Fight to the last drop

In a world addicted to fossil fuels, reports suggesting that most of the planet's oil has already been discovered have been at the heart of increasing concerns about the future of the global oil supply. Energy experts believe that global industries and economies are currently operating on oil which was discovered 40 years ago and that while the search for new resources will continue, it is unlikely that new discoveries will contribute much to the levels of oil being extracted over the next 20 years.

Estimates say the amount of oil available at present production levels – around 80 million barrels a day – will last another 40 years if no new oil is found. If these estimates are to be believed and the planet's oil resources are becoming increasingly scarce, involvement in and control over those areas which still have oil will become increasingly sought after. With so many of the global mechanisms dependent on oil, it is not unimaginable that wars could be fought over the last remaining deposits.

When it comes to conflicts over oil, most people will consider the Middle East – where 61 percent of the planet's oil reserves are located – as the most logical battleground. But while the Middle East remains the main focus, areas such as the Central Asian region around the Caspian Sea, the West African nations on the Gulf of Guinea and sections of Latin America are also becoming increasingly important, both strategically and economically, in the context of oil.

Caspian Sea reserves at the heart of new Eurasian tensions

"The Eurasia region has a number of strategically important players," Neil Macfarlane, a Eurasia expert at Chatham House, told Deutsche Welle. "Russia, both for its oil product and its pipelines; Kazakhstan, which has major oil reserves, and Azerbaijan, which has modest oil reserves but is important in terms of transit routes while Georgia is also important for the transit of oil."

Macfarlane added that there have already been tensions between Russia, Azerbaijan, Turkmenistan and Kazakhstan over the ownership of undersea energy resources in the Caspian basin. "This has not been resolved by bilateral agreements as the parties have failed to agree on a multilateral regime for the seabed as a whole. There has also been some tension over routes with Russia seeking to dominate the transit of oil to global markets while the other countries have contested that dominance."

In the short term, chances for a conflict of over resources are small, argues Macfarlane. "In the longer term, if you believe in the peak oil scenarios, one may expect competition to intensify, especially between Russia and China. China has an interest in gaining strategic and ownership control in this region as in others, given its rising oil demand. Energy is just one factor in its larger rivalry with Russia that includes strategic positioning, political influence and broader economic penetration."

New wealth puts "oil curse" on African nations

The dangers of instability derived from the oil business take on another dimension in Africa. Countries discovering the huge wealth that potentially lies under its earth and deep below its coastal waters are faced with the challenge of ethically managing the revenue which flows in from the oil fields.

One of the main struggles African oil nations face is how to use the money to improve health, education or sustainable social development while keeping oil revenue out of the pockets of a few insiders. This is just one aspect of what Africa experts call the continent's "oil curse."

"Disclosure of information remains a major concern," Bashir Twesigye, a research officer at the Kampala-based think-tank Advocates Coalition for Development and Environment, told Deutsche Welle."Basically, many governments work in secrecy."

Twesigye said that the connections between the oil companies and governments are causing concern and that local communities are becoming increasingly angry at being alienated from the benefits oil business can provide.

"We're uncomfortable with the way the companies have behaved," Twesigye said. "They are not providing the services required by the community, and many people see the companies as the extended arm of the government. You only need to look at list of the directors and the shareholders to see the links."

Experts believe that oil wealth tends to erode democratic accountability and that the threat of democratic development being undermined should not be underestimated. With so much money – and the power that comes from that wealth – at stake, fragile states risk coming under increasing pressure from internal and external agitators eager to take control of the resources and revenue for their own ends.

"Africa has become a busy place, politically and economically," Denis Tull, a researcher with the German Institute for International and Security Affairs in Berlin, told Deutsche Welle. "As well as Chinese investment, there is an increased presence of other emerging countries like India, like Brazil, etc. This means there is certainly more competition."

Latin America's oil giants flex strategic, economic muscles

Latin America is emerging as one of the new powerhouses of oil production but while experts believe that the chances of conflicts arising from the pursuit of oil are small, just as in Africa, some Latin American countries run the risk of falling victim to corruption and instability.

"Oil is constantly in high demand, but Latin America is emerging as a more important player in this area with Brazil, Mexico and Venezuela as the most strategic places for oil exploration, less so in Peru and Ecuador," Thiago de Aragao, the director for Latin American political risk analysis at Arko Advice, a political think-tank in Brazil, told Deutsche Welle. "The political turmoil in the Middle East, the lack of technical problems as those experienced in North America and the limitation of Europe as a supplier, all contributes to Latin America being an area rich for exploration and commercialization."

"Among the three main players, Brazil is the strongest politically. Therefore, we can conclude that strategically, Brazil offers a stronger control over strategic areas of exploration."

De Aragao believes that the oil industry in Latin America is still an environment free of strategic tensions. Since the major reserves are located in areas with no border dispute, Latin America does not suffer from tensions over who controls or should control production areas.

However, interested external parties are yet to exert their influence, a key factor in turning peaceful production into desperate competition. De Aragao argues that Latin America's main players are strong enough to repel foreign interests and maintain the status quo.

"There have not been major moves from foreign nations," he said. "The sovereignty of each country over there exploration areas are very clear. Naturally one would assume that the countries that are more ‘oil hungry’ would be the ones trying to exert their power over these nations. China is one that has lots of interest in oil exploration in Latin America. The United States is naturally interested as well. But Brazil, Mexico and Venezuela are very committed to their political strategies. Hardly a country outside of Latin America would have the necessary strength to have influence over them."

"The chances of conflict erupting over oil are very low," he added. "The worst case scenario is that the traditional administrative inefficiency of Latin American countries impedes the most profitable and balanced exploration of these resources. The stagnation of exploration is more of a risk than any other. No countries will get in conflict over this since they do not share important reserves, but populist, inefficient and corrupt governments are always the main threat to sustainable exploration in the region."

Author: Nick Amies

Editor: Michael Knigge