Global Energy Outlook: Energy Transit – Chokepoints and Mitigating Oil Supply Disruptions

Running Head: GLOBAL ENERGY TRANSIT 0
Global Energy Outlook
Energy Transit – Chokepoints and Mitigating Oil Supply Disruptions
(student details:)
11/25/2018

Global Energy Transit 1
Global Energy Outlook
Global security of the energy exportation as well as energy transit from the Middle East and
North Africa (herein after referred as MENA) region has been given the paramount
importance for the growth of global economy (Brookings Doha Centre analysis paper, 2016).
On account for, even if the wickedest-case scenarios have ignored, still the MENA region has
a lengthy history of oil and gas supply disruptions as well as production and transportation.
Out of which, transit from the
Gulf and Strait of Hormuz (GASH) has acquired the most attention, while there are so many
other susceptibilities, along with likely disruption scenarios from tiny-level local terrorism
and interference to most important interstate conflicts (Global Maritime HUb, 2018).
Therefore, the susceptibility of oil and gas transport has acquired the foremost attention,
because of its magnitude, and the safety of liquid natural gas transfers and important
importations to the Gulf and Strait of Hormuz are under-esteemed risks (Bahgat, 2008).
As the MENA is gifted with the bulk of the global oil reserve and is accountable for a huge
share of world oil production, thus security of MENA oil supplies is a key issue for the oil
security debates. These threats to energy security also happen for local production services as
well as while transiting routes except the Persian Gulf and Strait of Hormuz. Moreover,
MENA region has around fifty seven per cent of the globe’s proven oil reserves as well as
forty one per cent of verified natural gas resources. It is also capable to provide unique solar
resources worldwide. However, huge gap exists amid nations that are full of natural resources
and countries that are dependent on others for these resources (The World Bank, 2010). In
this context, several countries are having near to 100 per cent access to safe electricity; still
an estimate tells that 28 million peoples are still having no access to electricity globally,
particularly in the rural areas, besides around 8 million peoples are relying on outdated
biomass energy techniques for all of their energy requirements (The World Bank, 2010).
Moreover, in order to highlight the problems and key challenges of various MENA countries
(Bailey & Wellesley, 2017), the following issues are presented here:
 Cost recovery of electricity is quite low
 Petroleum product costs are biased
 Carbon intensity is higher than in technologically advanced countries

Global Energy Transit 2
 The MENA region is lagging behind in employing improvements in the electricity
sector as well as the in private sector investments
 The efforts for the renewable energy sources are under-explored (European
Parliament, 2017)
In this way, population rise, sudden rapid urbanization and the economic growth are situating
pressure on existing contemporary organisations as well as comparatively high demand for
the novel investments (Harks, 2010). The continual high as well as volatile costs of fuels are
pulling the finances of oil and gas importing countries, at the government as well as the
utility level, besides growing costs of endowed energy at their premises for the oil exporters
(Fattouh, 2008).
Energy transit chokepoints including sphere’s oil chokepoints for the maritime transit of oil
are the critical elements for the world energy security. Because around half of the globe's oil
production transports on the maritime routes. In this context, these chokepoints are the
narrow channels along with extensively utilized world’s sea routes; out of them some are so
narrow that limitations have been placed on the vessel size which can direct from them.
These chokepoints are important parts of world energy security because of the bulk of oil
traded by the narrow straits (Mansson et al., 2014). On the basis of volume of oil
transportation, the Strait of Hormuz, is leading out of the Persian Gulf, as well as the Strait of
Malacca, connecting the Pacific and Indian Oceans, are the two of the globe’s most tactical
chokepoints. The international energy market (IEM) is relying upon reliable as well as
disruption free transport. This is the reason that any blockage of these chokepoints, even
provisionally, can result in considerable hikes in the whole energy pricing. Additionally,
these chokepoints make oil tankers susceptible to theft from the pirates, shipping accidents,
political unrest like wars or hostilities and terrorist attacks which can result in disastrous oil
spilling. There are seven major straits include Panama canal, Danish straits, Turkish straits,
Strait of Malacca, Bab el-Mandab, Suez Canal and Strait of Hormuz which are used mostly.
They serve as the major trade routes for the world oil transportation, and disruptions to
consignments (Mills , 2018).
In order to analyse the distinct energy policy frameworks related to the impacts of the various
elements of energy resources as well as sustainability (Scarlet et al., 2015), we will discuss
EU policy framework for renewable energy here. Firstly, in 1997, European Union policy
(EU) on renewable energy has released as the White Paper for a Community Strategy and