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China in context of Global Energy Abundance and Geopolitics

  • 17 Jan 2018

    Siddharth Aryan

    Venue: Seminar Room, ICS
    Time: 2:00 PM

Winter timing for Wednesday seminar is 2.30 pm 

Abstract

The past five years has witnessed an unprecedented transformation in global energy markets as assumptions about “peak oil” and ever-deepening scarcity have been washed away in a flood of new production and projects.  Looked at from a North American perspective, by far the most significant component of this revolution has been the technological leap that enabled the combination of horizontal drilling, which allows for the penetration of bands of shale deep underground and hydraulic fracturing, which injects high-pressure fluid that releases gas and oil from the rock formations.  As a result, U.S. liquids production rose between 2012 and 2014 by roughly a million barrels per day each year.  The United States has been the most obvious beneficiary, both economically and geopolitically, of the energy revolution so far. 

The decade between 2003 and 2013 saw two long oil price increases, interrupted by the collapse of late 2008 and early 2009 driven by the global financial crisis.  During the first decade of this century China’s oil demand doubled to over 9 million bpd, an annual growth rate of some 8%.  China, by itself, accounted for more than one-half of the total global oil demand growth during that period.  At the same time, Chinese energy firms intensified their aggressive efforts to secure and develop overseas energy resources.  Chinese growth on the demand side and the increasingly competitive search for what were then perceived as scarce new carbon-based energy resources were accompanied by the perception of high levels of political risk in the Middle East, be it the war and its aftermath in Iraq or the later political revolutions in the Arab world.  Collectively, these developments combined to drive energy prices into triple-digit range both in 2008 and to keep them there between 2011 and 2014. 

As US production surged to 9 million barrels a day, a bedrock belief among oil forecasters was that China’s voracious appetite for fossil fuels would stoke global energy demand for decades to come. That assumption now appears increasingly shaky.  The rapid deceleration in Chinese demand was a surprise, slowing energy demand growth proved to be destabilizing.  The glut in the supply led to a rapid fall of Crude prices that changed China’s outward strategy.   

About the Speaker

Siddharth Aryan is Associate Director for Energy & Infrastructure at USIPF. Siddharth has nearly 8 years of energy and infrastructure experience in India, Middle East, Africa and the United States. He has worked with Baker Hughes in the Oil & Gas sector as an engineer, project manager, and strategy consultant. Prior to USIPF, Siddharth worked with the U.S.-India Business Council (USIBC) where he designed, developed and executed policy advocacy programs to mitigate political risk for leading energy and infrastructure companies in India and United States. Siddharth earned his master’s in International Business from the Fletcher School, Tufts University. He graduated with a degree in engineering from Manipal Institute of Technology, Manipal University.

 

 

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