The politics of oil controlling resources, governing markets and creating political conflicts

The Politics of Oil M4630-CLAES_9781785360176_t.indd 23/10/2018 12:26 To Juana M4630-CLAES_9781785360176_t.indd 23/10/2018 12:26 The Politics of Oil Controlling Resources, Governing Markets and Creating Political Conflicts Dag Harald Claes Department of Political Science, University of Oslo, Norway Cheltenham, UK • Northampton, MA, USA M4630-CLAES_9781785360176_t.indd 23/10/2018 12:26 © Dag Harald Claes 2018 All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc William Pratt House Dewey Court Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Control Number: 2018945835 This book is available electronically in the Social and Political Science subject collection DOI 10.4337/9781785360183 ISBN 978 78536 017 (cased) ISBN 978 78536 018 (eBook) 02 Typeset by Servis Filmsetting Ltd, Stockport, Cheshire M4630-CLAES_9781785360176_t.indd 23/10/2018 12:26 Contents List of figuresvi List of tablesvii List of abbreviationsviii Prefacex PART I  RESOURCE GOVERNANCE       Sovereignty and ownership Governing oil production Oil income – blessing or curse? With Mads Motrøen 25 59 PART II  MARKET CONTROL   Institutional governance   Producer governance  6 OPEC 96 115 136 PART III  POLITICAL CONFLICT       10 Oil and the US hegemony Oil and regional security Oil and domestic conflicts Climate change and the future of oil 162 186 209 230 References247 Index269 v M4630-CLAES_9781785360176_t.indd 23/10/2018 12:26 Figures   1.1 Percentage share of total proven oil reserves 2016   1.2 Law of the Sea regulations 22   2.1 Crude oil prices 1861‒2016 ($2016 $/barrel) 29   2.2 Reserves-on-production (R/P-ratio), number of years 30   2.3 Illustration of the Obsolescing Bargaining Model 36   3.1 Oil price – percent annual change 1980‒2016 68   3.2 The net government cash flow from petroleum activities 86   3.3 Market value of the Norwegian fund 1998‒2017, in Norwegian kroner (billions) 87   4.1 The new complex oil market structure, old structure in bold lines112   5.1 Illustration of the monopoly profit and welfare loss to society120   5.2 US crude production and price 1860‒1900 (th.barrels/day, $/barrel)126   5.3 The Red Line 132   6.1 Saudi Arabian production, and market price, 1981‒1985 and 2014‒2017155   7.1 US production, consumption (th barrels per day), and import share (percent) of crude oil and petroleum products, 1981‒2016179   7.2 US oil imports 2016 by country 181   9.1 Deaths following terrorist incidents 1970‒2015 219 10.1 Global primary energy consumption 1800‒2015, values in EJ 232 10.2 Change in oil demand in selected countries and regions in the New Policies scenario, 2016–2040  238 vi M4630-CLAES_9781785360176_t.indd 23/10/2018 12:26 Tables   1.1 Key features of contract arrangements 18   3.1 Average annual growth in per capita GDP at purchasing power prices 65   3.2 Petroleum exports as share of GDP, OPEC countries, 2012 vs 2016 69   4.1 Patterns of network interaction in oil market governance 113   5.1 The division of the Turkish Petroleum Company in 1928 131   5.2 Ownership shares in Middle East production distributed to companies (%) 133   6.1 Production under various price changes and models, 1982‒1999, number of months 156   9.1 Relation between the nature/geography of a resource and the type of conflict 215   9.2 The role of oil for civil war onset, duration and intensity 216 10.1 Distribution of sources and sectors in the US energy system, 2017231 10.2 World primary energy consumption in 2013 and IEA scenarios in million tons of oil equivalents (mtoe) 233 10.3 Estimated primary energy consumption in 2016 (mtoe and percentage)234 10.4 Global oil demand from transport, 2015 and two scenarios for 2050 (million barrels per day)  244 vii M4630-CLAES_9781785360176_t.indd 23/10/2018 12:26 Abbreviations Aramco Saudi Arabian Oil Company (formerly Arabian-American Oil Company) AWACS Airborne Warning and Control System b/d barrels per day (a barrel is 159 liters or 42 US gallons) BNOC British National Oil Corporation CCS Carbon Capture and Storage CENTO Central Treaty Organization CEO Chief Executive Officer CERM Coordinated Emergency Response Measures (IEA) CFP Compagnie Franỗaise des Pộtroles CIA Central Intelligence Agency CITGO Citgo Petroleum Corporation CLCS Commission on the Limits of the Continental Shelf CNOOC China National Offshore Oil Corporation CNPC China National Petroleum Corporation E&P Exploration and Production ECHR European Convention on Human Rights EIA Energy Information Administration (United States) ENI Ente Nazionale Idrocarburi ENOC Emerging National Oil Company ETI Energy Transmission Infrastructures EV Electric Vehicle FDI Foreign Direct Investments FEA Federal Energy Administration (United States) GATT General Agreement on Tariffs and Trade GCC Gulf Cooperation Council GDP Gross Domestic Product GTD Global Terrorism Database IEA International Energy Agency IEF International Energy Forum IGO International Governmental Organization IMF International Monetary Fund IOC International Oil Company IPE International Political Economy viii M4630-CLAES_9781785360176_t.indd 23/10/2018 12:26 Abbreviations ­ix IR International Relations ISIL The Islamic State of Iraq and the Levant, also IS – Islamic State, or Daesh (Arabic) JODI Joint Oil Data Initiative MEND Movement for the Emancipation of the Niger Delta MID Militarized Interstate Disputes MNC Multinational Corporation NATO North Atlantic Treaty Organization NDC National Determined Contributions (Paris Convention) NIOC National Iranian Oil Company NOC National Oil Company OAPEC Organization of Arab Petroleum Exporting Countries OBM Obsolescing Bargaining Model OECD Organisation for Economic Co-operation and Development ONGC Oil and Natural Gas Corporation (India) OPEC Organization of the Petroleum Exporting Countries PDVSA Petróleos de Venezuela PEMEX Petróleos Mexicanos PLO Palestinian Liberation Organization PSA Production Sharing Agreement R/P-ratio Reserves on production ratio SDFI State Direct Financial Interest (Norway) TNC Transnational Corporation TRC Texas Railroad Commission UAE United Arab Emirates UNCLOS United Nations Convention of the Law of the Sea UNCTAD United Nations Conference on Trade and Development URR Ultimately Recoverable Resources USGS United States Geological Survey WTO World Trade Organization M4630-CLAES_9781785360176_t.indd 23/10/2018 12:26 ... between ownership of the soil and the fugitive natural resources in the subsoil In another case, the full transfer of the property of the oil through the logic of the rule of capture was explicitly... the role of politics in the oil business and market to asking what role oil plays in political conflicts In this section I first study the general geopolitics of oil from the perspective of the. .. together with Mads Motrøen The second part of the book focuses on the governance of the oil market First, I start out with the prominent idea in the study of International Relations (IR) of the governing