“Oil is ammunition - use it wisely”. Thus went an admonition popular in the United States of the 1940s, evidence of the importance of oil to the war economy - and war effort - of the time. Some 80 years later, and despite the continuing development of alternative energy sources, oil still plays an outsize role in global politics and economics. The Department of Political and Peacebuilding Affairs (DPPA) and the Department of Peace Operations (DPO) are looking at ways the oil industry is relevant to international peace and security, just one of a series of innovative initiatives aimed at improving the UN’s analysis capacity and its ability to detect and defuse potential tensions.
The last decade has seen dramatic transformations in global energy dynamics. Saudi Arabia is no longer the world’s top oil producer, a distinction now held by the US, which has also supplanted Russia as the largest producer and exporter of natural gas. Technological disruption has sparked major changes. The development of Liquefied Natural Gas (LNG) technology allows buyers to be more selective about their suppliers as they’re no longer tied to distribution via static pipelines. LNG has thus reduced the political significance of existing gas pipelines. And notwithstanding climate change concerns, between 2006 and 2017, oil and gas consumption rose by 13 per cent, driven by demand from Asia, with China nearly doubling its consumption in the last decade.
What has not changed?
While the global ranking of oil and gas producers may have been upended, the significant role of the industry in domestic politics remains a constant. According to the Natural Resource Governance Institute, at least 25 countries are “national oil company-dependent”, meaning that their national oil companies collect revenues equivalent to more than 20 per cent of all government revenues. This helps explain the industry’s strong influence in decision-making on economic strategy, distribution of wealth and power, national security and foreign policy. The public’s trust in governments’ ability to use oil revenue for national development depends heavily on how well the national oil company is run, how much revenue it transfers to the state, and the quality of its spending, a dynamic that is not new.
How DPPA analyses these issues
Understanding the political economy of countries and regions forms a critical component of DPPA’s comprehensive political analysis. Strategic considerations around energy security and the geopolitics of oil and gas can influence political decision-making and affect the formation of alliances around the world. Over the past year, experts within DPPA and DPO have established the “Oil Working Group”, a voluntary knowledge management initiative that, in collaboration with private sector and academia, organizes study sessions and discusses recent oil and gas-related developments and their potential impact on regional peace and security.
“This is an ecosystem for a brand new inter-disciplinary collaboration,” said Naoko Takahashi Taymanov, initiator of the Oil Working Group. “While ‘Oil and Politics’ might not sound new for political analysis, the industry and technology are constantly evolving,” she adds. “We must address this ‘classic’ topic with new methodologies and approaches.”
The Oil Working Group has hosted informal working-level discussions among staff working on Chad, Libya, and Sudan to examine cross-border linkages. A key element of these discussions was how conflict dynamics in each of the three countries are shaped by the movements of people and commodities across them, including in relation to oil, gold, military assets, and migration/trafficking.
“We invited the Working Group members to get a snapshot of their techniques in undertaking such a geopolitical-commercial analysis,” said Sumie Nakaya, who works on Sudan in DPPA-DPO. The joint analysis on cross-border issues in the three countries helps shape policy for UN engagement.
”Directly or indirectly, oil and gas market dynamics affect many of the situations that we monitor around the world, including areas we have field presences in,” said Daanish Masood, a member of DPPA’s Innovation Cell. “This necessitates that we pay close attention to the intersection of oil and gas with geopolitics, and the Oil Working Group is a vital part of that effort.”
Chart source: Energy Information Administration