An Oil-Slicked Playing Field

Despite the likely prospect of Iran being referred to the United Nations Security Council for its noncompliance with the Nuclear Non-Proliferation Treaty by International Atomic Energy Agency governors at their November 24 meeting, its leaders do not appear overly concerned, at least not in public.

They feel that they have a fighting chance of dissuading India, a rising international power, from repeating its performance at the last IAEA meeting in September, when it voted with America and European Union members against Tehran. The Iranians' bargaining chip is the proposed $22 billion supply of Iranian natural gas to India for the next quarter-century. Between now and 2025, the imports of hydrocarbon energy required by a rapidly industrializing India will rise from 70 percent to 85 percent.

This is just the latest instance of how a scramble for petroleum by developing countries worldwide is reshaping the global geopolitics in favor of oil-rich nations.

Another recent example was on public display at the recent summit of the thirty-four-strong Organization of the American States at Mar del Plata in Argentina. Here President George W. Bush, the world's most powerful person, who is known to speak Spanish, hardly managed to engage other leaders in friendly conversations, leaving the field open to his adversary, President Hugo Chávez of Venezuela. By all accounts Chávez stole the show both inside and outside the summit venue.

Part of Chavez's popularity stemmed from the Petrocaribe Initiative that Venezuela's state-owned oil company, Petroleos de Venezuela SA (PDVSA), signed in June with thirteen Caribbean and Central American countries. It codified a scheme dating back to October 2000 that gave the signatories up to fifteen years to pay for Venezuelan oil with a nominal 2 percent interest at $20 a barrel, one-third less than the prevalent price of $30. The updated scheme enabled the signatories to pay only $40 a barrel instead of the market rate that shot up to nearly $70 in October.

Venezuela has been producing petroleum since the 1920s and is among the top four suppliers of crude oil to the United States. In the income league, it belongs to the middle-income nations of the world.

But even such newcomers to the game as Sudan are able to wield geopolitical power they could not have imagined even a decade earlier. This is the case with Sudan, one of the poorest countries on the planet.

Khartoum acquired a geopolitical leverage with the assistance of China, a veto-wielding permanent member of the UN Security Council. The China National Petroleum Corporation (CNPC) won an oil exploitation contract in Sudan in 1995. Two years later, when Washington put Sudan on the list of countries that support international terrorism, American oil companies had to withdraw from the country. The subsequent void was quickly filled by the Chinese.

In 2000 Sudan gave a contract to a consortium headed by CNPC in the Melul Basin region, which proved a prolific source of petroleum. Besides developing oilfields, the Chinese have erected refineries and laid pipelines. Sudan, an oil importer before the arrival of the Chinese, now earns $2 billion in oil exports annually, half of which goes to China.

When the issue of the massacres in the troubled Sudanese western region of Darfur was debated at the UN Security Council in September 2004, the United States wanted to impose economic sanctions against the Sudanese regime. Beijing threatened to veto such a resolution. As a result the Security Council passed a watered-down resolution on Drafur.

As yet the full significance of these developments appears to have been lost on the policy-makers in Washington. Though seemingly disparate, they collectively represent a trend that will dominate global geopolitics in the coming decades.

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