- The Washington Times - Friday, February 1, 2008

ANALYSIS/OPINION:

While worries about $100-per-barrel oil tend to grab the headlines, the uninterrupted delivery of clean-burning natural gas from politically stable countries into the United States, Europe and Asia should be the focus of Western energy security. Domestic natural-gas production for both North America and Europe is at or near its peak while demand for natural gas on both continents continues to rise. More than 50 percent of homes in the major OECD countries are committed to natural gas heating systems, and a significant percentage of commercial, industrial and electric power generating concerns are also natural gas-fueled.

With more than 50 percent of its imports from Russia alone, Europe is “sleepwalking” into a staggering dependence on imported gas from Moscow, thus seriously jeopardizing its energy security. Separated by two oceans from new supplies of natural gas, the United States is becoming the largest and fastest growing liquefied natural gas (LNG) market in the world. By 2020 U.S. LNG imports could account for up to one-third of worldwide annual LNG demand, forecasted to nearly triple from 140 million tonnes per annum (MTA) in 2005 to 410 MTA by 2020. Total worldwide natural-gas consumption in 2020 is estimated to be approximately 150 trillion cubic feet (tcf), compared to 100 tcf in 2004. China’s rapidly growing demand for clean energy is much greater than any projected increases in its production capacity, therefore making it likely that China becomes a major LNG importer in the future.

The countries with the largest reserves of natural gas are Russia (1,680 tcf), Iran (971 tcf) and Qatar (911 tcf). Russia is able to supply considerable amounts of natural gas by pipeline but has not always been a dependable supplier at agreed-upon prices. Iran’s natural-gas reserves are largely undeveloped and its current production capacity is consumed domestically or by neighboring countries. What should concern the West is that Moscow and Tehran control 42 percent of total worldwide reserves of natural gas. Furthermore, Presidents Vladimir Putin of Russia and Mahmoud Ahmadinejad of Iran have not hesitated to use energy supplies as a political weapon. Fortunately, the ruler of Qatar, Sheikh Hamad bin Khalifa al-Thani, believes that his energy-rich country must play a responsible role as an emerging giant of global energy markets. His track record since assuming power 12 years ago bodes well for the West.

The emir has overseen the investment of billions of dollars to develop state-of-the-art LNG facilities to deliver natural gas worldwide. With LNG production capacity of 31 MTA, Qatar is now the largest-capacity LNG producer in the world, having surpassed Indonesia’s 30 MTA capacity. By 2010 Qatar is targeted to have 77 MTA of total LNG production capacity. Unlike other LNG producers, Qatar had the vision to incorporate economies of scale into its LNG development by building shared facilities for multiple phases of project development from the beginning, thus creating a streamlined, cohesive operating concern with diverse international partners.

Since succeeding his father, Sheikh Hamad’s mission has been to reform Qatar’s institutions and international partnerships based on the proven values of good governance. The emir believes that good governance requires investing in education, zero tolerance for corruption, religious pluralism and allowing space for democracy in his conservative Muslim country. For example, to combat corruption he has made a break from the region’s standard practice by making it very clear that anyone interested in doing business in Qatar must deal directly with the government and not through “agents” or “facilitators.” Thus, unlike in Russia and Iran, American and European companies such as ExxonMobil and Shell are finding it easy to invest billions of dollars in Qatar due to its transparent fiscal and legal regimes.

In February 2007, Qatar hosted a celebration with Japan for never having defaulted in 10 years of supplying the Asian country. The stability of Qatar as an energy supplier in the combustible Middle East rests on Sheikh Hamad’s notion that there are no contradictions between Islam and democracy. If Arab countries like Qatar embrace pluralism rather than authoritarianism, he reasons, then, citizens with differing ideologies — secular vs. religious, traditionalist vs. modernist — can participate in the political life of their nation without resorting to terror and mayhem.

In addition to finding a subtle balance between traditional Islamic values and the imperatives of modernity as an anchor for internal stability, Qatar openly seeks to foster closer political and security relations with the United States and Europe. For example, Sheikh Hamad’s support for the U.S. Central Command on Qatar’s territory is unprecedented.

As the world becomes increasingly dependent on natural gas, the security of supply from Qatar to “energize the world” takes center stage. In short, this small nation at the epicenter of the Persian Gulf has positioned itself brilliantly to become a responsible partner in the burgeoning worldwide natural gas market.

S. Rob Sobhani is president of Caspian Energy Consulting.

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