The Geopolitics of Natural Gas (Page 3)

Iran is also a major producer of natural gas. Under increasing diplomatic pressure from the Bush Administration to halt its suspected pursuit of nuclear weapons, Tehran has been eager to establish joint production and export projects with friendly nations in Europe and Asia. In the past two years alone, it has signed several multibillion-dollar deals with companies from France, Italy, Norway, Turkey, Japan and India for joint development of offshore gas fields in the Persian Gulf and the construction of new pipelines to Europe and Asia. Capping this drive was the signing in October 2004 of a $100 billion, twenty-five-year contract with the China National Petrochemical Corporation (Sinopec) for the joint production and export of liquefied natural gas (LNG), much of which will ultimately go to China. While all this makes perfect commercial sense, given Iran's need for foreign partners in the management of these ambitious projects, it is safe to assume Tehran is also seeking to increase the number of allies it can turn to in case of a showdown with the United States.

Qatar has tacked the opposite way, using its huge gas reserves to establish close ties with Washington and to insinuate itself beneath the US defense umbrella. Under a $10 billion, twenty-five-year agreement signed in 2003, ExxonMobil will build the world's largest LNG shipping facility in Qatar. Much of the resulting liquid will go to the United States to be converted back into gas. This will entail the construction of new LNG terminals at ports on the US Gulf Coast, a major undertaking.

Like Qatar's, many of the world's largest deposits of natural gas are located far from the areas where demand is greatest. The most efficient and economical way to transport gas to distant markets is by pipeline. As a result, vast natural gas pipeline networks have been built in North America, Europe and the former Soviet Union, and many more such conduits are under construction. These networks are easiest to construct on land or in relatively shallow, enclosed bodies of water like the Mediterranean and the Black Sea, both of which are now traversed by gas pipelines.

At present, however, it is impractical to build gas pipelines beneath a large ocean like the Atlantic or Pacific, so gas traveling from the Middle East or Africa to the United States or Japan must go by ship. Unlike crude petroleum, which can be pumped directly from the ground onto waiting ships, gas must first be converted to a liquid by cooling it to extremely low temperatures (around -160° centigrade, or -260° Fahrenheit), transported on mammoth refrigerated vessels and then converted back to a gas by raising its temperature, at giant regassification plants in the receiving country. This is very expensive and energy draining, making seaborne transport a far less attractive proposition than pipeline delivery. Still, in their hunger for ever-increasing supplies of energy, more and more countries are building LNG terminals in their harbors and negotiating with major gas suppliers like Iran, Qatar and Nigeria for long-term contracts.

Whether natural gas is transported by pipeline or ship, the growing commerce in it is likely to nurture new forms of international cooperation, like that between longtime rivals India and Pakistan, both desperate to boost their energy supplies in order to sustain strong economic growth. In June energy ministers from the two countries set up a joint working group to plan construction of a $4 billion, 1,700-mile gas pipeline from Iran, and ground breaking is projected for sometime later this year--unless, of course, the Bush Administration succeeds in arm-twisting one or the other into canceling the plan.

India is also looking eastward for additional supplies of natural gas. In January its officials met with their counterparts from Burma and Bangladesh to discuss the construction of a gas pipeline from Burma to India via Bangladesh. Such an arrangement would frustrate US efforts to isolate Burma for its egregious human rights behavior.

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