columbia would have been inundated.

 

 

Mounting environmental and native-rights opposition finally forced the cancellation of the Rampart Dam project in 1967. In 1980, the area slated for flooding became the Yukon Flats National Wildlife Refuge, preventing any future revival of the plan. Environmental opposition, as well as widespread geopolitical hostility in Canada, led to the abandonment of the NAWAPA as well by the 1970s. NAWAPA still has its supporters, however, most notably the followers of the American political activist Lyndon LaRouche, who is often regarded as an extremist, a conspiracy theorist, and a cult leader. But if drought conditions persist in Texas and elsewhere in the United States, which many climatologists regard as a harbinger of things to come, the NAWAPA idea could be reawakened. Still, Canadian and environmental opposition—along with the astronomical price tag—would make any actual revival exceedingly difficult.

But if NAWAPA remains a pipe dream, other massive hydrological engineering projects seem much more likely. Feasibility studies are currently being conducted for the Grand Inga Dam on the lower Congo River in the D. R. Congo. Plans call for a hydroelectric plant of some 39,000 megawatts, almost twice the amount currently produced by China’s Three Gorges Dam. Beyond the Grand Inga project, the Congo River has vast hydroelectric potential, owing to its massive flow as well as its substantial drop along its lower course.  Approximately thirteen percent of the entire global hydropower potential derives from the Congo alone. If harnessed, the river could easily supply all of the electricity demand not just of the D. R. Congo, but of all sub-Saharan Africa.

Owing to the prospects of such abundant power, many African leaders clamor for the Grand Inga project. South Africa, which sees itself as the continental leader, is deeply interested. As AllAfrica reported in November 2011, South African president Jacob Zuma then signed a Memorandum of Understanding with President Joseph Kabila of D.R. Congo, calling for South Africa “to facilitate the funding and construction of the Grand Inga Dam.” The AllAfrica article goes on to summarize the project in glowing terms:

The Grand Inga is a beautiful vision. Harnessing Africa’s raw power from the very centre of the continent, lighting up the heart of darkness with renewable, environmentally friendly energy, at the same time saving the precious rainforests which at the moment are the DRC’s only source of electricity.

Increasing Africa’s electrical output generally, making electricity cheaper and readily available, allowing Africa’s industrial and manufacturing sectors to really take off.

Running power lines all through the continent, forcing countries to rely on each other for power, thereby removing and incentive toward the perennial conflict and war. Good for the environment, good for development, and good for peace.

It’s a pan-Africanist’s wet dream, if you’ll excuse the pun; and, with South Africa’s involvement, is closer than ever to being realised.

Such optimistic views, of course, are not universally held. Environmental opposition to the proposed project is pronounced, and will no doubt intensify if construction seems imminent. The environmental NGO International Rivers, for example, implies that Grand Inga is nothing but a grand illusion. But hydroelectric development actually presents a major paradox for environmentalism, as we shall see in the next GeoCurrents post.

 

Mapping Renewable Electricity Generation

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The use of renewable energy sources (hydro, solar, wind, geothermal, and biomass) for electricity generation varies profoundly from country to country, ranging from 100 percent in Albania, Iceland, Paraguay, and Tajikistan to less than 1 percent in Belarus, Eritrea, and Jordan. Intriguingly, the map bears no resemblance to that of economic development; the highest levels of “renewability” are found in some of the world’s richest countries (Norway) and some of the poorest (DR Congo). Low levels are also found across the developmental spectrum.

As can be seen in the relatively comprehensive and only slightly out-of-date data-table in Wikipedia from which the map was generated, the vast majority of renewable energy worldwide comes from hydropower. With just a few exceptions, other sources are negligible (a subsequent GeoNote will explore electricity generation through solar, wind, geothermal, and biomass in more detail).

High levels of renewable electricity generation are typically found in mountainous countries with abundant precipitation, conditions favorable for hydropower (such as Norway, Albania, Bhutan, and Laos). Gargantuan dams on huge rivers can put lowland countries in the same category; Paraguay, for example, gets almost all of its electricity from Itaipu Dam on the Paraná River. Meager electricity consumption can do the same thing. Central African Republic, for example, ranks high on the map; over 80 percent of its electricity comes from hydro, yet its total hydro figure is a paltry 0.130 GWh (2008). Finland, in contrast, a country of similar population, generates 12,588 GWh of electricity though hydro and another 8,586 through biomass, yet it manages to produce only about 30 percent of its electricity through renewable sources (2009).

As the map shows, relatively little electrical power is generated through renewable sources worldwide. Actually, the map should be redder than it is, as almost all of the countries shown as having “no data” produce small amounts of renewable energy.

Iceland to Export Electricity to Britain?

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Iceland is by far the world’s richest country in terms of per capita renewable energy. 81 percent of Iceland’s total energy needs are derived from renewable sources, mostly geothermal and hydroelectric, as is 100 percent of its electricity. As a result of Iceland’s abundant resources, its electrical power is cheaper than anywhere else in Europe. The possibilities for expansion, moreover, are substantial, especially in the areas of hydroelectric power and wind power.

Economically troubled Iceland has been keen to take advantage of its low-cost, renewable energy resources on the international market. It has long engaged in aluminum smelting on a massive scale, a energy-intensive industry that raises environmental concerns of its own. Roughly 80 percent of Iceland’s electricity is currently used in aluminum plants. More recently, Iceland has turned to developing electricity-intensive server farms, an activity that also benefits from the country’s cool climate (computer servers require extensive cooling in warm areas). In February, a firm called Verne Global opened a large server farm on a decommissioned NATO base near the country’s main airport.

More recently, plans have been developed to directly export electricity from Iceland to the U.K. through undersea “interconnector cables.” Transmitting energy by way of High Voltage Direct Current (HVDC), interconnector cables are highly energy efficient, losing only two to three percent of power over 1,000 kilometers. Laying the cables, however, would be a very expensive proposition, owing both to engineering challenges and to the fact that each kilometer will contain roughly 800 metric tons of copper. In late May, however, Iceland and the U.K. agreed to begin working on the project and to cooperate more generally on energy initiatives. The U.K. has limited renewable energy resources of its own, and hence is eager to tap those of other countries. As the Guardian map of existing and proposed interconnector cables posted here indicates, Britain is also interested in Norway’s abundant hydroelectric resources.

Although the electricity-export scheme would have major environmental benefits when analyzed at the regional and global scales, in regard to Iceland it would come at a certain cost. As a result, Icelandic environmental groups remain skeptical. According to a recent article in Utility Products, environmental activists in Iceland argue that “The proposed cables would put pressure on building more power plants, both hydro and geothermal, for exporting energy. These are often located in sensitive wilderness areas which we want to protect. In addition, the Icelandic power transmission system would need much bigger transmission lines with associated visual and other environmental impacts to connect to the undersea cables…”

 

Regional Variation in Gasoline and Electricity Prices in the United States

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Regional differences in the price of gasoline in the United States are often discussed, with many observers noting that higher prices tend to be found in left-leaning states that have more stringent regulations and higher taxes.  Maps of gasoline price, such as those supplied by GasBuddy.com tend to bear out this generalization, although some exceptions are evident. Democratic-voting Minnesota, for example, has lower gasoline prices than Republican-voting Indiana. (GasBuddy also provides highly detailed local maps of gasoline prices, updated regularly.)

Less often discussed is the fact that electricity prices in the United States vary vastly more than do gasoline prices. Here, political correlations are weak to non-existent, while variation within some states is profound. Price differentials here are partly rooted in the source of electrical power.  Low prices in Washington state in the northwest, for example, reflect the cheap and renewable power generated by massive dams on the Columbia River.

Electricity price differences across Texas are especially notable, a topic that would merit further exploration.

Alaska’s Energy Economy and the Japan Connection

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Alaskan newspapers recently announced that their state had just been surpassed by North Dakota as the second largest oil producer in the United States (after Texas). The announcement sparked discussions about why Alaska’s production is falling while that of North Dakota is booming. Whatever the reasons, the geographical transformation of the U.S. oil industry over the past few years has been pronounced, occurring too rapidly to be noted by many top reference sources. Wiki Answers, for example, still claims that the top oil-producing states are “Alaska, Oklahoma, California, Texas, and Louisiana,” without even mentioning North Dakota. As can be seen in the graph, as recently as one year ago the oil output of both Alaska and California exceeded that of North Dakota.

Although Alaska’s oil production will likely continue to decline, natural gas may be a different matter. Large quantities of gas are derived from oil drilling in the North Slope (the Arctic coastal region), but as bringing the gas to market is currently impossible, it is simply injected back into the oil deposits. Recently, however, the Alaskan legislature voted in favor of building a pipeline to transport natural gas from the North Slope to the southern part of the state. This controversial project will have to clear additional hurdles, but events elsewhere in the world have increased the likelihood of its eventual approval.

The signal event in question is Japan’s shutdown of its entire nuclear power industry. Without the use of its nuclear power plants, Japan has been forced to quickly increase its energy imports. Small quantities of natural gas from southern Alaska have long been liquefied and shipped to Japan; the current plan is to vastly expand this trade by tapping North Slope supplies. As Olga Belogolova, writing for the Homer Tribune, explains:

 Alaska needs Japan as much as Japan needs natural gas. No pipeline transports gas from Alaska to the lower 48, and the economics—near-record-low prices for gas combined with the shale boom across the country—don’t support building one. …
Meanwhile, profits are far higher in Asia than in Europe and the United States. Asian LNG prices hover around $14 to $16 per million British thermal units, while the U.S. surplus has brought domestic prices down to $2 to $3 per MBtu. This stark disparity means that no viable market for Alaska’s gas exists in the rest of the U.S., but the Japanese government is the perfect customer, because it badly needs the fuel and is willing to pay above the market price.

Alaska is by no means the only place seeking to capitalize on Japan’s surging energy demand. Huge gas deposits are also found in the delta of the Mackenzie River in far northwestern Canada; here as well a massive pipeline project has long been on hold, due mainly to environmental concerns. But as Reuters recently reported:

 The native-owned corporation that would control a third of a long-delayed gas pipeline in Canada’s Far North is open to discussing the idea of a liquefied natural gas project that would allow reserves to be shipped to Asia to kickstart development.

Similar processes are also occurring elsewhere in the world. Reuters is also reporting that:

 Western companies announced finds of huge additional quantities of gas off the coast of Mozambique and Tanzania, cementing the future of East Africa as a major new supplier exporting liquefied natural gas (LNG) to energy-hungry Asia.

 

Problems Surrounding the Oil-Boom in Northwestern North Dakota

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North Dakota is a sparsely settled state that has seen its population languish for decades. Home to 680,845 people in 1930, North Dakota held only 672,591in 2010. Currently, however, the state is experiencing a rebound, most notably in its oil-rich northwestern region. Workers are flowing into Williston (population 14,716 in 2010), the main town in Bakken Formation area, which has oil reserves estimated at some 18 to 24 billion barrels.

The recent population surge is resulting in major issues in the Williston area. Workers are arriving faster than they can be accommodated. The lack of local housing has forced oil-field employees to set up “man camps” where they live in recreational vehicles. Many established residents view such settlements with alarm. As a result, the Williston City Commission has recently “introduced an ordinance that would make it illegal to live in a camper within city boundaries. If passed, the law would make living in a home on wheels a misdemeanor punishable by a $500 fine.” Many workers stay in Williston during the work week only, returning home during their off periods. As a result, Williston’s train station is now the fastest-growing Amtrak depot in the country: “The once-sleepy little train station in western North Dakota where the sole ticket agent knew passengers by name is now overflowing with oil workers.”

The booming economy of the region demands other forms of infrastructural investment as well. Communications demands were recently addressed when Midcontinent Communications announced a $3 million plan to extend its fiber optic network to Williston, promising rapid, broadband internet connections.

Rapid growth is also resulting in a crime surge. Although North Dakota still has one of the lowest crime rates in the country, the Williston area is no longer particularly safe. According to a recent article in Boston.com, “Booming oil production in the Northern Plains is spurring law enforcement from the U.S. and Canada to gird for a spike in crimes ranging from drug trafficking to prostitution.”

Republic of Congo/Congo Republic — and its Oil Development

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Searching the internet for the Republic of Congo can be a frustrating exercise, as returns are dominated by the country’s neighbor, the Democratic Republic of Congo (DRC). The DRC is a much larger and more populous country, and its security problems and general misgovernment are considered more newsworthy. To find information on the smaller of the two Congos, a former French rather than Belgian colony, it is best to search for “Congo Republic.”

News on the Republic of Congo in the global sphere tends to be dominated by the oil industry. The country is not a huge oil producer, but it is situated in the western African oil belt, where most of the main fields are located offshore. In recent years, oil-driven economic growth has been rapid, with GDP expansion reaching almost eleven percent in 2010, but investment had been lagging. Congolese oil production has long been dominated by French and Italian companies, but that situation seems to be changing as the country seeks new investments. Bloomberg recently announced that Chevron, the second largest U.S. oil firm, would be investing $1.9 billion in Congo’s Lianzi oil field. Congo is also working with neighboring Angola, a much larger oil-producer, to develop offshore deposits. As recently reported by allAfrica:

 Two accords for development and exploration of the Lianzi trans-frontier oil field, situated in the common maritime zone between Angola and Congo Brazzaville, were signed Friday in Luanda. ….The first of the deals sets the mechanisms for the sharing of revenues from the exploration of the field that will start production in 2015, whereas the second relates to the opening of a joint account for deposit of the incomes resulting from the operations.

The Colombian-Venezuelan Energy-Led Diplomatic Thaw

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Relations between Colombia and Venezuela have been so tense over the past decade that it sometimes seemed that the two countries were at the verge of war. Such tensions, however, have recently diminished to the point where the neighboring states are now discussing building a pipeline to transport Venezuelan crude oil to Colombian ports, a project enthusiastically backed by China. Just this week, moreover, the Colombia company Ecopetrol, the country’s largest oil and natural gas firm, announced that it would soon be drilling for oil in Venezuelan territory.

The improvement in Colombian-Venezuelan relations is often linked to the election of Juan Manuel Santos to the presidency of Columbia in 2010, as he is considered to be more accommodating to Venezuelan interest than his predecessor, Álvaro Uribe. But it is also true that the fossil fuel industries of the two countries, as well as their economies more generally, can profit through increased cooperation. Colombia’s economy is currently booming, having grown by 5.9% in 2011, due in part to the expanding oil and natural gas sectors. But Colombia’s fossil fuel deposits are limited, and Venezuela’s vast reserves beckon. Venezuela’s oil and gas economy, meanwhile, has been held back by the politicization of the industry, and investment by foreign firms is needed.

Other complementarities further link the energy sectors of the two countries. For example, the Trans-Caribbean gas pipeline, inaugurated in 2007, takes natural gas from Colombia’s Guajira Basin to Venezuela’s Maracaibo oilfields. Gas is then injected into the semi-depleted oil reservoirs in order to boost production. The Colombian oil and gas industry, moreover, has been held back by periodic attacks on pipelines by leftist rebels, who have allegedly received support from Venezuela in the past. Improved diplomatic relations between the two countries could also be helpful on this score.

 

 

 

 

 

 

 

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