In Geopolitics Today - Friday, February 18th
US Share of Global Natural Gas Supplies Expected to Grow, The Future Role of the Strait of Malacca, Compellence and Deterrence at Play in the Ukraine Crisis
US Share of Global Natural Gas Supplies Expected to Grow
The United States is expected to drastically raise its production capacity for liquefied natural gas and assume a more dominant position in Europe’s energy market going forward. By supporting policies in EU member states which seek to diversify energy supplies away from Russia, the US has significantly increased its share of the European energy market, with its stake expected to rise by 20% by the end of 2022. If estimates are met by reality, the US will become the world's top exporter of natural gas.
Globally, there is growing demand for liquefied natural gas (LNG), which is expected to grow by roughly 20 million tons this year to a total of 400 million tons. In line with the growing increase in demand, investments in new US LNG facilities have risen, lifting total US capacity to 100 million tons this year. About one third of all the gas consumed in Europe originates from Russia, but this share has been in a steady decline as the US incentivises EU member states to avoid importing gas from Russia, allowing US LNG firms to occupy the energy space left behind. Exports to the EU made by Russia's state-owned Gazprom fell by 40% from a year earlier to 5.8 million tons, providing an opportunity for the US to leverage its increased domestic production in order to entrench itself as the main energy provider to EU member states.
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The Future Role of the Strait of Malacca
The current state of affairs in the Strait of Malacca is provides an element of enhanced protection to trade routes used by the United States and its allies, a significant part of which includes trade with China. Yet over the past two decades, Chinese influence has increased greatly in the area, leading US strategists to pay more attention to the Strait as they look to challenge Beijing’s growing power across all domains. In the unlikely event of a major war between the US and China, the Strait would become a critical zone of control.
If the US was able to maintain undisputed dominance of the Strait during an armed conflict it could pose a crippling threat to Chinese economic activity. For this reason, China has incentives to drastically expand its naval capabilities broadly, and naval operations around the Strait specifically. Moreover, China’s modern development paired with the limited supply fuel sources lead to an ever-increasing need for oil, the vast majority of which passes through the Strait as it is imported from Saudi Arabia and other countries in the Gulf. This reliance on the Strait for development has been recognized by Beijing, which seeks to facilitate the opening of alternative maritime trade routes — such as the Thai Canal — which would bypass the Strait of Malacca, and by extension, US leverage over China’s economic development.
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Compellence and Deterrence at Play in the Ukraine Crisis
In the Russian view, the collapse of the Soviet Union led to a drastic fall in Moscow’s freedom of action in its near-abroad, as former Eastern Bloc states increased their ability to push back against Russian power by joining alliances and coalitions with more powerful actors. In 2008 and 2014, however, Russia signaled that it would no longer idly accept the growing influence of the EU and NATO in its geographic periphery by using limited military engagements as a form of compellence against Georgia and Ukraine in order to raise the costs of integration into the Euro-Atlantic bloc.
On the other hand, Ukraine — spurred on by financial, political, and military support from EU and NATO member states — has sought closer alignment with the Euro-Atlantic bloc to offset Russia’s regional military advantages. At the same time, Kiev has prioritized deterrence against Russia to preserve its importance as a transit country for Russian natural gas flowing to European markets. Russian energy exports to European customers is an important source of income for the Russian state, meaning that Ukraine’s energy infrastructure acts as a deterrent against Russia because preserving that revenue stream is in the interests of Moscow. Even Russia’s limited military interventions in Ukraine since 2014 have taken place at a distance from the energy transit infrastructure that connects Russia to Europe, and these energy supplies have continued to flow largely without interruptions even as relations between Moscow and Kiev break down and conflict intensifies.
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