By IPCS

By Dr. Venkat Lokanathan

With the US stepping up effort towards its Asian rebalancing strategy, three fundamental elements must be understood: Are the US strategic lenses now shifting away from Europe to Asia? Is Asia the playground for the next Great Game? Is the Asian rebalance aimed at containing China?

Firstly, the US focus is not shifting away from Europe and towards Asia; and neither is the US attention towards Asia a new phenomenon. It is important to bear in mind that Asia was never on the sidelines of US policy. The continent has always been important to the US. What is unfolding at the moment is the rise in the intensity of focus towards the region.

During the Cold War, Europe, given its geographical proximity to the then Soviet Union, enjoyed greater importance in the US policy-making circles, an example being the Marshall Plan for economic aid to the continent.

However, a variety of its associations with Asian nations, such as Washington’s alliance with Japan following the Second World War; its support of South Korea in the Korean War; its active backing of the Taiwanese cause; involvement in the Vietnam War; the attempt at rapprochement with China and their subsequent cooperation against the then Soviet Union in Afghanistan, among others, defined and reinforced Asia’s role as a playground for US activities. Subsequently, the disintegration of the Soviet Union rendered Europe as less strategically important, comparatively.

Secondly, post the Cold War, Asia’s significance in the US strategic calculus rose primarily as a result of four factors.

The US has consistently remained apprehensive of three looming potentially armed conflicts between Asia’s nuclear powers: India and Pakistan; India and China; and North Korea and South Korea. The US efforts in the region are towards achieving ‘deterrence stability’ to ensure that low intensity conflicts do not trigger nuclear war.

The concern over the security of nuclear weapons in India, Pakistan and North Korea has driven the US to actively monitor and engage with the region.

Post the Cold War, Asia has emerged as the productive motor of the global economy – be it Asian Tiger economies in the early 1990s or India and China over the last decade. Given the grim situation at home, the US views Asia’s economic potential as a means to revitalise its own economy. At present, this region performs the role of a foundation for a range of new institutional innovations. In the future, much of the competition for influence will be on access to membership in such institutions – complimenting the capitalist approach to decision-making in the US.

The vast reserves of natural resources in Asia’s oceans have also resulted in increasing maritime competition. Additionally, ensuring the security of sea lanes used for trade and other projects, especially with linkages to the Straits of Hormuz, Malacca and Sunda, has become a critical issue.

However, post 9/11, the US’ priorities in Asia got diverted. Not surprisingly, the ensuing ‘War on Terror’ assumed a greater precedence for the US. With this war slowly winding down now, Asia, as a region, has reassumed its primacy in US lenses. This rebalance thus stems from a terror and threat-centric perspective, and it is not dictated by the emergence of a ‘Great Game’ played out in an opportunity-rich Asia.

This does not spell the reduction in importance for regions outside Asia for the US. Given the geopolitical developments in the Arctic region, the energy-rich Persian Gulf, or the politically unstable Middle East in recent times, the US’ priorities will keep shifting rapidly.

Thirdly, the US is not fond of emerging regional hegemons, as it perceives them as a threat to its old alliances. Currently, it is undertaking efforts to refresh old alliances and forge new partnerships through preferential Free Trade Agreements under the umbrella of the Trans-Pacific Partnership.

The US has also realised the significance of a narrow military strategy, characterised by the shift of a marginal 3 per cent of its forces to the region. This is Washington’s attempt to prepare a response to Beijing’s strategy of Anti-Access/Area-Denial. Essentially, the rebalance is a symbolic announcement of the US’ intent to maintain force as an option for itself, while it simultaneously advices others against it.

Although the US government has publicly denounced the possibility of a containment strategy several times, it is important to note its recognition of the fact that its economic ties with China are too immense to engage in the conventional containment strategy that was adopted against the Soviet Union.

Ironically, growing economic ties, largely characterised by a negative balance of trade, has actually created complications for the US, unlike during the Cold War, where the confrontation with the Soviet Union could be blatantly aggressive and seen as a simple zero-sum game. Hence, rebalancing, for the US, is also about walking the tight rope between balancing relations with China as well as its own regional allies.

Dr. Venkat Lokanathan
Assistant Professor and Coordinator, Master’s Programme, Department of Political Science, St. Joseph’s College, Bangalore

The article The US And Asia Pacific: Is The Rebalancing Merely Symbolic? – Analysis appeared first on Eurasia Review.

By Jim Kouri

The campaign to stop federal violations of the U.S. Constitution’s Second Amendment at the state and local level got two big boosts with the introduction of the Second Amendment Preservation Act in Arizona and an important police endorsement for a similar bill pending in Florida, according to press statement released on Monday by a national think-tank based in Los Angeles, Calif.

According to the Tenth Amendment Center, Florida’s HB733 picked up the endorsement of the Constitutional Sheriffs and Peace Officers Association. Sheriff Richard Mack founded CSPOA and he’s a former sheriff in Arizona.

The highly-decorated law enforcement chief said his organization supports the Florida Second Amendment Preservation Act, and he would like to see every state in the Union take the same path.

“This bill is one more needed action in the growing movement to return the powers not expressly given to the federal government back to the States and the People, according to the Constitution. We are in league with this legislation, and we encourage every state to enact similar laws,” Mack stated.

CSPOA is in the process of communicating it’s support to legislatures throughout the country, according to Rick Dalton, CSPOA legislative liaison. “Our members are on the front lines and this kind of law will aid us in standing firm in defense of the rights of the people we serve,” said he said.

Eugene Morrissey, also a retired police commander, told the Examiner that he believes this is a step in the right direction for states seeking to articulate their sovereignty. “We have finally been visibly confronted with a federal government in the throes of lawlessness. The current White House has little regard for constitutional law and even less regard for American citizens,” said Chief Morrissey.

“Obama told Americans ‘if you like your doctor, you can keep your doctor,’ but we discovered that was a lie. He’s also claimed he is not seeking to take Americans’ guns away, but we know he and his attorney general are chomping at the bit to grab those weapons,” Morrissey added.

CSPOA just held a conference last week in Las Vegas where all those present signed a resolution putting the federal government on notice that lawless and unconstitutional federal activities will not be tolerated where its members have jurisdiction.

In fact, a police commanding officer in New Mexico returned to his office after attending the conference in Las Vegas to find he was placed on “administrative leave” by political leaders in his jurisdiction, according to an Examiner news story.

Jemez Springs, New Mexico, Police Chief Shane Harger was arbitrarily terminated, in part, for his participation in a conference of Constitutional Sheriffs and Peace Officers Association (CSPOA) in Las Vegas one week ago, according to the Examiner.

Along with eight other sponsors, Arizona state Senator Kelli Ward introduced the Second Amendment Preservation Act in the Grand Canyon State. SB 1294 declares all federal regulations violating the Second Amendment “invalid and void in this state.” It also prohibits the state from enforcing “any federal act, law, order, rule or regulation that relates to a personal firearm, firearm accessory or ammunition within the limits of this state.”

“We’ve sat back and allowed the federal government to trample the Constitution long enough,” Ward said. “We’re going to pass this bill and stop the state of Arizona from helping the feds violate your rights.”

Arizona Tenth Amendment state chapter coordinator Adam Henriksen agreed. “Guns and Ammo magazine ranked Arizona number one for gun rights, giving our state a score of 49 out of a possible 50 points. Our legislators know that we won’t let our rights be trampled on,” he said.

The article US Cops Endorse Legislation To Stop Federal Gun Grabbing Laws And Agencies‏ – OpEd appeared first on Eurasia Review.

By IPCS

By D Suba Chandran

The previous article in this column discussed the talks about talks with the Pakistani Taliban, and Sami-ul-Haq being projected as the interlocutor between the State and the Teherik-e-Taliban (TTP).

Since the previous column was written in early January 2014, three major developments have taken place. First was a short military campaign against the militants in Waziristan. Second was appointment of a ‘four member committee’ by the government to negotiate with the Taliban. Third was the acceptance of the TTP to negotiate with the State, along with nomination of a team from the Pakistani Taliban.

While the decision to negotiate with the TTP and the latter’s response was itself a substantial achievement, the harsh reality is that the problems for the State have just begun. Given the issues and questions, this process is likely to be anything but easy.

From Sami-ul-Haq to the Four Horsemen: A Changed Strategy by the Government

During the last week of January 2014, the government appointed a four member committee to negotiate with the TTP, comprising of Rahimullah Yusufzai, Irfan Siddiqui, Rustam Shah and Major (Retd) Amir.

Rahimullah Yusufzai is a well-known and independent senior journalist. His writings in mainstream newspapers have been balanced and he his insights are respected. Irfan Siddiqui is also a senior journalist, but today he is known more as a pro-Nawaz person; he is also a Special Assistant to the Prime Minister. Major Amir has been reported as a former ISI officer who is close to Nawaz Sharif. According to Amir Mir, “Major (retd) Amir… has a murky past being the alleged architect of the infamous ‘Operation Midnight Jackal’ to topple the first government of Prime Minister Benazir Bhutto in 1989.” (The News, 30 January 2014). Rustam Shah is a former diplomat who has served in Afghanistan and is known to be sympathetic to the Taliban.

In terms of the composition, it could be generally agreed that two of them (Irfan Siddiqui and Major Amir) are seen as closer to Nawaz Sharif. There is nothing wrong in Sharif choosing his confidantes, in fact, given the intricacies it is always useful for the Prime Miniester to choose a team he has confidence in. However, as Fazlur Rehman has already criticised, they were not chosen on a consensus, nor they have a political background. The four horsemen are all professionals in one field or the other, but have never been politicians.

Will the four horsemen be able to deliver? Except for Fazlur Rehman, the rest of the political leadership, cutting across political lines at the national and regional levels, seems to have faith in the new initiative.

From Suicide Attacks to a Ten Member Committee: Understanding the Change in TTP

What has changed for the TTP in the last month that it has agreed to negotiate with the government?

Was it because of the military strikes in Waziristan? Given the nature of the attacks and the short duration, it appears that the military strikes were aimed more at convincing the US, where Sartaj Aziz was attempting to revive the strategic dialogue between the two countries, rather than at bringing the Taliban down. Had the latter been the case, the strikes would have continued until the TTP begged for a dialogue. However, this was not the case.

Why did then the TTP agree to negotiate? Does it really believe in negotiating with the government? Or is the negotiation a strategy of its ongoing war with the State?

What would the TTP Demand?

Will this negotiation between the TTP and the government be without any preconditions? Unlikely. The TTP is likely to emphasise that there should be no military strikes in the first place. As a logical extension of that, it is likely to pressurise the State to tell US that the latter completely stop its drone programme. In fact, the TTP leadership should be more worried about the drone strikes than the military strikes. However indiscriminate the military strikes are likely to be, they can never be as precise as a drone attack. The TTP is also likely to demand the release of its top leadership, who have been arrested by the State and kept in different jails.

Politically, the TTP is likely to pressurise the government to sever ties with the US and ensure that the Durand Line becomes irrelevant for the Afghan militants.

Will the TTP also demand the imposition of shariah elsewhere in Pakistan, as it demanded in Swat? It may place that demand but is unlikely to carry it forward, given that the time is not ripe. Such a demand may perhaps be acceptable for the State in remote FATA or the Swat valley, but not acceptable in the rest of Pakistan. Not yet.

How Far will the State Go in Yielding to the TTP?

Clearly, the State is not keen in pursuing a military option vis-à-vis the militants. The TTP would not be satisfied with the status quo.

The primary question is not what the TTP wants. Rather, it is how far the State is willing to go to accommodate the TTP.

D Suba Chandran
Director, IPCS

The article Taliban Talks And The Four Horsemen: Between Peace And Apocalypse – Analysis appeared first on Eurasia Review.

By SAAG

By Kumar David

The JVP has made a good choice in Anura Kumara Dissanayake, not least because he shares with this columnist an excellent set of initials, AKD!

He is known for his meticulous work and preparation on issues he raises in public or parliament, he is young (45) and promises stability for 15 to 20 years, and is said to represent the middle position in the party, (as NM did most of the time), so he will be able to bridge internal debates. By all reports he is prepared to rethink past mistakes and the brief reference he made to the national question in his acceptance speech (“We have failed to reach the Tamil people”) may signal better things to come.

A friend quipped to me that he would make a better Leader of the Opposition than the current one! There was a time when parliament was a forum of great tribunes, NM, Colvin, Pieter and SWRD; when they stood up, the chamber hushed; when they spoke, the nation listened. For decades thereafter it was a fish-market whose cacophony dismayed even schoolchildren. Recently Sumathiran, Anura Kumara and a few others have begun to regain lost ground; in time they too may emerge as worthy tribunes. But I do not know the chap personally – JVP types are reluctant to enter into extended conversations with outsiders – so my impressions are superficial.

It will be better if I use this essay to think aloud about the party and the challenges it faces. To put it straight upfront: The crucial challenge is the interleaved issue of identity and role going into the 21-st Century. The JVP still retains a clear identity (the identities of the LSSP and CP have withered); but should it rigidly hold on to an ideology derived and inherited from the past or are there fundamental issues to rethink (parliamentary democracy, revolution, socialism, globalisation, and 21-Century world order)? As for its role, the JVP has had three distinct personas, ultra-left adventurism up to the early 1970s, Pol-Pottian cannibalism in the late 1980s, and from late-1990 to now, a democratic, left and parliamentary phase. Despite role transitions, the party has sustained a high degree of identity in its own mind and in the minds of the people. It is these two sides (identity and role) that the party will be forced to re-examine during the course of this year.

I will deal with the JVP and national question in depth in a future piece.

The leadership transition comes at a time when the JVP is going through a period of extended quietus and loss of parliamentary support. It has also suffered two heavy splits, one a welcome cleaning of the stables, the other a great pity; mad racist Weerawansa, and Frontline Socialists (Peratugami), respectively. The split with Peratugami is not fundamental and can be overcome IF good sense prevails; I say this with great confidence as I have talked a lot with these excellent young comrades. What do they want? (a) A greater degree of internal democracy and transparency in decision making; (b) a candid review of the mistakes made in the democratic period – was in right to enter Cahndrika’s government, was it right to support General Fonseka, what about the national question, and so on. Unless the new leadership makes a sweep towards internal democracy, and unless it opens up a discussion of the last 15 years (the errors of 1971 and 1989-90 have already been discussed internally) the party will not go forward, Peratugami or no-Peratugami.

The other matter on which I wish to make a brief comment is a life and death theoretical issue for modern Marxism and 21-Century socialism. This is not yesterday’s world, this is not 1917 which was probably a unique event, this is not pre-1949 Maoist China. On the other hand neo-liberalism has crumbled; it was been defeated by people all over the world. Global capitalism is going through its greatest structural crisis since the Great Depression and there are no signs of a sustained recovery – if at all we only see a Wobble-U effect, sporadic spurts and spluttering downturns. Income and wealth inequality has never been so great at any previous time in human history. Marx will say “I told you so”; but the old bugger was unforgiving in his demand for intellectual honesty. So he will kick all of us, and the JVP, in our butts and thunder: “Get off your arses you thick headed mutts; don’t repeat what I said as though it was the Bible; think, look at your times, open your eyes”. That then is the theoretical frontier facing the JVP as it goes forward into this century. It is too big a topic for me to say anymore within the few miserable words that the CT Editor permits me.

Lastly, I will get my point across on political role, or action, in as few words as possible; an example helps. The LSSP ran into a midlife crisis when it reached the age of, say 40, if we count from the early 1930s. The crucial issue was the relationship to state power. The LSSP and CP made the fateful decision to carry through the transition to socialism by alliances, intervention through parliamentary mechanisms, a Republican Constitution, land reform and takeover of the commanding heights of the economy (estates), reform of tenant-landlord relations in housing, and most significant of all NM’s budgets to put the economy on a new keel. This was the grand, indeed colossal project the Old Left (not the pigmy caricatures of the Dead-Left) set itself. The project failed for two reasons; the outside world had changed dramatically and the second reason flowed from this; this method of reaching socialism was undoable. Not only China, but also social change ongoing in the West, shows us that more complex pathways of class and international alliances and statist tracks have to be pursued to reach a better world.

The bottom line of this story for the JVP is that its principal role in this historical period is an oppositional one – Oh if only the LSSP had remained an opposition party all along, right up to now! Brief spells in governments are another matter, but the JVP’s main role in this historical period is long term work among the people to expose and keep the swine (UPFA, UNP and Fonseka) in check. Making and breaking short-term links for tactical reasons is of course essential, but that’s another story.

I close by congratulating Comrade Anura Kumara Dissanayake and wishing the JVP success.

The article Sri Lanka: Anura Kumara Takes Over JVP At Vital Time – Analysis appeared first on Eurasia Review.

By Eurasia Review

Indo-Americans have hailed the appointment of Hyderabad (India) born 46-year-old Satya Nadella as the third Chief Executive Officer (CEO) of world’s largest software firm Microsoft Corporation.

Indo-American statesman Rajan Zed, in a statement in Nevada today, said: Indo-American community is delighted and thrilled and feels honored by this appointment. A “smart choice”, Zed remarked.

Zed, who is Chairperson of Indo-American Leadership Confederation, noted: We applaud Nadella’s appointment; an outstanding executive who has demonstrated to be a sincere and innovative leader and visionary in engineering, technology, strategy and business; committed to take Microsoft to the next level.

Congratulating Nadella on the appointment, Rajan Zed stated: We believe that well-respected and well-loved Nadella was the right choice for this near-impossible job in a complex company and we believe Nadella’s intellectual and technical talents and vision for future would make a positive impact to re-establish Microsoft’s identity.

We hoped that Nadella would be given a free hand to take the company forward, Zed added

Joining Microsoft in 1992, Nadella was Executive Vice president of Microsoft’s Cloud and Enterprise group. He reportedly earned a bachelor’s degree in engineering from Manipal Institute of Technology in Karnataka (India) and his hobbies include cricket and poetry. He reportedly hails from Guntur district in Andhra Pradesh (India) whose prominent residents included Buddhist philosopher Nagarjuna and playback singer S. Janaki. Nadella becomes member of Microsoft’s Board of Directors also.

Founded in 1975, Redmond (Washington, USA) headquartered Microsoft claims to be the “worldwide leader in software, services and solutions that help people and businesses realize their full potential”. William H. Gates III is its Technology Advisor while John Thompson is Chairman of its Board of Directors. It has about 101 thousand employees.

The article Indo-Americans Hail Nadella’s Appointment As Microsoft CEO appeared first on Eurasia Review.

By Arab News

Saudi Arabia’s Grand Mufti Sheikh Abdul Aziz Al-Asheikh said Tuesday that scores of young Saudi men have lost their lives by answering false jihad calls to fight wars outside their country.

“They were misled into believing that they were jihadis, but were in fact easy targets for the enemies of Islam in war zones where they were subject to torture, humiliation and slavery, let alone losing their lives,” the grand mufti said in an interview on Saudi Television.

Al-Asheikh’s comments come a day after Custodian of the Two Holy Mosques King Abdullah decreed jail terms of up to 20 years for citizens who fight in conflicts abroad or belong to “extremist religious and ideological groups, or those classified as terrorist organizations.” Promoting the views of such groups and organizations “through speech or writing” would also incur prison sentences.

The grand mufti urged families, schools, the media, and imams to warn young men against supporting advocates of sedition and focus on creating a better future in the Kingdom.

He said some people in Saudi society are manipulating the true message of Islam. They are spreading misleading information sugarcoated with religious rhetoric to break down national unity and create chaos, he said.

He praised King Abdullah for tackling these extremist views and actions that were harming the nation. He said it was “the ruler’s obligation to maintain the well-being of the nation.”

The Council of Senior Religious Scholars said King Abdullah acted on the basis of Islamic principles related to governance and political leadership.

“The call for war or peace is an Islamic right given to the ruler, Muslim scholars agree,” Sheikh Fahad Al-Majed, secretary-general of the council, said in a statement on Tuesday carried by the Saudi Press Agency.

He said jihad only becomes “obligatory” if it is made by the ruler. The king’s decision protects the nation’s religion, security, and unity, he said.

Meanwhile, Sheikh Abdullateef Al-Asheikh, the chief of the Commission for the Promotion of Virtue and the Prevention of Vice (Haia), reportedly vowed on Tuesday to remove extremists within the organization and called them “advocates of sedition.”

“We will eliminate whoever urges sedition in this country,” he warned, describing calls for jihad as “void.”

“It is forbidden to disobey the ruler” by sending young Saudis to join “sedition in neighboring countries,” Al-Sheikh said.

Saudis have welcomed the royal decree.

Saudi columnist Salman Al-Dossari said that the decrees include “those who encourage instigate and support acts of terror in writing and speech.” The relationship between terror and its supporters has a history of wars and political conflicts in Afghanistan, Chechnya, Bosnia-Herzegovina, Iraq, Yemen, Somalia, Syria, and Egypt, he said in his column in Al-Eqtisadiah daily.

He said that Saudi supporters of the Muslim Brotherhood, the party banned in Egypt, have publicly supported it despite the government’s unequivocal stance on that party’s political agenda.

The decision then “is not necessarily politically motivated as some may perceive it, but rather to keep our national unity intact without alliances with politically motivated groups that tear apart the fabric of the nation,” he said.

Hamoud Al-Fayez said: “We have now realized the danger they pose. These poor young men, who have been tricked into someone else’s war, come back armed with malicious intent to harm their societies.”
Fadel Abu Al-Ainain said: “Only such a law can protect young men from becoming entangled in outside wars.”

Abdul Rahman Jumah said: “This is the right decision to protect the minds and integrity of our young men from the religious swindlers who have tarnished the essence of true Islamic teaching.”

The article Young Saudis Warned: Beware Of False Jihadis appeared first on Eurasia Review.

By Eurasia Review

Four journalists with the Unity Weekly newspaper and the newspaper’s CEO have been detained for the past four days in connection with a report about an alleged secret chemical weapons factory in the northwestern city of Pauk.

“We firmly condemn the detention of these journalists and call on the authorities to release them without delay,” said Lucie Morillon, Reporters Without Borders head of research.

“This latest violation of freedom of information is indicative of legislative gaps in Burma, which is finding it hard to adopt a media law. The public has a right to be informed on a subject of general interest like this. Journalists who are just doing their job must be protected, and if anyone has to be prosecuted, it should be the newspaper. Under no circumstances should journalists be imprisoned because of the content of their articles.”

Published on 25 January, the offending story was headlined “A secret chemical weapon factory of the former generals, Chinese technicians and the commander-in-chief at Pauk Township.”

Unity Weekly reporter Lu Maw Naing was the first to be arrested. Police detained him in Pauk on 31 January on a charge of violating the state secrets law, which carries a maximum sentence of 14 years in prison. The authorities told his family that, in view of the charge, he could not be freed on bail and that he would be transferred to a special police unit near Pakokku.

Unity Weekly CEO Tint San and three more of the newspaper’s journalists ¬–Yarzar Oo, Paing Thet Kyaw and Sithu Soe – were arrested the next day. Shortly before his arrest, Tint San told The Irrawaddy newspaper that he could prove the story’s claims and that he was “ready to face whatever happens.”

The authorities meanwhile seized copies of the offending Unity Weekly issue throughout the country.

The story reported that the chemical weapons plant was built in 2009 on more than 3,000 hectares of land confiscated from farmers and that it was visited by former army chief Than Shwe in 2009 and by the country’s vice-presidents in 2011 and 2013.

“Reporters Without Borders is very concerned about the precarious status of Burma’s journalists, which has also been highlighted by the case of Weekly Eleven reporter Ma Khine,” Morillon added.

An appeal court in the city of Loikaw rejected Ma Khine’s appeal on 27 January. She was sentenced on 17 December to three months in prison on charges of trespassing, using abusive language and defamation in connection with her visit to a lawyer’s home for an interview on 27 October.

The company that owns Weekly Eleven said it would not appeal against the latest ruling because Ma Khine would be released by the time it was heard.

Burma rose 18 places in the 2013 Reporters Without Borders press freedom index to be ranked 151st out of 179 countries.

The article Burma: Four Journalists Facing Possible 14-Year Jail Terms In State Secrets Charge appeared first on Eurasia Review.

By Ria Novosti

Russian President Vladimir Putin on Tuesday welcomed the guests of the International Olympic Committee to their 126th session in Sochi, where the Winter Games open Friday.

The session at a hotel in the Black Sea resort runs Wednesday through Friday, and will be the first to feature an address from a UN secretary-general after Ban Ki-moon confirmed earlier this week that he’ll attend.

“Let me declare the 126th session of the International Olympic Committee open,” Putin said in English at a welcome event at the Winter Theater in Sochi.

Putin rarely uses other languages publicly, and the switch to English was a throwback to 2007, when he gave an impassioned speech to the IOC to help Sochi win the Games over Pyongchang and Salzburg.

The two-day session, ending Friday, is expected to focus on the so-called Olympic Agenda 2020, a plan of how the Games will develop and modernize under new president Thomas Bach.

Putin’s presence at the session demonstrates his role as the chief architect of the Sochi Winter Games, widely described as his pet project.

He has been present at every major stage, from the 2007 IOC congress in Guatemala to Friday’s opening ceremony, where Putin is expected to be a central figure.

The Sochi Olympics run February 7-23.

The article Putin Opens 126th IOC Session In Sochi Ahead Of Olympics appeared first on Eurasia Review.

By IPCS

By Sandip Kumar Mishra

Shinjo Abe’s unrelenting tough approach towards China is arguably the second most important development in recent years in East Asia after the growing military might of China. There is lots of support across the region for his policy of ‘staring at China’ on the Senkaku/ Diaoyu islands disputes, especially among those countries, which have been uncomfortable with growing ‘Chinese assertiveness’ in the region but unable to stop it. The US stance has also been overall supportive to the changed posture of Japan.

However, Abe’s indiscriminate assertiveness, which hurts South Korea and other regional players, would be unable to achieve desired results. There are critiques of Japanese foreign policy, who point out that Japan has not been able to create trust in any of its neighboring countries such as South Korea, North Korea, Russia, and China. Thus, Japan needs to moderate its assertiveness and make it more nuanced to make it more palatable and wide-based.

The biggest problem in Shinjo Abe’s approach is that it entirely disregards ‘goodwill capital’ of Japan, which has been accumulated in the post-World War-II period. Japan evokes a very different kind of state behaviour, which denounced use of force in resolving inter-state disputes and concentrated on welfare of people inside its own territory and beyond. The concept of official development assistance (ODA) became synonym of the Japanese economic assistance to many Asian, African and Latin American countries. Japan could and must utilize this ‘capital’ for creating a network of relations across the region along with economic interdependence and people-to-people contacts, which would make it costly for China or any other countries to becoming assertive. It does not mean that Japan could be complacent on its defense preparedness, however, it does need to be approached in a framework of cooperative security involving as many as possible like-minded countries of the region. Japan has been respected for its peace-constitution and enough deliberation must happen before abandoning the alternate model of Japan.

Even if, Japan decides to make a paradigm shift in its foreign policy approach, which seems to be the case under Shinjo Abe, it must be more careful in articulating it. First and foremost, it is advisable to Japan to work on its defense preparedness without too much rhetoric directed against one or other country. In 2013, Japanese defense budget was increased to Yen 4.77 trillion which was an increase first time after 2002. The increase in itself is enough to create suspicions in the minds of observers and any sharp words are further going to create mistrust in the regional countries. Probably, Japan could learn from China, which continues augmenting its defense capabilities but keeps talking about ‘peaceful rise’ and ‘harmonious development’.

Secondly, even if Shinjo Abe administration intends to be tough towards ‘Chinese assertiveness’, Japan needs to be more careful about its other neighboring countries including South Korea. In last one year of his term, South Korea-Japan relations have further deteriorated. It would not be enough to say that South Korean government has either been too much sentimental or playing the game of domestic populism. When Japanese ministers, members of parliament and Shinjo Abe himself visits Yasukuni shrine, it is well-known that South Korea would not take it easy. When, insensitive statements are given and confrontational actions are taken on the issues related to history disputes, comfort women and Dokdo/Takeshima islands disputes, it is going to affect South Korea’s perception about Japan and its intensions. Rather than expecting South Korea to be more accommodative to the new posture of Japan, a more conciliatory approach must be adopted in dealing with South Korea. By using all possible channels of communication, it must be conveyed to South Korea in a credible manner that in the Japan’s contest with China, Tokyo would seek cooperation from South Korea.

Thirdly, Japan also must re-emphasize that it would like to have more cooperation with the US and other democracies in the region such as South Korea, Australia and India. It would be a different paradigm for the Asian security architecture in which a multipolar, inclusive, open and rule-based structure is sought for. In case, Japan tries to counter ‘Chinese assertiveness’ by it own assertiveness, it might be considered no different than China. To have a different framework needs emphasis on involving all possible partners and creating regimes, institutions and structures rather than having a tit-for-tat approach.

The recent visit of Shinjo Abe to India probably could be used as the beginning for a more nuanced Japanese assertiveness in the regional politics, which would try to create network of multilateral partnerships. India, though has avoided to express any opinion on Japanese indiscriminate assertiveness, would be more comfortable if Japan tones down its rhetoric. Similarly, it would be easier for the US to keep both Japan and South Korea, two of its closest allies in the East Asia, together. The changed Japanese approach would also be in consonant with Australian foreign policy approach. Japan needs to realize that to contest with China on the turf created by China would not only be dangerous but also be an isolating exercise and it must be avoided.

The author teaches at the University of Delhi and is a Visiting Fellow at the Institute of Peace and Conflict Studies (IPCS)

Sandip Kumar Mishra
Faculty, University of Delhi and Visiting Fellow, Institute of Peace and Conflict Studies (IPCS).

The article Japan: Implications Of Indiscriminate Assertiveness – Analysis appeared first on Eurasia Review.

By Eurasia Review

Eni’s CEO, Paolo Scaroni, met today with the President of Turkmenistan, Gurbanguly Berdimukhamedov, in Asgabat to discuss Eni’s projects and activities in the country with a particular focus on potential new offshore exploration activities in the Caspian Sea.

During the meeting, they also discussed the possibility of prolonging Eni’s activities in the Country by extending the length of its onshore concessions, and of unlocking value from Turkmenistan’s natural gas resources also through the utilisation of gas to liquids technology.

Eni started its activities in Turkmenistan with the purchase of the British company Burren Energy plc in 2008. In 2012, Eni’s production averaged 11 kboe/d.

The article Eni’s CEO Paolo Scaroni Neets With President Gurbanguly Berdimukhamedov Of Turkmenistan appeared first on Eurasia Review.

By Eurasia Review

Rosneft reported Tuesday that crude oil and liquids production equaled 4,196 th.bpd (organic growth 1%), gas production reached a record high figure of 38.17 bcm (organic growth 22%).

Rosneft said that it stabilized production of its largest West Siberia assets, including Samotlorneftegaz, Nizhnevartovsk, Varieganneftegaz, and Nyaganneftegaz. The brownfield successes have been primarily driven by employment of new oil recovery increase technologies, including massive implementation of horizontal wells with multi-stage hydrofracturing, sidetracking, waterflood management, dual completions and injection. In 2013, the Company achieved a 2.9% growth of liquids production in Samaraneftegaz due to extraction of reserves discovered on fields acquired in 2011-2012 and increased geological exploration works efficiency caused by the use of 3D seismic.

In 2013, output from producing greenfields (Vankor, Verkhnechonskoye and the Uvat group of fields) accounted for 19% of the Company’s total liquids production. The Company continues implementation of the associated petroleum gas utilization program at Vankor, East Siberia’s largest field and a new oil and gas province hub. The Company started gas injection in 4Q at the field as a a part of the project solution for the field development to maintain formation pressure. Two new fields, Yuzhno-Petiegskoye and Radonezhskoye, were brought on stream at the Uvat group of fields in the south of the Tymen region and three new fields were discovered. The Company continued to improve operational efficiency and control of its lifting costs, which in 2013 amounted to USD 4.8/bbl, the best unit-cost performance among world public companies.

According to oil and gas reserve information prepared by independent auditor proved hydrocarbon reserves increased by 74% (organic growth 11%) and amounted to 33.00 billion barrels of oil equivalent on the basis of the standards set forth by the U.S. Securities and Exchange Commission (“SEC”).

Rosneft is the leader in developing Russia’s offshore resources. In 2013, the Company, jointly with its partners, carried out an unprecedented E&A offshore effort, including acquisition of 32.5 th. linear km of 2D seismic and 2.6 th. sq. km of 3D seismic, conducting geological engineering surveys to prepare 12 sites for exploration drilling, as well as acquiring 19 new offshore hydrocarbon exploration and production licenses for the Arctic, the Sea of Okhotsk and the southern seas of Russia. In total, the Company has 46 licenses for developing Russia’s offshore with the resources of 45 bln tons of oil equivalent.

The 2013 performance has made Rosneft the third largest gas producer in Russia with increased gas production to 38.17 bcm. Gas production posted a record more than twofold growth which was primarily due to the integration of the major gas assets resulting from the TNK acquisition and also consolidation of the Itera assets. Favorable prerequisite for future organic growth of gas business were created in 2013. Rosneft is expanding development at Rospan, (Vostochno- Urengoysky and Novo-Urengoysky license blocks development). Kharampurskoe integrated gas project development plan is approved. In 2013, gas sales amounted to 39.07 bcm, including 24.02 bcm in West Siberia, 10.42 bcm in the European part of Russia and 0.94 bcm outside of Russia.

Significant attention is given to development of gas resource base in the Far East. In 2013 the Company signed an agreement with Exxon Mobil on an LNG plant construction project development in the Far East. Asian-Pacific will be the main market for the future LNG supply from the project.

In 2013, Rosneft processed 97.68* mln t of crude oil in Russia and abroad (organic growth 1%). In 2013, Euro-4 and Euro-5 motor fuel and diesel output equaled 18 mln t*. In 2013, incremental Euro-4 and Euro-5 motor fuel output added RUB 18 bln* to the Company’s EBITDA.

In October 2013, as part of the refinery modernization program, the largest crude oil distillation unit in Russia (AVT-12) was launched at the Tuapse refinery with the throughput of 12 mln t per year. In 4Q, main heavy manufacturing equipment was delivered to the Komsomolsk refinery, Achinsk refinery, Novokuibyshev refinery, Kuibyshev refinery, Angarsk petrochemical complex, and Syzran refinery. The Company is successfully competing in the retail oil product and jet fuel markets. The customer base of the high-marginal “in-wing” fueling channel has been expanded with a number of new counter-parties added. The 2013 results show an increase of fuel volumes delivered on contracts with air lines up to RUB 67.8 bln which is 23% more compared to 2012.

In 2013, the Company made a number of key acquisitions with the total synergy effect from capital and operational expenditure reductions amounting to RUB 23 bln.

Despite an unfavorable macroeconomic environment in 2013, the revenues (including the share in the profits of associates and joint ventures) reached a record RUB 4,694 bln (revenue organic growth 2.5%).

In 2013, EBITDA amounted to RUB 947 bln. The Company continues its policy of effective cost control and is constantly implementing the synergy effect on its financial performance, which helps to maintain a stable EBIDTA level.

Rosneft’s 2013 net income totaled RUB 551 bln.

The Company continues to generate a cash flow sufficient to cover its investment needs. In 2013, the Company increased its 2012 dividend payments to RUB 85 bln.

The Company intends to gradually de-leverage. In 2013 the Company repaid part of the loans attracted to acquire TNK assets in the amount of RUB 166.9 bln.

The Company is the country’s biggest corporate taxpayer. The tax revenues from Rosneft to the Russian budget in 2013 equaled RUB 2.7 trln.

Commenting on performance in 2013, President of Rosneft Igor Sechin said:

“2013 was a transformational year in the Company’s history. Despite a challenging macroeconomic situation the Company delivered record results in upstream and downstream due to increased efficiency, skillful use of advanced technologies and business expansion in accordance with our strategic priorities. The Company has been pursuing a prudent and responsible investment and financial policy aimed at cost control, liquidity increase, timely debt redemption and dividend payments.

Since the appointment of the new Company management (in May, 2012) Rosneft market capitalization has been showing the best dynamics not only in the Russian oil and gas industry, but also compared to the international peer group despite market volatility. We are not using artificial means to increase the Company’s capitalization, and maintain our focus on operational activities, implementation of large-scale projects and improvement of our financial performance. This is clearly reflected in the reported results. We are proud to say that on a number of metrics such as hydrocarbon production, reserve replacement ratio and lowest operational costs, the Company’s results are the best not only in Russia, but also on a global scale. In 2014, we will continue to improve our business efficiency, prepare new major projects to be launched and ensure long-term profitability for our shareholders”.

The article Rosneft Posts Record 2013 Earnings Results appeared first on Eurasia Review.

By RSIS

China’s ‘Marching West’ strategy has gained international attention as a counter-response to the US pivot to Asia. But food could be an important driver behind China’s westward advance.

By Zhang Hongzhou

AS THE United States pivots towards the east, China launched the so-called “Marching West” strategy to avoid a direct confrontation with the Americans – a strategy first articulated by a prominent Chinese scholar Wang Jisi.

While much of the attention has been given to the strategic and diplomatic importance of countering the US pivot to Asia and on China’s overseas quest for energy resources, food could be an important driver behind China’s Marching West strategy.

Diversifying from the US

For decades, self-sufficiency has been the cornerstone of China’s food security strategy. Yet, facing dual challenges of rapidly growing demand for food and fast-depleting water, land and labour resources, China has to import large quantities of food from other countries. As it relies more on foreign imports to feed itself, an overdependence on US imports, amid deep-seated Sino-US strategic distrust, is drawing serious concern.

To better safeguard the country’s food security, China aims to diversify its food imports away from the US and build its own global food supply system by investing in overseas agricultural resources. To secure its food supplies, China is marching west, particularly to Russia, Central Asia and Europe, where food and agricultural resources abound.

Russia

In contrast to China, Russia, especially, its Far East region, has wide swathes of unfarmed fertile land. As China faces increasing difficulties to produce enough food to feed its people, the Chinese government opened talks on investing in Russian farmland. In 2012, China Investment Corporation contributed US$ 1 billion to a joint Russian-Chinese fund to invest in agriculture and timber in Russia and other former Soviet states. Chinese firms, led by state-owned firms have leased at least 600,000 hectares of land, and 800,000 hectares of forests.

Central Asia

According to the Food and Agriculture Organisation (FAO), Central Asia has vast untapped agricultural resources and a vital role in improving world food security. Yet it faces key obstacles in its farming techniques, inputs, agricultural machinery, along with transport infrastructure and storage facilities. This makes Central Asia an ideal target for China’s agricultural going-out, particularly given the stable and close relations between China and Central Asian countries.

In 2012, Wen Jiabao announced that China would consider setting up a China-Central agricultural cooperation fund and building several trade zones and agricultural demonstration centres to promote agricultural development in the region. And in 2013, addressing a Shanghai Cooperation Organisation (SCO) summit in Kyrgyzstan, Chinese leader Xi Jinping proposed that SCO countries should establish a cooperation mechanism for food security.

Two main Central Asian countries targeted by China are Tajikistan and Kazakhstan. In Tajikistan, China has leased or controlled over 100,000 hectares of land so far. Both countries are also discussing the possibility of establishing a free trade zone in neighbouring countries to expand trade in agricultural products.

In Kazakhstan, Chinese companies have already had large presence in the country’s agricultural sector. It is reported that China’s state-owned Jilin Grain Group invested in one project covering one million hectares of land in Kazakhstan for soybean production. Also, two countries have taken serious efforts to facilitate cross-border agricultural trade.

In December last year, China opened its first green channel for agricultural product, connecting its Bakty port and Kazakhstan’s Baktu port. The green channel, which is a significant part of the development of a Silk Road economic zone, helps China meet its growing demand for grains.

Europe

European countries are among the world’s leading food exporters. As China looks to diversify its food imports away from the United States to strengthen the country’s food security, it is interested in expanding agricultural trade with Europe’s leading food exporters, such as France, the Netherlands and Germany. In 2012, China and the European Union signed the Agriculture Cooperation Plan, which aims to address issues including food security and the environment, with a goal of expanding trade relations and sustainability.

At the 16th China-EU Summit in November 2013, a Letter of Intent on Research and Innovation Cooperation in Food, Agriculture and Biotechnology was signed between the EU and China, with the hope to enhance cooperation on food security and safety.

China also intends to cooperate with the EU at the multilateral level, notably on global food governance issues dealt with by the G20 and WTO, pushing forward the Doha round of negotiations. China and the EU will strive to get WTO members to reach agreement on agricultural trade facilitation.

Turning to Central and Eastern Europe (CEE)

More prominently, China is turning to CEE countries for food. As Prime Minister Li Keqiang stated during his visit to CEE countries in November 2013, CEE countries produce high-quality meat, dairy and wine products and China’s urbanisation will unleash greater demands for beef, lamb, cheese, wine and other products. Thus, China wishes to import more food products from CEE countries. Among the CEE countries, Ukraine, is attracting huge interest from China. In 2012, China’s Export and Import Bank agreed to provide a loan of US$ 3 billion to Ukraine to develop its agriculture; in return, Ukraine will export corn to China.

In the same year, UkrLandFarming signed a memorandum of cooperation with China’s CAMC Engineering Co. for up to US$ 4 billion in investment to build production facilities for an annual output of 400,000 tonnes of pork and 600,000 tonnes of chicken as well as a grain terminal with handling capacity up to 5 million tonnes in Ukraine.

And in December 2013, during Ukraine’s president Yanukovych’s visit to China, the two countries tabled a five-year plan to deepen their strategic partnership and their first priority area for expanding cooperation is agriculture. Food is becoming a key factor shaping China’s international strategies and foreign policy, in a way similar to, if not more profound than, energy.

Zhang Hongzhou is an Associate Research Fellow with the China Programme at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University.

The article China Is Marching West For Food – Analysis appeared first on Eurasia Review.

By RSIS

Many Asian countries are highly susceptible to climate hazards, resulting in food insecurity. The magnitude of the devastation of typhoon Haiyan should serve as a clarion call for regional action to improve food security in the region.

By Jurise Athena Oliveros and Paul S. Teng

TYPHOON HAIYAN which swept across the central Philippines in November 2013 left in its wake widespread devastation. The number of lives lost exceeded 5,000. The gargantuan damage caused to property and the agriculture sector has made a significant dent to the economy of the region and serve as an ominous reminder of how the country in general remains vulnerable to natural disasters.

The affected areas encountered multiple problems in the aftermath of the typhoon chief of which was the lack of access to food and water. Distribution of food, water and medicine was hampered by an incapacitated local government and damaged infrastructure particularly roads and communications. Surviving victims were left to scour for food and basic necessities from the massive heaps of rubble that were their homes. As the country began to recover, discussions have been rekindled on long-term solutions and disaster responses.

Typhoon aftermath

While there was an influx of aid from countries around the world, distribution of food had been paralysed by impaired transport and communication as well as an immobilised local government. The adverse impact of natural calamities exacerbates the perilous food security in the Philippines and other Southeast Asian countries posed by volatile commodity prices, waning agricultural productivity and changing food demand.

Under threat were the three main dimensions of food security – supply of food or its availability, access to food and the utilisation of food. These were causes for alarm as they could result potentially in civil unrest, economic decline and political instability. Severed access to food in the wake of the typhoon led to increased reports of violence, panic, looting and hoarding.

Hence distribution of food was a priority for relief efforts. However the task of providing food access initially overwhelmed the government. A week after the catastrophe, there were still reports of families unable to receive food relief due to the lack of coordination and a visible chain of command and distribution.

The impact was amplified since the typhoon struck during the crucial harvesting period, affecting smallholders who were dependent on the harvest for subsistence and income. Besides crops and livestock, agricultural infrastructure and production equipment were also heavily damaged. These losses will consequently depress the agricultural output of the country.

With an apparent shortfall in production the Food and Agriculture Organisation (FAO) of the United Nations has been prompted to downgrade the 2013 rice production forecast for the country. This could potentially impact the global rice market if the Philippines were to import a large amount of rice to make up for the loss.

A chronic problem

Although the magnitude of this typhoon was unprecedented in Philippine history, typhoons are not unique to the country. Storm surges have also hit the country many times in the past based on the historical records of the Department of Science and Technology’s Project NOAH. The Asian region in general is likewise disaster-prone. Based on UNESCO data from 1980-2008, Asia recorded the highest incidence of natural disasters in the world and registered the highest economic damage, amounting to US$23 billion per year, mainly due to flooding, storms and earthquakes.

The recurrence of natural disasters has been concentrated among developing countries in the Asian region where the majority of people greatly rely on the agriculture sector. This puts the region at a great disadvantage because weather vagaries and fluctuation patterns could critically disturb agricultural productivity and threaten food security and economic growth. Although the FAO defined impact from shocks such as natural disasters as transitory or seasonal food insecurity, data shows how natural hazards have been a long-standing problem of the region.

This chronic recurrence of transient food insecurity as a result of natural disasters calls for greater coordinated effort from the region to find longer-term solutions.

Relieving transient food insecurity

Much work is needed to restore the devastated communities back to normalcy and help smallholders who have suffered enormous losses, which ultimately depends on the near-term and long-term policy responses of the government. Furthermore the problem of chronic food insecurity, as precipitated by transitory shocks like typhoon Haiyan, affects not just the Philippines but Asia as well.

However, despite the higher frequency of these cataclysmic events, the region generally lacks a distinct mechanism or an institution that would provide efficient linkages between national policies and regional initiatives in response to these events.

Regional dialogues and initiatives should be promoted since countries tend to be complacent once the impact of transitory shocks wanes and signs of recovery set in.

Given the high risk of climate hazards threatening food security, it is critical for the region to become more involved in developing more effective food-based safety net programmes to improve food security in the region. There have been negotiations in the WTO regarding creation of international stockpiles and revolving safety net funds to cushion the impact of transient shocks. One such initiative is the ASEAN Plus Three Emergency Rice Reserve (APTERR), which pools reserves from member countries and acts as buffer stocks for food emergencies.

This regional mechanism could potentially be useful if constraints surrounding political commitment and distribution can be sorted out. Given the higher stakes for Asia, a regional mechanism with a broader scope would be key to addressing the problem and improving food security in the region.

Jurise Athena Oliveros is a Research Assistant in the Office of Graduate Studies & Professional Learning, National Institute of Education. Paul S. Teng is Professor and Dean of Graduate Studies and Professional Learning, NIE, and Adjunct Senior Fellow at the Centre for Non-Traditional Security (NTS) Studies, S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU).

The article Food Security Post-Calamity: A Chronic Dilemma – Analysis appeared first on Eurasia Review.

By Murray Hunter

Even though many buildings constructed of natural materials, particularly earth, have stood the test of time, the construction of buildings out of these materials almost completely disappeared during the 20th Century. This occurred due to the development of commercial building materials and labor saving methods which took on status and prestige connotations, even in Asia and Africa.

The skills and craft of natural building by artisans who were most often handed down specific situational knowledge by their forefathers almost disappeared, except for some small pockets of people scattered around the globe.

Consequently buildings constructed out of natural materials and methods are now rare and far between around the world.

Buildings constructed out of mud and other natural materials were until recently considered primitive, where most likely mental images of African and Indian mud houses would arise in the mind of most, when the subject is brought up as a building option.

However small groups of people from the ‘hippy’ generation moved out into some of the scenic rural areas around Canada and the United States during the 1980s and ’90s and built houses constructed through rammed earth, cob, bale, and adobe brick methods. Designer builders like Meror Krayenhoff have assisted many notable people like Randy Bachman of the former bands The Guess Who and Bachman-Turner Overdrive build beautiful rammed earth homes.

Likewise, in Australia, even with flawed regulations biased towards conventional dwellings, many owner builders flocked out to the outer Melbourne semi-rural suburb of Eltham, building mud brick homes inspired by architect Alistair Knox’s designs and methods.

The term earthen building incorporates a number of well known methods which include:

• Rammed earth which involves developing a mixture of sand and clay, and compressing it within a mold to shape the walls, etc. Usually some form of insulation like polyurethane, or even old newspaper in the middle of the wall, which maybe also reinforced with steel rods.

• Cob which involves developing a loamy clay like mud compound and mixing straw or rice paddy husks into it to build strength.

• Mud or adobe bricks which are fundamentally made by molding cob into bricks which are used in the construction on a dwelling, and

• Mud based ferro cement, invented by Dr. Kamarudin Bin Mohd. Nor of University Kuala Lumpur, which incorporates a mixture of cement, sand and clay, which is rendered onto a steel or wooden frame sown through some form of insulation like conventional ferro cement.

Other methods important in the construction of natural buildings include straw bale dwellings which are usually rendered with a mud based mixture, and bamboo and thatches for the ceilings and roofs of mud based dwellings.

Building mud houses is more art than science. Learning the right mixtures to use based on the soil you have available is more a matter trial and error than calculation, and thus requires a certain amount of experimentation. making an earth house is more similar to making a cake than building a conventional form of house.

The material cost of building earth based dwellings is only a fraction of the cost of building a conventional house with commercial materials. However labor is the major cost.

Earth based houses are naturally insulated, so they will be cool in summers and warm in winters. They are extremely strong if constructed correctly, and proponents of earth houses claim they are resistant to earthquakes. Other advocates of earth houses claim that are very healthy with no irritant chemicals incorporated within the mixture to cause any allergies, etc.

There has been a small revival of earth house building in Asia over the last decade, however this revival is driven by a small number of champions like Ajarn (teacher) Smith, as he likes to be called, of Sakaeo, approximately 300 km North-East of Bangkok.

As an entrepreneur, Ajarn Smith runs a special type of business that is orientated towards empowering others to build earth brick houses, rather than for profit. As he says……”mud houses must be made with your heart”, it requires community collaboration. Thus the business of mud house construction in Asia is a social enterprise, which is about helping communities to organize themselves and acquire the specific skills to build their own dwellings.

The concept, at least at village level will not work through the engagement of direct contractors, it’s more a consulting arrangement. And this is where the benefits come in.

Earth houses are best seen as a community project, and as such are a potential game changer for a village. Building earth houses is about developing self reliance. And self reliance brings on many other benefits.

Earth housing as a cluster can be a source of value for a local community. Firstly, it helps the youth of any village build up self discipline, new skills, and even more importantly enshrines them with the ability to learn through trial and error. Secondly, such community projects build up great amounts of personal self esteem, which according to many academics is important in developing any form of entrepreneurship culture.

Community earth house construction can be a catalyst for regenerating a cooperative spirit in a village. Communal work brings back the old values of cooperation, once one of the cornerstones of village life. It’s through this cooperation where new sources of community opportunity can be created, and provide the basis for a small entrepreneurial economy. This is so important to keep the youth in any village today.

Many earth building village clusters in Thailand have become the basis for home-stay projects, which act as a platform for other income making activities like handicraft production, expanding the potential income base of the community.

Natural building is a potential tool in poverty eradification as well. It prevents the need to borrow money to purchase conventional building materials, thus reduces debt and reliance on high interest micro-financing within any community.

Community earth house projects can help change a village paradigm where there is an emphasis on developing self sufficiency, which without any village will most likely remain within the poverty trap. Mud housing projects coupled with solar panels and mini hydro systems to produce a source of electricity, allow the village to improve their standard of living with the need to be connected to the main electricity grid. Water can also be harvested from the roofs (if sheets) of buildings to assist in water self reliance as well.

Combined with organic farming, the indigenous manufacture of enzymes for cleaning and cosmetic products, and the use of natural ways of cooking , creates a completely new community paradigm.
In this way earth houses have an almost spiritual value, where it combines the inner person through their passion and skills, and hard work to the very environment the community live in.

Natural buildings have an important role to play in rural Asia, particularly in regards to developing communities within new paradigms outside the old industrialization frame. Community building workshops are becoming more popular where skills are being shared between both the ‘new and old’ worlds. It connects communities to the world, devout of any middle people.

Earth house development projects can become a new tool in poverty alleviation and as a catalyst in developing an alternative micro-economy, which maybe very important with forecasted world economic slow-down over the coming years.

However this to be achieved requires new cooperative business models, basing value upon labor and skills, rather than technology.
Social evolution may be about going back to the future.

The article Natural Building As A Community Game Changer – Analysis appeared first on Eurasia Review.

By RSIS

Singapore’s recent initiatives to increase cybersecurity expertise through specialist training and education are timely and necessary. In addition to enhancing such skills, the strategic analytical skills of existing and potential cybersecurity practitioners must be honed as well.

By Damien D. Cheong

IT WAS reported in The Straits Times last year that Singapore, like many other countries such as the United States, United Kingdom and India, was experiencing a shortfall in the number of cybersecurity practitioners. Furthermore, graduates did not seem attracted to the IT security profession, which meant that the next generation of cybersecurity practitioners would be negatively impacted.

Expectedly, these trends are a cause for concern in light of the persistent and ever-increasing cyber threats facing the country. The government has embarked upon two major initiatives to address these issues.

Role of Strategic Analysis

Firstly, it has increased the number of scholarships for infocom security studies through the Infocom Development Authority (IDA). Secondly, it has announced two different training initiatives for potential and existing cybersecurity practitioners: (a) KPMG’s Cyber Security Centre in collaboration with Singapore Polytechnic will conduct cybersecurity courses for 10 to 15 participants annually; (b) FireEye, a security company specialising in advanced cyber threat detection, will train existing cybersecurity practitioners to hone their skills in detection analytics, identification and monitoring of emerging threats as well as undertaking “defensive action”.

These initiatives are both timely and necessary. In addition, they will need to be complemented with a corresponding increase in strategic analytical training. This is envisaged to significantly improve the quality of analytical products as better strategic insights can be generated.

The major challenge of data analysis in the “era of Big Data” is well-known; it is both time-consuming and involves a lot of manpower to make sense of it all. Even if technological advancements help minimise the time taken to filter useful data from non-useful data, the resultant data still lacks strategic insights. As a result, the value of the analytical product to decision-makers is somewhat reduced.

Enter the strategic analyst. His/her job, effectively, is to analyse data and convert it into useful information. This, according to Thomas Fingar, former chairman of the National Intelligence Council, is accomplished by “providing insight on trends”. Such insight adds value to the information, and allows the decision-maker to “broaden the range of possible futures and thus better manage uncertainty”.

Hence, effective data collection and functional analysis, while a major part of cybersecurity expertise, must be buttressed with “strategic analysis of threats and threat indicators”.

Strategic analysis, according to the Software Engineering Institute (SEI) at the Carnegie Mellon University, “adds perspective, context, and depth to functional analysis, and incorporates modus operandi and trends to provide the ‘who’ and ‘why’ of cyber threats. It is ultimately rooted in technical data, but incorporates information outside traditional technical feeds – including internal resources such as physical security, business intelligence, and insider threat, and external feeds covering global cyber threat trends, geopolitical issues, and social networking.

The resulting strategic analysis can populate threat actor profiles, provide global situational awareness, and inform stakeholders of the strategic implications cyber threats pose to organisations, industries, economies, and countries”.

Improving strategic analytical capabilities

Researchers at the SEI have proposed several measures to improve strategic analytical capabilities in their report Intelligence Analysis for Internet Security. These include:

Overall Threat Assessments: Pertains to the “analysis of vulnerabilities of critical missions (including levels of dependence), the kind of disruption and damage that could be caused to the implementation of these missions, the kinds of weapons/instruments that could be used to cause such disruptions and the likelihood of such attacks and intrusions taking place”.

Sector Threat Assessments: Focuses on “vulnerabilities and threats either in particular areas such as national infrastructure, or in particular sectors of the economy such as banking or e-commerce…In effect, a strategic analysis of this kind has to take account of changes in what can be a very dynamic environment”.

Trend Analysis: Relates to analysing “changing threats and vulnerabilities. These might include base-line assessments so as to better recognise departures from the baseline. Alternatively, they might focus on future threats and vulnerabilities in an effort to determine in what ways the problem is evolving – and what can be done to anticipate and contain future challenges. Trend analysis is likely to be most effective when it is linked with careful attention to drivers such as key trends in the political, economic, social and technological sectors that will shape the future threat and vulnerability environment of the future”.

Potential Damage Assessments: Assesses the “potential cascade effects of intrusions. This would offer opportunities to develop both defensive and mitigation strategies. Crisis management, contingency planning, mitigation strategies, and disaster management would all be enhanced by strategic analysis of potential damage assessment. Indeed, the capacity for effective and rapid reconstitution might depend on such analysis”.

Categorising and Differentiating Attacks and Attackers: Differentiating between intrusions/threats from various sources is critical. “This will be especially true as groups or individuals develop intrusion strategies that mimic other forms and thereby lessen their chances of identification or, in the case of nation states, provide plausible deniability of their actions. Also, by doing so, appropriate responses that might go beyond simply defensive or mitigation strategies can be determined”.

Identification of Anomalies: This refers to detecting “anomalies that provide indicators of emerging threats and problems”. Anomalies in this context can be understood as developments or events that do not fit typical or known patterns. The detection of anomalies or novel patterns can be a major element in anticipating new methods of intrusion, new targets, or even new classes of intruders. “It is a macro-level task that requires careful and systematic ‘environmental scanning’ as well as the coalescing of tactical and operational intelligence reports that identify and highlight specific aberrations from the norm”.

Analysis of Future Net Environments: This provides “assessments of potential future environments on the Internet and the potential impact of malicious activity within those environments”.

Some of these measures will most likely be taught in the new IT security courses. Nevertheless, it may be useful for public as well as private organisations to audit current capabilities to determine if their strategic analytical expertise requires enhancement. In light of the inadequate regulatory/legal frameworks at the international level to deal with cyber threats, defence, through improving a country’s cybersecurity capabilities, is the best approach to cyber threats at present.

Damien D. Cheong is a Research Fellow at the Centre of Excellence for National Security (CENS), a constituent unit of the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University.

The article Enhancing Cybersecurity: Improving Technical And Analytical Expertise – Analysis appeared first on Eurasia Review.

By VCNV

By Kathy Kelly

Two weeks ago in a room in Kabul, Afghanistan, I joined several dozen people, working seamstresses, some college students, socially engaged teenagers and a few visiting internationals like myself, to discuss world hunger. Our emphasis was not exclusively on their own country’s worsening hunger problems.  The Afghan Peace Volunteers, in whose home we were meeting, draw strength from looking beyond their own very real struggles.

With us was Hakim, a medical doctor who spent six years working as a public health specialist in the central highlands of Afghanistan and, prior to that, among refugees in Quetta, Pakistan.  He helped us understand conditions that lead to food shortages and taught us about diseases, such as kwashiorkor and marasmus, which are caused by insufficient protein or general malnutrition.

We looked at UN figures about hunger in Afghanistan which show malnutrition rates rising by 50% or more compared with 2012. The malnutrition ward at Helmand Province’s Bost Hospital has been admitting 200 children a month for severe, acute malnutrition — four times more than in January 2012.

A recent New York Times article about the worsening hunger crisis described an encounter with a mother and child in an Afghan hospital: “In another bed is Fatima, less than a year old, who is so severely malnourished that her heart is failing, and the doctors expect that she will soon die unless her father is able to find money to take her to Kabul for surgery. The girl’s face bears a perpetual look of utter terror, and she rarely stops crying.”

Photos of Fatima and other children in the ward accompanied the article. In our room in Kabul, Hakim projected the photos on the wall. They were painful to see and so were the nods of comprehension from Afghans all too familiar with the agonies of poverty in a time of war.

As children grow, they need iodine to enable proper brain development.  According to a UNICEF/GAIN report, “iodine deficiency is the most prevalent cause of brain damage worldwide.  It is easily preventable, and through ongoing targeted interventions, can be eliminated.” As recently as 2009 we learned that 70% of Afghan children faced an iodine deficiency.

Universal Salt Iodization (USI) is recognized as a simple, safe and cost-effective measure in addressing iodine deficiency. The World Bank reports that it costs $.05 per child, per year.

In 2012, the World Food Programme (WFP) and the Global Alliance for Improved Nutrition (GAIN) announced a four-year project which aimed to reach nearly half of Afghanistan’s population – 15 million Afghans – with fortified foods. Their strategy was to add vitamins and minerals such as iron, zinc, folic acid, Vitamin B-12 and Vitamin A to wheat flour, vegetable oil and ghee, and also to fortify salt with iodine.  The project costs 6.4 million dollars.

The sums of money required to fund delivery of iodine and fortified foods to malnourished Afghan children should be compared, I believe, to the sums of money that the Pentagon’s insatiable appetite for war-making has required of U.S. people.

The price tag for supplying iodized salt to one child for one year is 5 cents.

The cost of maintaining one U.S. soldier has recently risen to 2.1. million dollars per year.  The amount of money spent to keep three U.S. soldiers in Afghanistan in 2014 could almost cover the cost of a four year program to deliver fortified foods to 15 million Afghan people.

Maj. Gen. Kurt J. Stein, who is overseeing the drawdown of U.S. troops from Afghanistan, has referred to the operation as “the largest retrograde mission in history.”  The mission will cost as much as $6 billion.

Over the past decade, spin doctors for U.S. military spending have suggested that Afghanistan needs the U.S. troop presence and U.S. non-military spending to protect the interests of women and children.

It’s true that non-military aid to Afghanistan, sent by the U.S. since 2002, now approaches 100 billion dollars.

Several articles on Afghanistan’s worsening hunger crisis, appearing in the Western press, prompt readers to ask how Afghanistan could be receiving vast sums of non-military aid and yet still struggle with severe acute malnourishment among children under age five.

However, a 2013 quarterly report to Congress submitted by the Special Inspector General for Afghanistan shows that, of the nearly $100 billion spent on wartime reconstruction, 97 billion has been spent on counter-narcotics, security, “governance/development” and “oversight and operations.”  No more than $3 billion, a hundred dollars per Afghan person, were used for “humanitarian” projects – to help keep thirty million Afghans alive through twelve years of U.S. war and occupation.

Source: Special Inspector General for Afghan Reconstruction Oct. 30, 2013, Quarterly Report to Congress, Available at www.sigar.mil.

Note: This graph shows total U.S. spending on “relief and reconstruction” in Afghanistan up to a given year. It does not account for the U.S. military operations, said to cost $2 billion per week.

Funds have been available for tanks, guns, bullets, helicopters, missiles, weaponized drones, drone surveillance, Joint Special Operations task forces, bases, airstrips, prisons, and truck delivered supplies for tens of thousands of troops. But funds are in short supply for children too weak to cry who are battling for their lives while wasting away.

A whole generation of Afghans and other people around the developing world see the true results of Westerners’ self-righteous claim for the need to keep civilians “safe” through war.  They see the terror, entirely justified, filling Fatima’s eyes in her hospital bed.

In that room in Kabul, as my friends learned about the stark realities of hunger — and among them, I know, were some who worry about hunger in their own families — I could see a rejection both of panic and of revenge in the eyes of the people around me. Their steady thoughtfulness was an inspiration.

Panic and revenge among far more prosperous people in the U.S. helped to drive the U.S. into a war waged against one of the poorest countries in the world. Yet, my Afghan friends, who’ve borne the brunt of war, long to rise above vengeance and narrow self-interest.

They wish to pursue a peace that includes ending hunger.

Kathy Kelly, Kathy@vcnv.org, co-coordinates Voices for Creative Nonviolence (www.vcnv.org). For more information about The Afghan Peace Volunteers, visit ourjourneytosmile.com  

The article Salt And Terror In Afghanistan – OpEd appeared first on Eurasia Review.

By EIA

China has quickly risen to the top ranks in global energy demand over the past few years. China is the world’s second-largest oil consumer behind the United States and became the largest global energy consumer in 2010.

The country was a net oil exporter until the early 1990s and became the world’s second-largest net importer of crude oil and petroleum products in 2009. The U.S. Energy Information Administration (EIA) projects that China will surpass the United States as the largest net oil importer by 2014, in part due to China’s rising oil consumption. China’s oil consumption growth accounted for one-third of the world’s oil consumption growth in 2013, and EIA projects the same share in 2014.

Natural gas use in China has also increased rapidly in recent years, and China has sought to raise natural gas imports via pipeline and liquefied natural gas (LNG). China is the world’s top coal producer, consumer, and importer and accounted for about half of global coal consumption, an important factor in world energy-related carbon dioxide emissions. China’s rising coal production is the key driver behind the country becoming the world’s largest energy producer in 2007. In line with its sizeable industrialization and swiftly modernizing economy, China also became the world’s largest power generator in 2011.

China is the world’s most populous country and has a rapidly growing economy, which has driven the country’s high overall energy demand and the quest for securing energy resources. According to the International Monetary Fund, China’s annual real gross domestic product (GDP) growth slowed to an estimated 7.7% in both 2012 and 2013, after registering an average growth rate of 10% per year between 2000 and 2011. China mitigated the 2008 global financial crisis with a massive stimulus package spread over two years that helped bolster China’s investments and industrial demand. Economic growth slowed in 2012 and 2013 as industrial production and exports decreased and as the government attempted to curb economic inflation and excessive investment in certain markets.

After 10 years a new leadership emerged in China in March 2013 when Xi Jinping became President and Li Keqiang assumed premiership. The new administration is keen to initiate economic and financial reform in China in the interest of greater long-term and sustainable growth. In November 2013 at the Third Plenum, a major policy meeting held every five years, the Chinese government outlined broad principles for economic reform in China.

The government has proposed incremental policy and economic reforms to create more balanced economic growth and to shift away from an economy driven primarily by excessive investments and exports toward one characterized by greater domestic consumption. In the energy sector, the government is moving toward more market-based pricing schemes, energy efficiency measures, and competition among energy firms, as well as making greater investments in upstream hydrocarbon plays and renewable energy projects.

China announced in late 2013 that it is assessing ways to attract more private investment in the energy sector by streamlining the project approval processes, implementing policies to foster more energy transmission infrastructure to link supply and demand centers, and relaxing some price controls.

Total primary energy consumption

Coal supplied the vast majority (69%) of China’s total energy consumption in 2011. Oil was the second-largest source, accounting for 18% of the country’s total energy consumption. While China has made an effort to diversify its energy supplies, hydroelectric sources (6%), natural gas (4%), nuclear power (nearly 1%), and other renewables (1%) accounted for relatively small shares of China’s energy consumption. The Chinese government plans to cap coal use to below 65% of total primary energy consumption by 2017 in an effort to reduce heavy air pollution that has afflicted certain areas of the country in recent years.

The Chinese government set a target in its 12th Five-Year Plan to raise non-fossil fuel energy consumption to 15% of the energy mix by 2020 in efforts to ease the country’s dependence on coal. EIA projects coal’s share of the total energy mix to fall to 63% by 2020 and 55% by 2040 as a result of projected higher energy efficiencies and China’s goal to increase its environmental sustainability. However, absolute coal consumption is expected to increase by over 50% during this forecast period, reflecting the large growth in total energy consumption.

As a result of high coal consumption, China is also the world’s leading energy-related CO2 emitter, releasing 8,715 million metric tons of CO2 in 2011. China’s government plans to reduce carbon intensity (carbon emissions per unit of GDP) by 17% between 2010 and 2015 and energy intensity (energy use per unit of GDP) by 16% during the same period, according to the country’s 12th Five-Year Plan. China also intends to reduce its overall CO2 emissions by at least 40% between 2005 and 2020.

Oil

China is the world’s second-largest consumer of oil and projected to move from second-largest net importer of oil to the largest in 2014.

According to the Oil & Gas Journal (OGJ), as of January 2014, China holds 24.4 billion barrels of proven oil reserves, up over 0.7 billion barrels from the 2013 level and the highest in the Asia-Pacific region. China’s total oil and liquids production, the fourth largest in the world, has risen by about 54% over the past two decades and serves only its domestic market. However, the production growth has not kept pace with demand growth during this period. In 2013, China produced an estimated 4.5 million barrels per day (bbl/d) of total oil liquids, of which 93% was crude oil.

EIA forecasts China’s oil production to rise to about 4.6 million bbl/d by the end of 2014. Over the longer term, EIA projects a steady growth for China’s oil and liquids production, reaching 4.6 million bbl/d in 2020 and 5.6 million bbl/d by 2040. Most of the growth over the long term is from non-petroleum liquids such as gas-to-liquids, coal-to-liquids, kerogen, and biofuels, as crude oil production remains relatively flat.

China’s oil consumption growth has eased after a high of 14% in 2009, reflecting the effects of the most recent global financial and economic downturn. Despite the slower growth, the country still made up nearly a third of global oil demand growth in 2013, according to EIA estimates. China consumed an estimated 10.7 million bbl/d of oil in 2013, up 380 thousand bbl/d, or almost 4%, from 2012. In 2009, China became the second-largest net oil importer in the world behind the United States, and average net total oil imports reached 6.2 million bbl/d in 2013. Notably, for the fourth quarter of 2013, China actually became the largest global net importer of oil. EIA projects that China is likely to surpass the United States in net oil imports on an annual basis by 2014 as U.S. oil production and Chinese oil demand increase simultaneously.

China’s oil demand growth hinges on several factors, such as domestic economic growth and trade, power generation, transportation sector shifts, and refining capabilities. EIA forecasts that China’s oil consumption will continue growing through 2014 at a moderate pace to approximately 11.1 million bbl/d, and its net oil imports will reach 6.6 million bbl/d compared to 5.5 million bbl/d for the United States.

Sector organization

China’s national oil companies dominate the oil and gas upstream and downstream sectors, although the government has granted international oil companies more access to technically challenging onshore and deep water offshore fields. China revised its oil price reform legislation in 2013 to further reflect international oil prices in the country’s domestic demand.

The Chinese government’s energy policies are dominated by the country’s growing demand for oil and its reliance on oil imports. The National Development and Reform Commission (NDRC), a department of China’s State Council, is the primary policymaking, planning, and regulatory authority of the energy sector, while four other ministries oversee various components of the country’s oil policy. The government launched the National Energy Administration (NEA) in July 2008 to act as the key energy regulator.

The NEA, linked with the NDRC, is charged with approving new energy projects in China, setting domestic wholesale energy prices, and implementing the central government’s energy policies, among other duties. In January 2010, the government formed a National Energy Commission with the purpose of consolidating energy policies among the various agencies under the State Council. Reforms under the new government leadership include consolidating and streamlining ministries and expanding the NEA’s purview.

National oil companies and others

China’s national oil companies (NOCs) wield a significant amount of influence in China’s oil sector. Between 1994 and 1998, the Chinese government reorganized most state-owned oil and gas assets into two vertically integrated firms that own both upstream and downstream assets: the China National Petroleum Corporation (CNPC) and the China Petroleum and Chemical Corporation (Sinopec). These two conglomerates operate a range of local subsidiaries, and together control China’s upstream and downstream oil markets. CNPC is the leading upstream player in China and, along with its publicly-listed arm, PetroChina, accounts for an estimated 53% and 75% of China’s total oil and natural gas output, respectively, according to FACTS Global Energy (FGE). CNPC’s current strategy is to integrate its sectors and capture more downstream market share.

Sinopec, on the other hand, has traditionally focused on downstream activities, such as refining and distribution, with these sectors making up over 76% of the company’s revenues in recent years. The company seeks to acquire more upstream assets to capture more value from oil and gas production and diversify its revenue sources.

Additional state-owned oil firms have emerged over the past several years. The China National Offshore Oil Corporation (CNOOC), which is responsible for offshore oil exploration and production, has seen its role expand as a result of growing attention to offshore zones. Also, the company has proven to be a growing competitor to CNPC and Sinopec by not only increasing its exploration and production (E&P) expenditures in the South China Sea, but also extending its reach into the downstream sector, particularly in the southern Guangdong Province. The Sinochem Corporation, CITIC Group, and Yanchang Petroleum have also expanded their presence in China’s oil sector, but these companies are still relatively small.

Whereas onshore oil production in China is mostly limited to China’s NOCs, international oil companies (IOCs) have been granted greater access to offshore oil prospects and technically challenging gas fields, mainly through production-sharing contracts (PSCs) and joint ventures (JVs). IOCs involved in offshore exploration and production (E&P) working in China include: ConocoPhillips, Shell, Chevron, BP, BG, Husky, Anadarko, and Eni, among others. China’s NOCs must hold the majority participating interest in a PSC and can become the operator once development costs have been recovered. IOCs offer their technical expertise in order to partner with a Chinese NOC and make a foray into the Chinese markets.

Pricing reform

The Chinese government launched a fuel tax and reform of the domestic product pricing mechanism in 2009 in efforts to tie retail oil product prices more closely to international crude oil markets. This reform aimed to attract downstream investment, to ensure better profit margins for refiners who must sell fuel at regulated prices, and to reduce energy intensity caused by lower consumer prices and higher demand. The oil product pricing system adopted in 2009 allowed the NDRC to adjust retail prices when the moving average of imported crude prices fluctuated outside of a 4% range around the established price within 22 consecutive working days for diesel and gasoline.

Despite the price reform, international crude oil prices increased at a faster rate than revisions made by the NDRC to retail fuel prices, causing refiners to incur losses on their downstream businesses and increase their fuel product exports. To promote greater market transparency and global changes, the NDRC revised the pricing regime in March 2013 by shortening the retail fuel price adjustment period to every 10 working days when prices automatically adjust to international crude price fluctuations greater than 50 yuan per ton (roughly $1/barrel). However, the NDRC did not identify the slate of crude oil types that it uses for price determination. Since the revised pricing mechanism was established, the NDRC has approved 15 price changes.

In November 2011, China also installed an ad valorem resource tax of 5% on all oil and gas production, including unconventional resources output, in an attempt to increase revenues for local and regional governments and to encourage more efficient hydrocarbon production. The resource tax was extended in 2012 to projects involving JVs of international and Chinese firms.

Exploration and production

China’s largest oil fields are mature, and production has peaked, leading companies to invest in techniques to sustain oil flows at the mature fields, while also focusing on developing largely untapped reserves in the western interior provinces and offshore fields.

After bolstering domestic oil output in 2010, China has experienced more moderate oil production growth since then. China boosted its domestic oil output by over 7% in 2010, after incremental growth in the previous two decades. Oil production in 2013 reached nearly 4.5 million bbl/d, about 50% higher than the level two decades ago. Approximately 81% of Chinese current crude oil production capacity is located onshore, while 19% of crude oil production is from shallow offshore reserves. New offshore production, enhanced oil recovery (EOR) of older onshore fields, and small discoveries in existing basins are the main contributors to incremental production increases. China’s NOCs are investing a great deal in EOR techniques such as water injection, polymer flooding, and steam flooding, among others, to offset oil production declines from these mature, onshore fields.

Recent E&P activity has focused on the offshore areas of Bohai Bay and the South China Sea (SCS), as well as onshore oil and natural gas fields in western and central interior provinces such as Xinjiang, Sichuan, Gansu, and Inner Mongolia. China invested an estimated $13 billion in oil and gas exploration in 2013 so that the country can reduce its dependence on hydrocarbon imports.

A vast majority of China’s largest oil fields, located in the northeast and north central regions of the country, represent the backbone of the country’s domestic production. However, these fields are mature and prone to declining production. CNPC’s Daqing field, located in the Northeast, is one of China’s oldest and most prolific fields, constituting 19% of China’s overall production. In 2012, Daqing produced about 800,000 bbl/d of crude oil, according to FGE’s most recent estimate, and has maintained this level for the past decade after declines of more than 1 million bbl/d. Sinopec’s Shengli oil field near the Bohai Bay produced about 550,000 bbl/d of crude oil during 2012, making it China’s second-largest oil-producing field. The use of EOR in these fields has been able to slow decline rates. However, Daqing, Shengli, and other mature fields have been heavily exploited since the 1960s, and their output is expected to decline within the next decade.

CNPC’s use of various EOR techniques on the Liaohe and Jilin fields in the Northeast, some of China’s oldest onshore oil fields, has helped stem production declines in recent years. Liaohe, one of China’s largest heavy oil fields, produced 200,000 bbl/d in 2012. Because CNPC began using more advanced EOR methods such as steam flooding and polymer flooding on a large scale, the company hopes to restore production to around 241,000 bbl/d by 2020. CNPC has used hydraulic fracturing and CO2 injection at the Jilin field to mitigate further declines in hydrocarbon output.

China’s interior provinces, such as the Northwest’s Xinjiang Uygur Autonomous Region (including the Junggar and Tarim basins) and central Ordos basin (particularly the Changqing field), have attained strong production growth in recent years through the use of improved drilling and advanced oil extraction techniques to unlock complex geological oil reserves. As China constructs more storage and processing infrastructure in this region, it is heavily investing in developing the surrounding oil and gas fields. Total 2012 production from the Junggar and Tarim basins was estimated at 370,000 bbl/d. CNPC applied a new EOR technology to the ultra-heavy Fengcheng field in the Junggar basin in 2009 and expects production and recoverable reserves to increase in the next few years.

Production at Changqing, China’s third-largest oil field, which is located in the north central Ordos basin, grew robustly over the past several years, averaging more than 13% annual growth between 2008 and 2012 when it reached 451,000 bbl/d. CNPC uses water injection, steam flooding, and hydraulic fracturing to boost Changqing’s production. The map shows the location of some of the major Chinese oil basins.

Offshore E&P activities, mostly driven by CNOOC, have focused on the Bohai Bay region in the Yellow Sea, the South China Sea (particularly the Pearl River Mouth Basin), and, to a lesser extent, the East China Sea. Most of these fields are small and mature faster than China’s onshore fields, which prompts CNOOC to explore deep water plays.

The Bohai Bay Basin, located in northeastern China east of Beijing, is the oldest oil-producing offshore zone and holds the bulk of proven offshore reserves in China. CNPC initiated the first phase of the Jidong Nanpu field development in 2007, and hoped to bring 200,000 bbl/d of crude oil production on stream by 2012. However, since then, the company claimed the reserves and production levels were overstated, and further exploration and reserve additions in the field would be necessary to meet its goals.

CNOOC’s production in the Bohai Bay was 406,000 bbl/d in 2011, or two-thirds of the NOC’s domestic oil production, according to PFC Energy. Following an oil leak at China’s largest offshore crude oil field (Penglai 19-3) in July 2011, the government called for the field’s production to cease. Production rates at Penglai 19-3 peaked at about 122,000 bbl/d prior to the shut-in. ConocoPhillips, a 49% stakeholder and operator of the field, and CNOOC resumed operations at Penglai 19-3 when they received government approval in early 2013. Production from the Penglai project is processed at China’s largest floating production, storage, and offloading (FPSO) vessel with an offloading capacity of 190,000 bbl/d. Further development phases of Penglai are underway. CNOOC has discovered other sizeable oil fields in the Bohai Bay such as Penglai 9-1, which the NOC claims to be its largest find in the Bohai Bay in recent years. The company made seven oil and gas discoveries and assessed seven more finds in 2012.

Although the South China Sea is known to be gas-rich, CNOOC has also discovered several small oil fields and is focusing on deep water discoveries. In 2011, CNOOC’s total oil production in the SCS was 193,000 bbl/d. In 2010, CNOOC made significant discoveries of the Enping Trough and the Liuhua 16-2 in the eastern SCS, opening further opportunities for exploration. The NOC continues to explore and develop several fields to use EOR tactics to further produce from mature fields in the East SCS. CNOOC has held three licensing rounds since 2011 for foreign companies to joint CNOOC to explore and develop offshore blocks in the Bohai Bay, SCS, and ECS. The latest round occurred in 2013 with foreign companies and included 25 blocks, 15 of which reside in deep water areas.

Territorial disputes

Territorial disputes in the East China Sea have to date limited large-scale development of oil and gas fields in the region, where China and Japan compete for territorial claims. The two countries have held negotiations to resolve the disputes. In June 2008, the two countries reached an agreement to develop jointly the Chunxiao/Shirakaba and Longjing/Asurao gas fields. However, in early 2009, the agreement unraveled when China asserted sovereignty over the fields. Since the agreement was signed, the countries have continued unilateral actions in attempts to develop the gas fields. Tensions escalated with territorial claims by Japan in 2012, China’s installation of a production platform, and CNOOC’s proposal to develop several gas fields in the contested area in 2013.

Continued territorial disagreements by countries bordering the South China Sea, including ownership of the Spratly and Paracel Islands, have hindered efforts for joint exploration of hydrocarbon resources in the area. ASEAN members signed the Declaration of Conduct in 2002 that encourages countries to use restraint and cooperate in the South China Sea, but no regulations were established. China stakes claims to the SCS using a “nine-dash line” to determine each country’s maritime borders and resources. Increasing appetites for oil and natural gas have exacerbated tensions, particularly between China and Vietnam and between China and the Philippines, as hydrocarbon development has attracted interest in deep water areas. China has increased its naval activity in the contested areas, and CNOOC’s June 2012 tender for nine offshore blocks in the disputed area overlaps several fields located within Vietnam’s 200-nautical mile exclusive economic zone. China’s current policy is to forge JV partnerships with the other SCS countries to explore and develop untapped hydrocarbon resources in the sea. More details covering the disputes in these two regions can be found in EIA’s East China Sea and South China Sea regional briefs.

Overseas acquisitions

China’s national oil companies have rapidly expanded their purchases of international oil and gas assets since 2008 through direct acquisitions of equity and financial loans in exchange for oil supplies in order to secure more oil and gas supplies, make long-term commercial investments, and gain technical expertise in more challenging oil and natural gas plays.

China’s increasing dependence on oil imports, the need for Chinese companies to develop technical expertise for their more challenging resources, and attempts to capture value upstream are key factors driving Chinese NOCs to invest in international projects and form strategic commercial partnerships with IOCs. China is taking advantage of the general economic downturn to increase its global acquisitions and use its vast foreign exchange reserves (estimated at $3.3 trillion in 2012) to help purchase equity in projects or acquire stakes in energy companies. Since 2008, the NOCs have purchased assets in the Middle East, North America, Latin America, Africa, and Asia and invested an estimated $34 billion in overseas oil and gas assets in 2012, according to the CNPC Economics Technology Research Institute.

China’s oil production from its overseas equity shares and acquisitions grew significantly over the past decade from 140,000 bbl/d in 2000 to an estimated 2 million bbl/d in 2012, according to the International Energy Agency. CNPC holds the most equity production and investment overseas of all the NOCs, although Sinopec, CNOOC, and other smaller NOCs have rapidly expanded their overseas investment profiles over the past four years. Most of China’s recent direct acquisitions were channeled to deep water oil plays off the coast of West Africa and Brazil, and oil sands and shale gas projects in North America.

CNPC, holding hydrocarbon assets in nearly 30 countries, produced a record 838,000 bbl/d from its stakes in overseas oil output by the end of 2011, up from 718,000 bbl/d in 2010. CNPC’s overseas oil production remained relatively flat in 2012 as the NOC focused on shale gas acquisitions that year. About two-thirds of CNPC’s international production was from its assets in Kazakhstan and Sudan, according to PFC Energy. Sinopec’s overseas equity oil output reached 456,000 bbl/d in 2011, and the NOC plans to double production to 1 million bbl/d from overseas oil equity by 2015.

Although CNOOC produced about 88,000 bbl/d in 2011, just 6% of China’s total overseas production, the NOC has swiftly increased oil and gas purchases since 2010 in an attempt to gain technical expertise and acreage in shale oil, shale gas, and coalbed methane and deep water hydrocarbon resources. Following approval from Canada, CNOOC purchased the Canadian oil company Nexen for $15.1 billion (plus $2.8 billion in Nexen’s net debt) in 2013. This deal became China’s largest overseas acquisition. The NOC anticipates this and other overseas deals will help it achieve an overall annual oil and gas production growth rate of 6% to 10% per year by 2015.

The other Chinese NOCs have also invested in overseas shale gas and tight gas formations to improve their technical capacities for developing these resources domestically and to secure gas supplies. As China rapidly expands its imports of liquefied natural gas (LNG), the NOCs are seeking supply contracts by purchasing stakes in the upstream developments and liquefaction terminals in the Asia-Pacific region, Canada, and the United States.

By the end of 2012, Chinese NOCs had secured bilateral oil-for-loan deals with several countries, amounting to around $108 billion according to FGE. China provided loans to countries that need capital to extract energy reserves and build energy infrastructure in exchange for oil and gas imports at established prices. China extended oil-for-loan deals with Russia, Kazakhstan, Venezuela, Brazil, Ecuador, Bolivia, Angola, and Ghana and has had a gas-for-loan agreement with Turkmenistan over the past decade. Venezuela and China signed several deals (including the most recent one in 2013) for about $40 billion in exchange for 600,000 bbl/d of crude oil and products. Based on China’s trade data, Venezuela falls short of this amount, but the country’s crude oil exports to China have ramped up markedly over the past four years, and were more than 300,000 bbl/d in 2012.

China also extended another $2 billion to Ecuador in early 2013 and is now Ecuador’s primary oil buyer. CNPC and Russia’s Rosneft signed an agreement in 2013 for China to lend $270 billion to Russia for an additional 300,000 bbl/d of oil through the ESPO pipeline, representing one of China’s largest energy deals. The deal involves a JV between CNPC and Russia’s Rosneft to develop Russia’s East Siberian oil fields where CNPC holds a 49% stake, and it signals the growing energy ties between the neighboring countries and China’s interest in gaining more access to Russian oil.

Oil imports

Substantial oil demand growth and geopolitical uncertainties have increased pressure on China to import greater volumes of oil from a wide range of sources.

As China’s oil demand continues to outstrip production at home, oil imports have increased dramatically over the past decade, reaching record highs in 2013. To ensure adequate oil supply and mitigate geopolitical uncertainties, China has diversified its sources of crude oil imports in recent years. China imported 5.4 million bbl/d of crude oil on average in 2012, rising 7% from 5.1 million bbl/d in 2011, according to China’s customs data and FGE. In 2013, import growth slowed to about 4.4% from 2012 levels, and crude oil imports averaged 5.6 million bbl/d. Crude imports now outweigh domestic supply, and they made up over half of total oil consumption in 2013. The government’s current Five-Year plan targets oil imports reaching no more than 61% of its demand by the end of 2015. EIA expects China to import over 66% of its total oil by 2020 and 72% by 2040 as demand is expected to grow faster than domestic crude supply.

The Middle East remains the largest source of China’s crude oil imports, although African countries, particularly Angola, began contributing more to China’s imports in recent years. As part of China’s energy supply security policy, the country’s NOCs are attempting to diversify supply sources in various regions through overseas investments and long-term contracts. In 2013, the Middle East supplied 2.9 million bbl/d (52%). Other regions that export to China include Africa with 1.3 million bbl/d (23%), the Americas with 562,000 bbl/d (10%), the Asia-Pacific region with 129,000 bbl/d (2%), and 736,000 bbl/d (13%) from other countries. Saudi Arabia and Angola are China’s two largest sources of oil imports, together accounting for 33% of China’s total crude oil imports.

Sudan and South Sudan became significant oil exporters to China until production was shut in at the beginning of 2012, following political conflicts between the two African nations over their oil resources. Exports from Sudan and South Sudan to China dropped from 260,000 bbl/d in 2011 to zero by April 2012. As production in the two African countries returned, China resumed a reduced level of imports. The ensuing shut-in of some of Libya’s oil production during the latter half of 2013 from political uprisings has also affected oil exports to China.

China reduced imports from Iran, historically the third largest exporter to China, by 20% in 2012 to 439,000 bbl/d from a high of 555,000 bbl/d in 2011, as a result of a contract dispute between Sinopec, China’s key oil importer, and Iran’s state oil company. Iran fell to the sixth-largest crude oil exporter to China behind Saudi Arabia, Angola, Oman, Russia, and Iraq, and constituted 8% of China’s crude oil imports in 2012 and 2013 compared to 11% in 2011. The contract dispute with Iran was settled by mid-2012, but China reduced its average oil import levels from Iran to maintain diplomatic ties with the United States and Europe as a result of global sanctions imposed regarding Iranian crude oil sales over disagreements on Iran’s nuclear program. Iran shipped 429,000 bbl/d to China in 2013, according to China’s customs data, or 2.3% below the 2012 level. China originally targeted a 5% annual reduction of oil intake from Iran in 2013, but it imported higher amounts of Iranian condensates during the second half of 2013. Negotiations between Iran and six countries, including the United States and China, at the end of 2013 allowed China and other buyers to maintain current import levels. Even if production resumes to pre-disruption levels from these countries, most analysts expect that China will continue to diversify import sources to reduce geopolitical risks and oil supply uncertainties.

China replaced the share of oil lost from Iran, Sudan and South Sudan, and Libya with imports from other Middle Eastern countries, Angola, Venezuela, and Russia. China and Russia have signed deals for Russia to send China close to 1 million bbl/d of crude oil by 2020 through various routes. China has significantly increased imports from Iraq, although future import growth is likely to depend on the pace of infrastructure development and the political situation in Iraq.

Pipeline connections

China is making headway on improving its domestic oil pipeline network to integrate its oil supply and demand centers and to diversify its oil import sources through pipeline links with Kazakhstan, Russia, and Myanmar.

China has actively sought to improve the integration of the country’s domestic oil pipeline network, as well as to establish international oil pipeline connections with neighboring countries to diversify oil import routes. According to CNPC, China had about 14,658 miles of total crude oil pipelines (67% managed by CNPC and the remaining 33% by other NOCs) and 11,795 miles of oil products pipelines in its domestic network at the end of 2012. The bulk of China’s oil pipeline infrastructure serves the more industrialized coastal markets and the northeastern region. However, several long-distance pipeline links have been built or are under construction to deliver oil supplies from the northwestern region or from downstream refining centers to more remote markets in the central and southwestern regions.

China inaugurated its first transnational oil pipeline in May 2006, when it began receiving Kazakh and Russian oil from a pipeline originating in Kazakhstan. The 240,000-bbl/d pipeline spans 1,384 miles, connecting Atyrau in western Kazakhstan with Alashankou on the Chinese border in Xinjiang. The pipeline was developed by the Sino-Kazakh Pipeline Company, a joint venture between CNPC and Kazakhstan’s KazMunaiGaz (KMG) and brings oil from the oilfields in central Kazakhstan to China. Expansions are underway on the Atasu-to-Alashankou section to nearly double capacity to 400,000 bbl/d in 2014. The two countries are considering a parallel second pipeline to supply crude oil from Kazakhstan’s oilfields in the Caspian Sea region including the new Kashagan field.

Russia’s new East Siberian oil fields have become another source for Chinese crude oil imports. Russian state-owned oil giant Transneft constructed the Eastern Siberia-Pacific Ocean Pipeline (ESPO), extending 3,000 miles from the Russian city of Taishet to the Pacific Coast in two stages. The first stage of the project included the construction of a 600,000-bbl/d pipeline from Taishet to Skovorodino in Russia. CNPC also built a 597-mile pipeline linking the spur with the Daqing oil field in the Northeast. The pipeline spur to China became operational in January 2011, and delivers up to 300,000 bbl/d of Russian oil to the Chinese border under an original 20-year supply contract between the two countries. The second stage of ESPO came online at the end of 2012 and delivers oil to the Russian Pacific port of Kozmino. This port provides Russia the option to send more crude oil to China via a sea route. Russia anticipates expanding the ESPO transmission capacity to Skovorodino to 1.6 million bbl/d by 2018 and augmenting contracted supply to China through this route. In the meantime, Rosneft agreed to send 140,000 bbl/d of western Siberian oil to China through the expanded pipeline from Kazakhstan to western China starting in 2014 until the ESPO spur to China is brought to full capacity. This agreement allows Russia a western outlet for sending its contracted oil to China.

China also revived its plans to construct an oil import pipeline from Myanmar through an agreement signed in March 2009. Myanmar is not a significant oil producer, so the pipeline is envisioned as an alternative transport route for crude oil from the Middle East that would bypass the potential choke point of the Strait of Malacca, which approximately 80% of China’s oil imports traverse based on crude oil import sources and routes. CNPC plans to direct crude oil from the pipeline to serve the proposed 200,000 bbl/d-Yunnan/Anning refinery. Maximum capacity for the pipeline is slated to be 440,000 bbl/d when it comes online in 2014.

Refining

As part of its goal to diversify crude oil import sources and meet oil product demand, China has steadily augmented its refining capacity, which climbed to more than 13 million bbl/d in 2013.

China is steadily expanding its oil refining capacity to meet its strong demand growth and to process a wider range of crude oil types. The country now ranks behind the United States and the European Union in amount of refining capacity. China’s installed crude refining capacity was an estimated 13 million bbl/d by the end of 2013, around 890,000 bbl/d higher than in 2012, according to FGE. These new refineries and expansions are expected to ramp up refinery runs in 2014 as crude oil supply becomes available and product demand rises in certain regions. Some of the new refineries are designed to accept all grades of crude oil, making Chinese refineries a strong regional competitor. The country not only plans to meet its swiftly growing domestic demand but also to export products within the region. Various sources estimate that China will add another 500,000 bbl/d of net capacity in 2014. FGE anticipates China adding 4.4 million bbl/d of net capacity between 2013 and 2020, pushing total capacity to over 17 million bbl/d.

Utilization rates have decreased to about 75% in the past year as Chinese companies continue to build refining capacity against a backdrop of slower oil demand growth in China and around the world. Some new refineries have encountered delays in startups over the past two years, as the refining sector deals with the current overcapacity.

Recent heavy pollution in certain areas of China prompted the NDRC to adopt stricter petroleum product specifications that are intended to lower sulfur emissions from gasoline and diesel use. The agency requires refineries to implement the equivalent of Euro V standards for transportation fuels nationwide by the end of 2014 and Euro V standards by the end of 2017. Shanghai and Beijing are already supplying only fuels that meet Euro V standards. Sinopec and CNPC are investing in refinery upgrades to meet these emissions standards, but the small independent refineries are facing economic challenges of additional cost. Also, in 2013, the Ministry of Environment put a temporary ban on the approval of new refineries and expansion of current refineries in reaction to the NOCs missing emissions targets in 2011 and 2012. This ban could postpone some of the refineries proposed after 2015.

The oil refining sector has undergone modernization and consolidation in recent years, shutting down dozens of smaller, independent refineries (commonly known as teapots). These smaller refineries account for roughly 20% of total refinery capacity. The NDRC issued guidelines in 2011 to eliminate refineries smaller than 40,000 bbl/d by the end of 2013 in an effort to encourage economies of scale and energy efficiency measures. Several of these local refineries, mostly located in the eastern Shandong province, plan to expand their capacity or consolidate with larger firms to avoid closing. FGE estimates these independent refineries will add about 240,000 bbl/d in the last quarter of 2013.

Domestic price regulations for petroleum products resulted in revenue losses for Chinese refiners, particularly small ones, in the past few years when international oil prices were high. This price differential squeezed refineries’ profit margins, leading to reduced processing rates at some independent refineries. The oil price reforms recently implemented by the NDRC have reduced some of these revenue losses and allowed refiners to be more responsive to domestic demand and global markets.

Although China remains an overall net oil product importer, the country became a net diesel fuel exporter in mid-2012 mostly to other Asian countries as the pace of growth in domestic oil product demand moderated. According to FGE, diesel is a key driver of China’s oil products demand and consisted of 35% of total oil products demand in 2012. The NDRC issues export quotas on oil products to NOCs to ensure that domestic demand for major oil products is met, with the possibility to extend the quotas if supply exceeds demand, as happened at the end of 2013. In 2012, China imported approximately 1 million bbl/d and exported 575,000 bbl/d of petroleum products. As refining capacity expands beyond 2013, exports of products, particularly gasoline and diesel, are likely to grow.

NOC participation

Sinopec and CNPC are the two dominant players in China’s oil refining sector, respectively accounting for 41% and 30% of the capacity in 2013, according to FGE. Sinopec, which operated nearly 5.5 million bbl/d of total oil processing capacity in China by 2013 and holds a significant refining presence in the coastal and southern areas of China, is the second-largest oil refiner in the world. Sinopec relies heavily on imported crude oil for its refineries, and most of the NOC’s refineries are configured to handle crude oil higher in sulfur and acidity.

The other NOCs are now building refineries and pipelines to compete with Sinopec’s strong presence in China’s downstream markets. CNPC is expanding its downstream presence in southern China, and started trial operations of its 200,000-bbl/d Pengzhou refinery in Sichuan Province at the end of 2013. CNOOC entered the downstream sector through the commissioning of the company’s first refinery, the 240,000-bbl/d Huizhou plant, in 2009. The NOC anticipates expanding this refinery by 200,000 bbl/d in 2015. Sinochem commissioned its first major refinery, Quanzhou, at the end of 2013.

National oil companies from Kuwait, Saudi Arabia, Russia, Qatar, and Venezuela have also entered into joint ventures with Chinese companies to build integrated refinery and petrochemical projects and gain a foothold into China’s downstream oil sector.

Chinese companies have ventured into overseas refining opportunities. In addition to its strong domestic presence, Sinopec is gradually investing in refining assets overseas, and the company purchased a 37.5% stake in Saudi Arabia’s 400,000-bbl/d Yanbu refinery, set to beginning processing heavy crude oils by the end of 2014. Sinopec recently entered into JV partnerships for two large refineries, Mthomobo in South Africa and Premium 1 in Brazil. CNPC branched out to acquire refinery stakes in other countries to move downstream and secure more global trading and arbitrage opportunities. The company’s purchases of refinery shares in Singapore and Japan a few years ago are cases where CNPC was looking for a share in the region’s refining opportunities. Also, CNPC has invested in refineries and pipelines in African countries in exchange for exploration and production rights.

Strategic petroleum reserves and crude oil storage

China’s plan to construct crude oil storage through both state-owned strategic petroleum reserves and commercial crude oil reserves is part of its need to secure energy in light of its growing reliance on oil imports. The government intends to build strategic crude oil storage capacity of at least 500 million barrels by 2020.

As part of China’s need for energy security and its growing reliance on oil imports, the country is in the process of developing significant storage capacity to buffer geopolitical issues involving global oil supply. In China’s 10th Five-Year Plan (2000-2005), Chinese officials decided to establish a government-administered strategic oil reserve program (SPR) to help shield the country from potential oil supply disruptions. The plan calls for China to construct facilities that can hold 500 million barrels of crude oil by 2020 in three phases. Currently, China’s has over 160 million barrels of total storage capacity for the SPR, and several sites are under construction. Phase 1, completed in 2009, has a total storage capacity of 103 million barrels at four sites. Phase 2 is expected to add at least 169 million barrels to the SPR by 2015. The IEA reports that three Phase 2 sites, which add 58 million barrels to the capacity, are completed. Three Phase 2 sites are located inland in western and central China, while the others are scattered along the eastern and southern coasts, allowing China to fill the facilities from various sources.

In addition to the strategic reserves of crude oil, China has between 250 and 400 million barrels of commercial crude oil storage capacity, which are operated almost exclusively by the major Chinese NOCs, according to various industry sources. The distinction between future strategic and commercial storage reserve capacity is not clearly defined, and there could be crossover between some of the facilities. Also, the government has discussed plans to create a strategic oil storage capacity for refined oil products, although details of this proposal are not yet known.

Stockpiling rates for strategic and commercial storage in China depend on factors such as supply security, crude oil prices, domestic demand, and domestic policy goals. The Chinese government reported the average Brent crude price was $58/barrel for purchasing oil in Phase 1. However, prices in the past few years have averaged over $100/barrel, making purchases for storage more expensive. While China’s official stocks are not disclosed, commercial stocks have fluctuated over the past three years. Another driving factor for additional stock build in the next several years is China’s goal to hold at least 90 days’ worth of net oil imports by 2020.

Natural gas

Although natural gas production and use is rapidly increasing in China, the fuel comprised only 4% of the country’s total primary energy consumption in 2011. Heavy investments in upstream development and greater import opportunities are likely to underpin significant growth in China’s natural gas sector.

According to OGJ, China held 155 trillion cubic feet (Tcf) of proven natural gas reserves as of January 2014, 14 Tcf higher than reserves estimated in 2013 and the largest in the Asia-Pacific region. China’s natural gas production and demand have risen substantially in the past decade. China more than tripled natural gas production to 3.8 Tcf between 2002 and 2012. The government is planning to produce about 5.5 Tcf of natural gas by the end of 2015 in line with its desire to use more natural gas to replace other hydrocarbons in the country’s energy portfolio. EIA projects long-term natural gas production to climb to 4.2 Tcf by 2020 and more than double from current levels to reach 10.1 Tcf by 2040.

The Chinese government anticipates boosting the share of natural gas as part of total energy consumption to around 8% by the end of 2015 and 10% by 2020 to alleviate high pollution resulting from the country’s heavy coal use. Consumption in 2012 rose to nearly 5.2 Tcf, 11% greater than the 4.6 Tcf in 2011, and the country imported nearly 1.5 Tcf of liquefied natural gas (LNG) and pipeline gas to fill the gap. Although the majority of gas consumption stems from industrial users, (48% in 2011, according to PFC Energy) the shares of gas consumption in the power, residential, and transportation sectors have been rising over the past decade. EIA projects gas demand to rise to 7.8 Tcf in 2020 and to more than triple to about 17 Tcf by 2040, growing by an annual average rate above 4%. To meet this demand, China is expected to continue importing natural gas in the form of LNG and from a number of new and proposed import pipelines from neighboring countries. It will also have to tap into its expanding domestic reserves and establish a wider domestic natural gas network and storage capacity.

China was traditionally a net gas exporter until 2007, when it became a net natural gas importer for the first time. Since then, gas imports have increased dramatically in tandem with rapidly developing pipeline and gas processing infrastructure. Natural gas imports, which met 29% of demand in 2012, have become an increasingly significant part of China’s gas supply portfolio.
Chart showing China’s natural gas production and consumption for 2000-2011

Sector organization

The NOCs lead the natural gas development of China. Similar to oil E&P, these companies partner with international companies to develop projects requiring more technical expertise. The shifting landscape of China’s natural gas supply sources towards greater imports and the need to bolster investment were the factors leading the government to implement the recent price reforms and align domestic natural gas prices more closely to market-based rates.

As with oil, the natural gas sector is dominated by the three principal state-owned oil and gas companies: CNPC, Sinopec, and CNOOC. CNPC is the country’s largest natural gas company in both the upstream and downstream sectors. CNPC data show that the company accounts for roughly 73% of China’s total natural gas production. Sinopec operates the Puguang natural gas field in Sichuan Province, one of China’s most promising upstream assets. CNOOC led the development of China’s first three LNG import terminals at Shenzhen, Fujian, and Shanghai and manages much of the country’s offshore production. CNOOC typically uses PSC agreements with foreign companies wanting to jointly develop upstream offshore projects and has the right to acquire up to a 51% working interest in all offshore discoveries once the IOC recovers its development costs.

Pricing

China’s natural gas prices, similar to retail oil prices, are regulated and generally below international market rates. China has typically favored manufacturing and fertilizer gas users by regulating the price these sectors pay, whereas residential and transportation sectors pay higher, unregulated prices. China’s nascent natural gas market has flourished in the past few years and become more complex as relatively expensive gas imports compete with domestic production. In order to bolster investment in the natural gas sector, create more transparency in the pricing system and responsiveness to market fluctuations, and make domestic natural gas competitive with other fuels and imported gas, the NDRC implemented a new system linking gas prices more closely to higher international oil prices. Also, China opened its first natural gas spot trading market at the Shanghai Petroleum Exchange in July 2012 as part of its gas price liberalization.

The NDRC historically has made few adjustments to China’s natural gas prices. In 2010, the NDRC raised the onshore wellhead gas prices by 25%, and some Chinese cities raised end-user prices in the industrial and power sectors. China launched a pilot program for natural gas price reform in the southern provinces of Guangdong and Guangxi at the end of 2011. The new system links the natural gas prices at the city gate (delivery point from a gas transmission line to a local distribution utility) to the price of imported fuel oil and liquefied petroleum gas. The linked natural gas price is discounted to some degree to encourage natural gas consumption.

In July 2013, the NDRC expanded the reform to the rest of the country and made an average upward price adjustment of 15% for all consumers apart from the residential sector. The new pricing scheme covers natural gas from imported pipeline gas and most domestic onshore sources. Prices from shale gas, coalbed methane, coal-to-gas, offshore domestic natural gas, and LNG are usually negotiated between the producer and the wholesale buyer. The price reform applies to incremental natural gas demand beyond 2012 levels. Although incremental demand represented approximately 9% of total gas demand in 2013 as calculated by the NDRC, this share is expected to increase over the next few years.
Exploration and production

China contains several natural gas-producing regions, including the western and central parts of the country as well as offshore basins. While eager to develop older natural gas fields, China’s oil companies are exploring more frontier plays such as deep water, shale gas, and gas derived from coal seams. The country’s first deep water field is expected online by 2014.

China’s primary onshore natural gas-producing regions are Sichuan Province in the Southwest (Sichuan Basin); the Xinjiang and Qinghai Provinces in the Northwest (Tarim, Junggar, and Qaidam Basins); and Shanxi Province in the North (Ordos Basin). China has delved into several offshore natural gas fields located in the Bohai Basin and the Panyu complex of the Pearl River Mouth Basin (South China Sea) and also is exploring more technically challenging areas such as deep water, coalbed methane, and shale gas reserves with foreign companies.

Southwest

The Sichuan Basin is China’s key natural gas-producing area in the southwestern region. The largest recent discoveries in the southwestern region are Sinopec’s finds at the Yuanba and Puguang fields in Sichuan Province. Sinopec started commercial production at Puguang in 2010 and ramped up to its peak capacity of 350 Bcf in 2012. Sinopec anticipates the field will produce at this level for about two decades. The NOC anticipates Yuanba will produce 120 Bcf/y by 2016.

Sichuan Province also holds five high-sulfur content (sour) gas fields in the Chuandongbei basin. In 2007, CNPC awarded a 30-year PSC to Chevron to bring the technically challenging fields online. Field development has encountered several delays, and initial production has been pushed back to the second half of 2014. Chevron is building two sour natural gas processing plants with a combined production capacity of 270 Bcf/y.

Northwest

Xinjiang historically is one of China’s largest and most prolific gas-producing regions, with output of 827 Bcf in 2012. The Tarim Basin in Xinjiang was the second-largest gas-producing area in China in 2012, supplying 680 Bcf/y, or 18% of China’s total production. According to CNPC, the Tarim Basin’s major fields Kela-2 and Dina-2 have proven gas reserves of 16.2 Tcf, although much of the basin is still underexplored. The basin’s complex geological features make development costs relatively high. CNPC’s two cross-country West-to-East Gas Pipelines, connecting Xinjiang to Shanghai, Beijing, and Guangdong, have greatly expanded the upstream potential of the Tarim Basin to supply markets in eastern China. Other new discoveries in the Northwest that have high gas supply potential are the Junggar Basin in Xinjiang Province and the Qaidam Basin in Qinghai Province.

Northeast

The Changqing oil and gas area in the Ordos basin is China’s largest gas-producing area and houses the Sulige gas field, containing over 35 Tcf of proven gas reserves. Development of this region is both geologically and technically challenging, and most of the reserves are tight gas (characterized by low permeability and low pressure and usually requiring hydraulic fracturing for commercial production). Partnering with IOCs Total and Shell Oil, CNPC is effectively using advanced drilling techniques and recovery methods to retrieve natural gas from projects in the South Sulige and Changbei fields. Changqing’s production rose steadily this decade to 1,022 Bcf in 2012, and constituted 27% of China’s total gas output. CNPC anticipates lifting production to 1,236 Bcf/y at Changqing by 2015. Sinopec’s Danuidi field, also located in the Ordos basin, has achieved high growth rates in recent years and produced 130 Bcf in 2012.

The Songliao basin holds the Daqing oil and gas field, which produced 119 Bcf in 2012. Also, China began the process of re-injecting carbon dioxide to enhance recovery rates for the mature fields in this area. The Jilin oil field recently began using CO2 injection produced from the associated Changling gas field for enhanced recovery.

Offshore

Offshore zones have also received increasing attention for upstream natural gas developments in China, and CNOOC is the primary stakeholder of exploration rights. The NOC produced about 200 Bcf in 2011 in the shallow waters of the South China Sea (SCS). The western South China Sea accounted for about 57% of CNOOC’s domestic gas production, although the NOC sees great potential for development in the eastern South China Sea. The western South China Sea is home to the Yacheng 13-1 field, China’s largest offshore natural gas field and a primary source of energy for Hong Kong’s power stations. The Yacheng 13-1 field produces about 125 Bcf/y of natural gas but has declined since 2007. Other fields have entered operations since 2005 and offset some declines from Yacheng. CNOOC’s long-term development plans include exploration of deep water fields in the Pearl River Mouth and Qiongdongnan Basins.

The eastern SCS is under intense exploration for gas finds. The NOC partnered with Husky Energy to develop China’s first large-scale deep water gas project at Liwan, which is scheduled to begin production by 2014. CNOOC expects the Liwan gas project, which includes three fields and 4 to 6 Tcf of reserves, to produce up to 180 Bcf/y and to be one of the company’s largest new sources of incremental gas production in the next few years. As development continues, other deep water fields such as Panyu 34-1 will feed into the main processing platform at Liwan. Other IOCs, namely Chevron, BG, BP, Anadarko, and Eni, signed PSCs for other deep water hydrocarbon blocks in the SCS.

Coalbed methane, coal-to-gas, and shale gas

The coalbed methane (CBM), coal-to-gas (CTG) or synthetic natural gas (SNG), and shale gas industries in China are in early stages of development because of technical and water resource challenges, regulatory hurdles, transportation constraints, and competition with other fuels and conventional natural gas. However, China’s potential wealth of these resources has spurred the government to seek foreign investors with technical expertise to exploit them.

Most of China’s CBM volumes are from basins in the North and Northeast, the Sichuan basin in the Southwest, and the Junggar and Tarim basins in the West. FGE reported that CBM production in 2012 was 441 Bcf from both surface wells and coal mines, and China targets about 700 Bcf of output by the end of 2015, according to the IEA. China also intends to increase the utilization rates from less than 40% to over 60% by the end of 2015, reducing the significant production waste. Although CBM production is increasing, company developers face regulatory hurdles, technical challenges, a lack of pipeline infrastructure from coal mining areas to gas markets, and high development costs. At times, there are conflicting interests between governing bodies when dealing with mineral and land rights. The local governments hold rights to coal mines, whereas the central government has rights to natural gas and CBM. China’s State Council issued a policy guideline in September 2013 encouraging investment in CBM exploration and development and more pipeline infrastructure through financial incentives and tax breaks to producers and reform of local price controls.

China’s first commercial CBM pipeline became operational in late 2009, linking the Qinshui Basin with the West-to-East pipeline. Two additional long-distance pipelines have become operational, and several more are under construction. China also uses many small liquefaction plants and trucks to transport CBM to demand centers.

China is rapidly approving CTG projects as China encounters higher natural gas demand alongside supply shortfalls and as coal remains an abundant resource,. China is set to produce gas from its first CTG plant at the beginning of 2014. The Datang plant located in the northern province of Inner Mongolia is one of four CTG projects coming online to supply Beijing with more natural gas by 2015. These plants are slated to fulfill China’s targeted CTG production of 530 Bcf by the end of 2015. Sinopec recently began construction of China’s largest CTG project that will be located in the northwestern Xinjiang province and has a design capacity of 1,058 Bcf/y. The plant is scheduled to come online in 2017 and connect with pipelines carrying the natural gas towards eastern China. So far, the NDRC has approved 12 large-scale CTG projects with a total capacity of 2,800 Bcf/y that is scheduled to come online by 2017. Many more facilities are in the planning phases, but CTG projects face high capital costs required to develop the attendant infrastructure, require scarce water resources, and produce high levels of emissions. These factors could affect the potential construction of many of these projects.

Most of China’s proven shale gas resources reside in the Sichuan and Tarim basins in the southern and western regions and in the northern and northeastern basins. EIA estimates from its most recent report on shale oil and gas resources that China’s technically recoverable shale gas reserves are 1,115 Tcf, the largest shale gas reserves in the world. Resource estimates of other sources are lower, and China’s Ministry of Land and Resources (MLR) reported total shale gas technical reserves were 883 Tcf in 2012. Shale gas production in 2012 was only 1.8 Bcf from test drilling in the Sichuan basin, falling far short of the Ministry of Land Resources’ goal to produce 230 Bcf of shale gas by the end of 2015 and at least 2,100 Bcf by 2020. CNPC and Sinopec own almost 80% of China’s shale gas resources, according to FGE, and together targeted shale gas production at around 95 Bcf in 2015. However, Sinopec’s recent success in developing its Fuling gas field resulted in the company to doubling its shale gas output goal, making the government’s overall shale gas targets more feasible.

China’s NOCs are in discussion with several IOCs for partnering on potential shale gas projects in order to gain necessary technical skills and investment for developing these geologically challenging resources. CNPC and Shell signed the first PSC for the Fushun-Yonghchuan block of shale gas in the Sichuan Basin in March 2012. Shell also has partnered with Sinopec and CNOOC on two other shale gas plays. After investing $950 million between 2011 and 2013 on shale gas exploration in China, Shell plans to spend another $1 billion each year for the next five years to develop these resources. Sinopec is working with Chevron and ConocoPhillips to explore shale gas resources in the Qiannan and Sichuan basins, respectively. On the reverse side, Chinese NOCs have been actively investing in shale oil and gas plays in North America to gain technical expertise in this arena.

China held its first shale gas licensing round in 2011 for four blocks in the Sichuan Basin and awarded the tenders to two Chinese companies, including Sinopec and Henan Coal. Tendering is available not only to NOCs but also to private and local companies, and foreign investors may participate indirectly if they hold a PSC contract with a participating Chinese firm. The State Council released shale gas from the jurisdiction of the NOCs, allowing the MLR to open a larger second bidding round in mid-2012. The MLR awarded 19 blocks to 16 domestic companies, mostly to coal producers, power companies, and local energy firms. Since these companies have limited shale gas experience and the capital required for such projects, they may partner with China’s larger state-owned companies or foreign companies.

Pipeline connections

China continues to invest in natural gas pipeline infrastructure to link production areas in the western and nothern regions of the country with demand centers along the coast and to accommodate greater imports from Central Asia and Southeast Asia.

China had nearly 32,000 miles of main natural gas pipelines at the end of 2012. China’s natural gas pipeline network is fragmented, although NOCs are rapidly investing in the expansion of the transmission system to connect more supplies to demand centers along the coast and in the southern regions as well as integrating local gas distribution networks. While the major NOCs operate the trunk pipelines, local transmission networks are operated by various local distribution companies throughout China.

CNPC is the key operator of the main gas pipelines, including the West-to-East pipelines, and holds over three-fourths of the gas transmission in China. CNPC moved into the downstream gas sector recently through investments in gas retail projects as well as investments in several pipeline projects to facilitate transportation for its growing gas supply. CNPC developed three parallel pipelines, the Shan-Jing pipelines, linking the major Ordos basin in the North with Beijing and surrounding areas. The third Shan-Jing pipeline began operations in 2011. The NOC fully completed its Zhongwei to Guiyang Gas pipeline, which delivers gas from the West-to-East pipeline network in the north-central part of the country to the gas markets in southwestern China, in 2013. Sinopec is also a major player in the downstream transmission sector, operating pipelines in the Sichuan province.

West-to-East Gas Pipeline

The Chinese government promoted the construction of the West-to-East Gas Pipeline in 2002 to meet natural gas demand in the eastern and southern regions of the country with production from the western provinces and Central Asian countries. CNPC’s first West-to-East Gas Pipeline, commissioned in 2004, is China’s longest natural gas pipeline at 2,500 miles. The pipeline links major natural gas supply bases in western China (Tarim, Qaidam, and Ordos Basins) with markets in the eastern part of the country and ends in Shanghai. The initial West-to-East pipeline has an annual capacity of 420 Bcf/y and contains many regional spurs along the main route, which has improved the interconnectivity of China’s natural gas transport network.

CNPC designed the second West-to-East trunk pipeline to connect with the Central Asian Gas Pipeline at the border with Kazakhstan and completed construction of this line in 2011. The second West-to-East pipeline has a capacity of 1.1 Tcf/y and spans over 5,200 miles, including the trunkline and eight main branch lines. This pipeline transports natural gas from Central Asia and western China to the key demand centers in the southeastern provinces. The western section of the line, running parallel to the first West-to-East Pipeline to Zhongwei in north-central China, became operational at the end of 2009. The eastern section, which began operating in late 2011, runs from Zhongwei to southern Guangdong province and Shanghai in the East.

To accommodate greater gas flows from Central Asia, CNPC began constructing the third West-to-East pipeline, set to become operational by 2015. This third pipeline will run partially parallel to the second West-to-East pipeline and end in the southeastern provinces of Fujian and Guangzhou. CNPC anticipates that the 1.1-Tcf/y pipeline will transport natural gas from Central Asia and domestically produced gas from the Xinjiang Province. Proposals for the fourth and fifth West-to-East pipelines are still in the planning stages, but China anticipates a capacity of nearly 1.6 Tcf/y for each line.

International pipelines

Over the past three years, China has ramped up imports of natural gas via pipelines as production from Central Asia and Myanmar increased and as gas infrastructure in the region improved. China’s first international natural gas pipeline connection, the Central Asian Gas Pipeline (CAGP), transports natural gas through twin parallel pipelines from Turkmenistan, Uzbekistan, and Kazakhstan to the border in western China. The CAGP’s current capacity is 1.1 Tcf/y and spans 1,130 miles. The pipeline’s first and second phases (Lines A and B) began operations in 2010 and link to the second West-East pipeline at the Sino-Kazak border.

CNPC has invested in upstream stakes in Turkmenistan to facilitate the gas supply development. The NOC operates the Bagtyyarlyk PSC that currently feeds the CAGP. In 2009, CNPC was awarded a production supply agreement to develop natural gas resources at Turkmenistan’s massive Galkynysh gas field and signed a deal with Turkmengaz, the state-owned gas company. China imported over 2 Bcf/d (765 Bcf/y) from Turkmenistan and Uzbekistan in 2012 and expects to increase imports as the pipeline capacities on both sides of the border expand. Turkmenistan and China signed another gas supply agreement in 2013 to extend supplies from 1.4 Tcf/y to 2.3 Tcf/y by 2020 as the new Galkynysh field ramps up production following its start of operations in September 2013.

The CAGP is undergoing expansion as more supply agreements are signed and as gas production capacity becomes available from Turkmenistan, Uzbekistan, and Kazakhstan. In 2010, CNPC signed an agreement with Uzbekistan to deliver 350 Bcf/y (1 Bcf/d) through a transmission line that connects with the CAGP. Uzbekistan began exporting natural gas to China in mid-2012 and quickly ramped up to around 400 MMcf/d by mid-2013. Kazakhstan and China also signed a joint venture agreement in 2010 to construct a pipeline starting in western Kazakhstan and connecting with the CAGP lines. The pipeline (known as Line C), the third phase of the CAGP, is expected to add another 880 Bcf/y of capacity from the three Central Asian countries to the CAGP and begin operations in 2014. This line corresponds with the commencement of the third West-to-East pipeline on the Chinese side. The second phase of the pipeline from Kazakhstan links the country’s western fields to Line C of the CAGP and is scheduled to come online in 2015. CNPC signed another agreement with Uzbekneftegaz (the Uzbek NOC) in September 2013 to build a fourth line of the CAGP (Line D) that would supply natural gas from the second stage of the Galkynysh field development and traverse Turkmenistan, Uzbekistan, Tajikistan, and Kyrgyzstan. This pipeline is anticipated to come online in 2016 and increase the capacity by another 880 Bcf/y.

The China-Myanmar gas pipeline is likely to boost gas imports to China and diversify its supply in the future. CNPC signed a deal with Myanmar in 2008 to finance the construction of a 1,123-mile, 420-Bcf/y pipeline from two of Myanmar’s offshore blocks to China’s Yunnan and Guangxi provinces in the southwestern region. Initial production from the fields is 182 Bcf/y, with China expected to receive 146 Bcf/y. China began importing gas from Myanmar when the pipeline became operational in September 2013. The pipeline is projected to ramp up to full capacity as adjacent gas fields in Myanmar are developed.

CNPC and Gazprom signed a Memorandum of Understanding in 2006 for gas pipeline imports from Russia to China. However, negotiations have stalled over setting an import price and determining the supply route from western or eastern Russia. In September 2013, CNPC officials signed a framework agreement with Gazprom to purchase 1.3 Tcf/y of gas from the proposed East Siberian pipeline, which is expected to connect Russia’s Far East and Sakhalin Island to northeastern China. The countries are still negotiating a price for the gas.

Liquefied natural gas imports

Robust growth in natural gas demand in recent years, particularly in the urban coastal areas, has led China to become the third largest LNG importer and to accelerate development of its LNG and pipeline infrastructure.

Since the country built its first regasification terminal, Dapeng LNG, in 2006, natural gas imports have risen dramatically, making China one of the largest LNG consumers in the world. Roughly half of China’s total natural gas imports were in the form of LNG in 2012. In 2012, China imported 706 Bcf, a 20% increase from 581 Bcf in 2011. Data estimates for 2013 show LNG imports climbing even higher to 749 Bcf for the first 11 months of the year. China, consuming over 6% of the global LNG trade, quickly became the world’s third-highest LNG importer, exceeding Spain for the first time in 2012.

Import regasification capacity was 1.5 Tcf/y (4.1 Bcf/d) by the end of 2013, and another 2 Bcf/d is being constructed by 2016. LNG now enters the country through nine major terminals, with another five under construction and more in various stages of construction and planning. China’s LNG imports are expected to increase as more terminal capacity comes online, although higher market-based LNG prices compared to lower prices from domestic gas sources and the increasing pipeline gas supplied by Central Asia could lead to more competition for LNG imports.

CNOOC is the pioneer of developing LNG regasification terminals and remains a key LNG player in China. The NOC operates six existing plants, including the Ningbo terminal at Zhejiang and the Zhuhai terminal, both of which came online in 2013. The company has held a competitive advantage thus far in China’s LNG market compared to the other NOCs and continues to expand aggressively. CNOOC completed construction of China’s first floating storage and regasification unit (FSRU) in Tianjin at the end of 2013. Generally, floating terminals are more expensive to build, but they can be developed more quickly than land-based terminals. China’s rapidly growing demand and need for seasonal flexibility makes the floating terminals attractive. CNOOC is constructing two regasification terminals in the southern region — Hainan and Shenzhen/Diefu — and intends to expand four of the company’s existing terminals. In addition, CNOOC has proposed two other FSRU facilities that are scheduled to come online in 2014.

CNPC recently entered the LNG market and commissioned its first two regasification terminals, Dalian and Jiangsu, in 2011. The company’s Tangshan terminal came online by the end of 2013. Sinopec anticipates entering China’s LNG market with the advent of its Qingdao terminal in 2014.

Chinese NOCs must secure supply prior to gaining government approval to build a regasification terminal, and these firms are faced with competition from other regional buyers, mainly those in Korea and Japan. Chinese companies have signed long-term contracts to deliver at least 5.2 Bcf/d through 2030. Most of these contracts are with Asian firms sourcing LNG from Indonesia, Malaysia, Australia, and Papua New Guinea (PNG). Some contracts are tied to new liquefaction projects primarily located in Australia and PNG and slated to come online after 2014. In addition to purchasing supply, Chinese companies are investing in significant equity stakes in Australia’s liquefaction projects, particularly ones involving coalbed methane. CNOOC owns a 50% stake in the Queensland Curtis LNG project, and Sinopec owns 25% of Australia Pacific LNG. Both of these terminals are scheduled to begin operations and supply natural gas to China by 2015.

To meet its rapidly growing demand, China is diversifying its LNG imports from other regions such as the Middle East and Africa. Qatar, which ships gas to China under long-term contracts and spot cargoes, supplied LNG to meet more than a third of China’s demand and was the largest LNG supplier to China in 2012. Also, some long-term contracts involve gas supply from global LNG portfolios of major international oil companies. China started actively seeking potential LNG opportunities from North American shale gas plays by investing in upstream developments and LNG projects in Canada. CNPC owns a 20% share in the LNG Canada project, and CNOOC, through its wholly-owned Canadian company, Nexen, recently purchased land in western Canada to explore opportunities to develop a liquefaction terminal.

China’s higher gas demand and a tighter LNG global supply market over the past few years have led to an increase in LNG import prices. According to PFC Energy, the average LNG import price was $10.43/MMbtu for all terminals in 2012, although import price for terminals that came online in the past two years were much higher. Also, as China has diversified its import sources to include more LNG from the Middle East and Africa, costs have increased. Average prices to import LNG at certain terminals, such as Jiangsu and Dalian, are over $17/MMbtu, which more closely reflects the higher Asian LNG prices, tied to international oil prices.

Coal

China is the largest producer and consumer of coal in the world and accounts for almost half of the world’s coal consumption.

China’s vast coal resources enable the fuel to remain the mainstay of the country’s energy sector and allow it to be a key driver of massive economic growth over the past decade. China has been the world’s leading coal producer and consumer in recent years and accounted for close to half of the global coal consumption, an important factor in world energy-related CO2 emissions. According to the World Energy Council, China held an estimated 126 billion short tons of recoverable coal reserves in 2011, the third-largest in the world behind the United States and Russia, and equivalent to about 13% of the world’s total coal reserves.

Coal production rose 4% from 3.8 billion short tons in 2011 to nearly 4 billion short tons in 2012, the slowest growth in over a decade. Although there are 28 provinces in China that produce coal, Shanxi, Inner Mongolia, Shaanxi, and Xinjiang contain most of China’s coal resources and virtually all of the large state-owned mines. China currently has about 12,000 coal mines producing primarily bituminous coal and a fair amount of anthracite and lignite. These elements make up steam coal, used mainly to generate electricity and produce heat in the industrial sector, and coking coal, also known as metallurgical coal, used primarily to smelt iron ore and produce steel. Much of China’s steam coal resources are located in the north central and northwestern regions, whereas coking coal reserves are found mostly in central and coastal parts of China.

Coal comprised 69% of China’s total energy consumption in 2011. In 2012, China consumed an estimated 4 billion short tons of coal, representing close to half of the world total. Coal consumption in 2012 was more than two times higher than it was in 2000, reversing the relatively flat growth seen from 1996 to 2000. About half of China’s coal is used for power generation. The industrial sector including steel, pig iron, cement, and coke currently, accounts for 45% of coal use. Coal consumption generally tracks economic growth, electricity demand, and industrial sector output. EIA projects that as industrial growth moderates in the long run and the economy becomes less energy-intensive, electricity generation will increase its share of coal consumption to 57% by 2040 from 50% in 2010.

Prior to 2009, China’s domestic coal production generally met all of its consumption requirements. However, in recent years, the country has ramped up its import volumes because of higher demand. Historically, a net coal exporter, China became a net coal importer in 2009 for the first time in over two decades. Total imports rose to 323 million short tons in 2012, about 30% higher than 2011 levels, according to FGE. Indonesia and Australia are the largest coal exporters to China, supplying more than 60% of China’s imports in 2012.

The rise in imports is primarily driven by steady demand growth and the high coal transportation costs resulting from bottlenecks in China’s railway capacity, which makes imported coal economically attractive, especially in Southeast China. As the bulk of the coal production moved westwards, an increasing amount of coal needs to be transported over long distances from the supply regions in the west and the north to the demand centers along the coast and the southern and eastern provinces via rail and truck. In recent years, the country has struggled with transportation bottlenecks in bringing all the coal to market, creating regional imbalances. Also, international coal prices, which are currently low, have been slightly below China’s domestic prices since 2011, making imports more commercially competitive with China’s own coal supply, particularly along the coastal regions.

As coal demand growth eased in 2012, the country witnessed an oversupply of coal and rising inventories. Despite this surplus, some of China’s major coal producers, particularly in key coal-producing provinces in northern and northwestern China that have larger and lower-cost mines, continued to increase domestic production, albeit at a more moderate pace. Producers in these regions are able to reduce their unit costs through higher output and economies of scale. Also, producers are taking advantage of the government’s financial incentives and sector reforms to curtail taxes and provincial duties imposed on mines. However, some mines in Inner Mongolia that produce lower-calorific coal and transport most of their coal outside of the region have suspended their output in response to weaker demand and revenue losses. Mines able to keep their costs low in the current low coal-price environment will be able to maintain higher production levels. China’s current Five-Year Plan addresses the regional imbalance of coal supply and demand through investments in greater railway capacity and higher electricity transmission capacity to enable electricity generated from coal to travel long distances to demand centers.

China’s coal industry has traditionally been fragmented among large state-owned coal mines, local state-owned coal mines, and thousands of town and village coal mines. The top-ten coal companies produced over a third of the domestic coal in 2011, according to FGE. Shenhua Group, the world’s largest coal company, holds over 10% of the domestic market in China.

China has about 10,000 small local coal mines where insufficient investment, outdated equipment, and poor safety practices prevent greater utilization of coal resources. Although the smaller coal mines currently hold a sizeable portion of the market, they are inefficient and are ineffective in responding to market demand. The goal of industry consolidation is to attract greater investment in new coal technologies and improve the safety and environmental record of coal mines. The government’s current 12th Five-Year Plan calls for a production ceiling of 4.4 billion short tons and a capacity ceiling of 4.6 billion short tons by the end of 2015 in an attempt to control the production growth. The Five-Year Plan also calls for streamlining the industry by forming 10 large coal companies that will account for about 60% of the country’s total coal production and capping the number of coal mines at 4,000 through mergers and acquisitions.

In contrast to the past, China is becoming increasingly open to foreign investment in the coal sector in an effort to modernize existing large-scale mines and introduce new technologies in the coal industry. State-owned enterprises partner with foreign investors in the coal sector. Areas of interest in foreign investment include coal-to-liquids, CBM production, coal-to-gas, and slurry pipeline transportation projects.

Electricity

China was the world’s largest power generator as of 2011. Fossil fuels, particularly coal, continue to be the leading sources of the country’s electricity generation and installed capacity.

China is the world’s largest power generator, surpassing the United States in 2011. Net power generation was an estimated 4,476 Terawatt-hours (TWh) in 2011, up 15% from 2010, according to EIA. Electricity generation increased by more than 89% since 2005, and EIA projects total net generation will increase to 7,295 TWh by 2020 and 11,595 TWh by 2040, nearly three times the generation level in 2010. The industrial sector currently accounts for three-quarters of China’s electricity consumption, according to FGE.

China plans to rely on more electric generation from nuclear, other renewable sources, and natural gas to replace some coal with the goal of reducing carbon emissions and the heavy air pollution in urban areas. China’s installed electricity generating capacity was an estimated 1,145 gigawatts (GW) at the beginning of 2013, according to FGE, IHS Cera, and the Chinese Renewable Energy Industries Association. China’s capacity rose 8% from a year earlier and more than doubled from 524 GW in 2005. As China’s generating capacity has quickly expanded over the past several years in response to its economic development, the country’s capacity is now roughly equivalent to that of the United States. Installed capacity is expected to grow over the next decade to meet rising demand, particularly in large urban areas in the eastern and southern regions of the country. EIA projects installed capacity will double to 2,265 GW by 2040, propelled by a combination of coal- and natural gas-fired capacity and renewable sources. Fossil-fired power has historically made up about three-fourths of installed capacity, and coal continued to dominate the electricity mix with 66% of total capacity in 2012.

Sector organization

China’s electric generation is controlled by state-owned holding companies, although limited reforms have opened up the electricity sector to some private and foreign investments. China is seeking to improve system efficiency, facilitate investment in the power grids, and alleviate power shortages.

In 2002, the Chinese government dismantled the monopoly State Power Corporation (SPC) into separate generation, transmission, and services units. Since the reform, China’s electricity generation sector has been controlled by five state-owned generation companies — China Huaneng Group, China Datang Group, China Huandian, Guodian Power, and China Power Investment. These five companies generate about half of China’s electricity. Much of the remainder is generated by independent power producers (IPPs), often in partnership with privately-listed arms of the state-owned companies. Deregulation and other reforms have opened the electricity sector to foreign investment, although this has been limited so far.

During the 2002 reforms, the SPC divided all of its electricity transmission and distribution assets into two new companies, the Southern Power Grid Company and the State Power Grid Company, which operate the nation’s seven power grids. The State Power Grid operates power transmission grids in the north while the Southern Power Company handles those in the south. China also established the State Electricity Regulatory Commission (SERC), responsible for the regulation enforcement of the electricity sector and facilitation of investment and competition in order to alleviate power shortages. As part of the new Chinese leadership’s efforts to streamline government agencies, the government eliminated SERC in March 2013 and transferred agency’s duties to the NEA. China is seeking to improve system efficiency and the interconnections between the grids through ultra high-voltage lines, as well as to implement a smart grid plan. The first phase was completed in 2012, and subsequent phases are slated for completion by 2020.

Electricity prices

On-grid (electricity sold by generators to the grid) and retail electricity prices are determined and capped by the NDRC. The NDRC also determines the price that coal companies should receive from power producers for a certain level of supplies. High coal prices in 2011 and lower government-controlled power tariffs contributed to financial losses for electric generators. Coal prices declined in 2012, giving power producers some financial reprieve. This prompted the government to lower on-grid tariff rates for coal-fired power plants while raising the rates for natural gas fired plants in certain regions. The cost savings by power generators is designated for funding renewable energy subsidies. Additionally, the NDRC is raising the surcharge on renewable energy use to all end-users apart from the residential and agriculture sectors. These measures are designated to encourage more investment in renewable energy infrastructure and to facilitate a greater shift towards using alternative fuels.

Electricity generation

The Chinese government has prioritized the expansion of natural gas-fired and renewable power plants as well as the electricity transmission system to connect more remote power sources to population centers. Also, the Three Gorges Dam hydroelectric facility, the largest hydroelectric project in the world, started operations in 2003 and completed construction in 2012.

Rapid growth in electricity demand this past decade spurred significant investment in new power stations, but China still struggles with insufficient investment, particularly in fossil fuel-fired capacity. Although much of the new investment over the past several years was earmarked to alleviate power supply shortages, the economic crisis of 2008 resulted in a slower demand growth for electricity. Power demand typically follows economic cycles and began to rebound in 2010 as the Chinese economy recovered from the recession. However, FGE and IHS Cera indicate that power demand growth slowed considerably to 5% in 2012 and the first half of 2013 as a result of weaker industrial output. The government is investing in development of the transmission network, integration of regional networks, and construction of new generating capacity.

Fossil fuels

Fossil fuels, primarily coal, currently make up about 80% of power generation and over 70% of installed capacity. Coal is expected to remain the dominant fuel in the power sector in the coming years, while natural gas is set to increase and replace some of the coal-fired capacity in the southeastern and coastal regions where power demand is higher. Oil-fired generation is expected to remain extremely small in the next two decades. In 2011, China generated about 3,596 TWh from fossil fuel sources, up 17% from 2010. Installed fossil fuel-fired capacity was 819 GW beginning in 2013, according to FGE.

Because of the large amount of domestic reserves, coal will continue to lead the fuel slate for power generation, even as China diversifies its fuel supply and uses cleaner fuels. As happened with coal mining, the Chinese government shut down 80 GW of small and inefficient plants between 2005 and 2010 and is looking to continue modernizing the coal fleet in favor of larger, more efficient units as well as technologically advanced ultra-supercritical units. Also, China has prohibited companies from building new coal-fired power plants around its three major cities – Beijing, Shanghai, and Guangzhou – as air pollution rates have become a problem in recent years. EIA projects China will bring on over 450 GW of new coal-fired capacity by 2040.

Natural gas currently plays a small role in overall power generation and consists of only 38 GW of installed capacity. However, the government plans to invest heavily in more gas-fired power plants as a growing marginal fuel source. China is able to obtain gas from growing domestic sources as well as growing import alternatives, but coal still remains the less expensive feedstock except in the large southern coastal cities where the fuel competition is higher. There are several examples of China’s effort to bring new efficient gas-fired units online, some in conjunction with new LNG terminals such as those in Guangdong and Shanghai. In 2010, Huaneng Power International, China’s largest listed electricity generation company, signed strategic agreements with CNOOC to explore opportunities for natural gas-fired power projects in the coastal areas near regasification terminals. Also, Beijing is planning to replace all of its coal-fired facilities, representing about 2.4 GW of capacity, with gas-fired plants by the end of 2014. Overall, China’s effort to shift coal-fired generation to more gas-fired generation in the long term depends on the country’s ability to increase domestic production through shale gas and offshore reserves and imported sources.

Nuclear

China generated 83 TWh of nuclear power in 2011, making up only 2% of total net generation. Although nuclear generation is a small portion of the country’s total power generation portfolio, China is actively promoting nuclear power as a clean, efficient, and reliable source of electricity generation. China’s installed nuclear capacity was 14.7 GW after the country added two reactors with 2.2 GW in 2013. China’s government plans to boost nuclear capacity to 58 GW by 2020. At the end of 2013, China had 31 reactors with almost 35 GW of additional capacity under construction, almost half of the global nuclear power capacity being built. These plants are slated to become operational by 2017, more than tripling China’s current capacity. There are several reactors and expansions, with a total capacity of 25 GW, that received approval from NDRC and are waiting to begin construction, according to FGE.

Following Japan’s Fukushima Daiichi nuclear accident in March 2011, China suspended government approvals for new nuclear plants until safety reviews of all facilities were completed and a safety framework was approved by the State Council. New plant approvals and construction resumed in October 2012.

China also intends to build strategic and commercial uranium stockpiles through overseas purchases and continue to develop domestic production in Inner Mongolia and Xinjiang. Also, China is in the process of developing nuclear fuel reprocessing facilities expected to come online by 2017, according to the World Nuclear Association.

Hydroelectricity and other renewables

China has a goal to produce at least 15% of overall energy output by 2020 from renewable energy sources as the government aims to address environmental issues. Chinese companies invested $65 billion in renewable energy projects in 2012, 20% higher than investments in 2011, and they plan to spend $473 billion on clean energy investments between 2011 and 2015, according to the country’s Five-Year Plan. China is encouraging investment in renewable energy and accompanying transmission infrastructure through a variety of financial and economic incentives.

Because of its cost-effectiveness and sizeable resource potential, hydroelectricity has become the key source of renewable energy in China. China was the world’s largest producer of hydroelectric power in 2011. The country generated 687 TWh of electricity from hydroelectricity, representing 15% of the country’s total electricity generation. This level was down from 2010 because of a severe drought in the southwestern region.

Installed hydroelectric generating capacity was 249 GW in 2012, according to FGE, accounting for about one-fifth of total installed capacity. The world’s largest hydropower project, the Three Gorges Dam along the Yangtze River, was completed in July 2012 and includes 32 generators with a total maximum capacity of 22.5 GW. The dam’s annual average power generation is anticipated to be 84.7 TWh. The Chinese government plans to increase hydro capacity to 325 GW by the end of 2015. However, China has faced some delays on projects resulting from environmental concerns and complications of population displacement.

In 2011, China was the world’s second-largest wind producer, generating 73 TWh, a level about 64% higher than in 2010. China’s installed on-grid wind capacity, which almost doubled each year since 2005, was 61 GW in 2012. However, absolute wind power capacity stood at 75 GW, representing a lack of transmission infrastructure to connect wind farms to the electric grid. The NDRC aims to increase wind capacity to 100 GW by the end of 2015, and the government is encouraging grid development to improve utilization of wind capacity. China is also investing in solar power and hopes to increase capacity from about 3 GW in 2012 to 35 GW by the end of 2015.The NDRC is also providing greater financial incentives for solar powered generation.

Use of biomass in China is relatively small, mostly for heating, cooking, or for small-scale power projects. The NDRC has created price and tax incentives for biomass and waste incineration project investment through feed-in tariffs. In 2011, the total installed biomass power capacity in China was more than 8 GW, with a target to raise capacity to 13 GW by the end of 2015.
Notes

Data presented in the text are the most recent available as of February 4, 2014.
Data are EIA estimates unless otherwise noted.

The article China Energy Profile: Rapidly Increasing Energy Demand – Analysis appeared first on Eurasia Review.

By Patrick J Buchanan

Despite our endless blather about democracy, we Americans seem to be able to put our devotion to democratic principles on the shelf, when they get in the way of our New World Order.

In 2012, in the presidential election in Egypt, Mohammed Morsi of the Muslim Brotherhood won in a landslide. President Obama hailed the outcome.

One year later, the Egyptian army ousted and arrested Morsi and gunned down a thousand members of his brotherhood. The coup was countenanced by John Kerry who explained that the Egyptian army was “restoring democracy.”

Comes now the turn of Ukraine.

In 2010, Viktor Yanukovych, in what neutral observers called a free and fair election, was chosen president. His term ends in 2015.

Yet since November, protesters have occupied Maidan Square in Kiev, battling police, and howling for Yanukovych’s resignation. The United States appears now to be collaborating with Europe in bringing about the neutering or overthrow of that democratically elected government.

Military coups, a la Cairo, and mob uprisings, at la Kiev — are these now legitimate weapons in the arsenal of democracy.

What did Yanukovych do to deserve ouster by the street? He chose Russia over Europe.

In the competition between Vladimir Putin and the European Union over whose economic association to join, Yanukovych was betrothed to the EU. But after an offer of $15 billion from Putin, and a cut in fuel prices to his country, Yanukovych jilted the EU and ran off with Russia.

Yanukovych felt he could not turn down Putin’s offer.

Western Ukraine, which favors the EU, was enraged. So out came the protesters to bring down the president. And into Kiev flew John McCain to declare our solidarity with the demonstrators.

Kerry has now joined McCain in meddling in this matter that is none of America’s business, declaring in Munich that, “Nowhere is the fight for a democratic European future more important than today in Ukraine.”

We “stand with the people of Ukraine,” said Kerry.

But which people? The Ukrainians who elected Yanukovych and still support him or the crowds in Maidan Square that want him out and will not vacate their fortified encampments until he goes?

Kerry is putting us on the side of mobs that want to bring down the president, force elections, and take power. Yet, Americans would never sit still should similar elements, with similar objectives, occupy our capital.

Reportedly, we are now colluding with the Europeans to cobble together an aid package, should Yanukovych surrender, cut the knot with Russia, and sign on with the EU.

But if Putin’s offer of $15 billion was a bribe, what else is this?

While he rules a divided nation, Yanukovych has hardly been a tyrant. As the crowds grew violent, he dismissed his government, offered the prime ministry to a leader of the opposition, repealed the laws lately passed to crack down on demonstrations, and took sick for four days.

But the street crowds, sensing he is breaking and smelling victory, are pressing ahead. There have now been several deaths among the protesters and police.

Putin is incensed, but inhibited by the need to keep a friendly face for the Sochi Olympics. Yet he makes a valid point.

How would Europeans have reacted if, in the bailout crisis, he, Putin, had flown to Athens and goaded rioters demanding that Greece default and pull out of the eurozone?

How would the EU react if Putin were to hail the United Kingdom Independence Party, which wants out of the EU, or the Scottish National Party, which wants to secede from Great Britain?

Ukraine was briefly independent at the end of World War I, and has been again since the breakup of the Soviet Union. Still the religious, ethnic, cultural and historic ties between Russia and Ukraine are centuries deep.

Eight million Ukrainians are ethnic Russians. In east Ukraine and the Crimea, the majority speak Russian and cherish these ties. Western Ukraine looks to Europe. Indeed, parts belonged to the Habsburg Empire.

Pushed too far and pressed too hard, Ukraine could disintegrate.

Security police who have questioned jailed rioters seem to believe we Americans are behind what is going on. And given the National Endowment for Democracy’s clandestine role in the color-coded revolutions of a decade ago in Central and Eastern Europe, that suspicion is not unwarranted.

Nor is Russian foreign minister Sergei Lavrov entirely wrong when he says, “a choice is being imposed” on Ukraine, and European politicians are fomenting protests and riots “by people who seize and hold government buildings, attack the police and use racist and anti-Semitic and Nazi slogans.”

If, as a result of street mobs paralyzing a capital, a democratically elected Ukrainian government falls, we could not only have an enraged and revanchist Russia on our hands, but a second Cold War.

And we will have set a precedent that could come to haunt Europe, as the rising and proliferating parties of the populist right, that wish to bring down the European Union, learn by our example.

The article Patrick Buchanan: Will Mobocracy Triumph In Ukraine? – OpEd appeared first on Eurasia Review.

By Anthony Gregory

Salon.com published a truly disgusting article on the supposed myths of communism. There are a lot of problems with it, but I’ll focus on this particularly revolting passage, which might seem literally true if you drop the context of what it suggests:

For one thing, a large number of the people killed under Soviet communism weren’t the kulaks everyone pretends to care about but themselves communists. Stalin, in his paranoid cruelty, not only had Russian revolutionary leaders assassinated and executed, but indeed exterminated entire communist parties. These people weren’t resisting having their property collectivized; they were committed to collectivizing property.

This is misdirection. It’s true that Stalin murdered so many people that in absolute terms “a large number” were communists, but in relative terms, they were a minority of his victims. Of course, Stalin’s murder of communists isn’t any more defensible than any other regime’s murder of communists, and it says something that so many regimes, from Maoist China to Ho Chi Minh’s Vietnam, slaughtered communists in sectarian crackdowns on political opponents.

What’s more, Stalin’s murder of party enemies has if anything been overemphasized—most of his victims in the 1930s were national and ethnic enemies, or victims on the periphery of his empire starved to death to create agricultural surplus and thus spur industrialization. In the Holodomor Stalin knowingly starved somewhere around 3.5 million Ukrainians. Those who couldn’t hand over the requisite amounts of grain were punished ultimately by having their livestock seized, meaning certain but torturously slow death. In his fantastic and chilling book Bloodlands: Europe Between Hitler and Stalin, Yale history professor Timothy Snyder recalls in chilling detail the reality of this starvation campaign in a gut-wrenching chapter detailing how families resorted to selling or even eating their own to survive, and how children would sometimes even tear flesh off their own bodies to eat. Snyder stresses that any people would resort to this in the desperation than Stalin forced upon Ukraine. Stalin’s artificial famines also devastated other people, mostly on the outskirts of his domain, such as those in the Northern Caucasus, the Volga Germans, the Kazakhs and those on the edge of Siberia.

Stalin did in fact focus on class enemies—”kulaks,” which basically means relatively wealthy peasants—and later in the 1930s had ethnic Poles and other minorities summarily shot by the hundreds of thousands. The first ethnic-based genocide in mid-20th century Europe was thus inaugurated by the Bolsheviks, not the Nazis.

And then, of course, Stalin teamed up with Hitler to invade Poland. His regime and Hitler’s mirrored each other in their treatment of the Polish leadership and cultural leaders—about a hundred thousand were liquidated on each side. Infamously, the Soviets committed the Katyn massacre, covered up by western allies for many years.

At the end of the war, Stalin unleashed his armies to devastate eastern Europe. This horror included the mass rape of as many as two million German and other women, ranging from little children to the elderly. Some of the Jewish women liberated from German concentration camps recalled this liberation as the worst day of their suffering during World War II, as they were brutally raped by Soviet soldiers. When asked about his troops doing this to civilian women, Stalin shrugged it off as the kind of “fun” that soldiers had to have.

After the dust settled, Stalin ethnically cleansed millions, including ethnic minorities who had lived in the regions under his control for generations. Many died during these forced removals.

The murderousness of Lenin, Stalin, Mao, and Pol Pot, in particular, along with the totalitarian dictatorships in Vietnam and N Korea, the reigns of terror in Latin America and elsewhere, the imperialism and butchery and total dehumanization inflicted by state communism in the last century, are not good ammunition for progressive talking points to criticize American crony capitalism. Just as lefties don’t like seeing Tea Partiers compare Obama to Hitler, they should be outraged to see such glib comparisons between Stalinism and the Wall Street-US Government economic management, whether we blame that management primarily on the Republicans or Democrats.

The American mixed economy has many problems, and many suffer horribly under it, and we can argue about what the causes are. I see the causes as primarily being caused by government’s role, rather than economic liberty—others disagree, and they can make arguments to that effect if they wish. But pretending as though American-style capitalism, or social democracy, or whatever you want to call it, is in the same league with the horrors of communism, is simply obscene. Only by vastly downplaying the bloodshed and misery unleashed by Marxist totalitarianism can we ever get to that point in discourse where someone looks at the American status quo and say it looks no worse than the Soviet Union at the very height of its belligerence and mass killing.

Cold War conservatives at times exaggerated, and certainly proposed counterproductive and downright oppressive and murderous approaches to battling communism, but the fundamentals in their description of the communists were true. No self-respecting person who loves humanity or wishes for a world of greater equality and justice should have anything to do with whitewashing the slavery and extermination of Marxism-Leninism. In qualitative and quantitative terms, since the days of the Russian Revolution, probably only the Third Reich was in the same league with these monsters.

The article Stalin Apologia – OpEd appeared first on Eurasia Review.

By Mary L. G. Theroux

President Obama has repeatedly attempted to obfuscate the issue of NSA’s actively spying on Americans by repeatedly referring to “metadata”: information about where, when and to whom people make phone calls, but not the actual phone conversations.

Most recently, he garnered wide press coverage by promising to limit the collection of phone metadata.

But this is just a smokescreen. It had already been revealed that phone conversations are routinely recorded and stored—as when the Director of the FBI revealed that NSA had archived phone calls of alleged Boston marathon bomber Tamerlan Tsarnaev:

There’s a way to look at digital communications in the past. …I can tell you that no digital communication is secure.

Newly revealed yesterday, Microsoft, Google, Facebook and Yahoo have turned over tens of thousands of their customers’ data to U.S. government authorities every six months as the result of secret court orders.

The tech companies remain under severe gag orders for disclosing what information they are passing on to the government, but even these broad brushstrokes paint a fairly graphic picture:

Yahoo disclosed that it gave the government communications content from between 30,000 and 30,999 accounts over the first six months of 2013, and fewer than 1,000 customer accounts that were subject to Fisa court orders for metadata. [emphasis added]

Communications content that is indefinitely stored, to be read and listened to at will, that can be edited, extracted, twisted to convey guilt from even the most innocent communication:

“If you give me six lines written by the hand of the most honest of men, I will find something in them which will hang him.”—Armand Jean du Plessis, cardinal-duc de Richelieu et de Fronsac (1585-1642)

If this concerns you, please join our efforts to shut the NSA down. Government doesn’t reform itself.

The article Believe It: NSA Collects And Stores Content, Not Just ‘Metadata’ – OpEd appeared first on Eurasia Review.