Natural gas could well emerge as the litmus test of how relations among the Gulf’s energy-rich monarchies evolve if and when a Saudi-United Arab Emirates-led alliance and Qatar bury their hatchet.
It could also position Gulf states as key players in shaping the future of the energy architecture of Eurasia.
This week’s summit in Riyadh of the Gulf Cooperation Council (GCC) that groups Saudi Arabia, the UAE, Qatar, Kuwait, Oman and Bahrain is likely to determine how close the kingdom and its allies are to lifting a 2.5-year-old diplomatic and economic boycott of Qatar.
Qatari foreign minister Sheikh Mohammed bin Abdulrahman al-Thani suggested that secret Saudi-Qatari talks in recent weeks had “moved from a deadlock in the Gulf crisis to talks about a future vision regarding ties.” It was not immediately clear whether the UAE was equally willing to find a way out of the Gulf crisis.
The bellwether of how much progress has been made will be the level of Qatari representation at the Riyadh summit. Qatar emir Tamim bin Hamad Al Thani has refrained from attending GCC summits since the boycott was imposed in June 2017 in a bid to force Qatar to fall in line with Saudi and UAE regional policies and effectively accept the two Gulf states’ tutelage.
An end to the boycott potentially could open the door to the creation of a regional gas network at a time that Qatar plans to increase its annual Liquid Natural Gas (LNG) production by a whopping 64 percent to 126 million tons by 2027 and Saudi Arabia is investing up to USD$ 150 billion in becoming a major gas player.
The network would facilitate Saudi crown prince Mohammed bin Salman’s plans to streamline and diversify the kingdom’s economy. It would further enable Saudi Arabia to capitalize on the fact that Iran is hobbled by crippling US sanctions in its efforts to maintain its status as a key swing producer serving Eurasian markets.
Building a regional network may be easier said than done even if the Gulf states succeed in putting their debilitating dispute behind them. Healing the scars of the dispute that impacted people’s lives on both sides of the divide to the point where countries like Saudi Arabia and Qatar would be willing to become dependent on one another is likely to take time.
That kind of trust didn’t exist even before the Gulf crisis. Saudi Arabia initially opposed the construction of the Dolphin gas pipeline, the region’s first cross-border gas project that links Qatar to the UAE and Oman.
Qatar continued to supply the UAE with two billion cubic feet of gas a day despite the boycott, which the Emirates would have found difficult to fully replace.
An end to the boycott would significantly enhance Saudi plans announced in early 2019 to establish a natural gas network with the UAE and Oman that eventually would extend to Kuwait, Bahrain Iraq, Jordan, Egypt and possibly Palestine.
Potential moves to enhance gas cooperation in the Gulf come as the eastern Mediterranean emerges as a potential competitor, particularly in future exports to Europe, Asia and China.
Huge gas finds in Israeli, Cypriot and Egyptian waters have seen industry eyes swivel to the Levant Basin, which, according to a 2010 estimate by the US Geological Survey, could hold as much as 122 trillion cubic feet of natural gas, the equivalent of Iraq’s reserves.
Energy experts argue that Qatari gas could significantly help Prince Mohammed rationalize Saudi Arabia’s energy market at a time that climate change is casting doubts on the sustainability of oil.
The King Abdullah Petroleum Studies and Research Center estimated that Saudi Arabia burned some 900,000 barrels per day of liquid fuels for industrial use and power generation in 2017.
“Replacing this oil with natural gas could generate more than U$10 billion of additional export revenue at current market prices… Qatar is one of the cheapest ways for the kingdom to remove oil entirely from power generation,” said Andy Critchlow, head of Europe, the Middle East and Africa at S&P Global Platts.
While Qatar may be willing to assist Saudi Arabia once the boycott is lifted, its is certain to ensure that it does not become dependent on gas exports to the kingdom.
Diversification of its gas exports is a pillar of Qatar’s soft power strategy that helped shield it from the effects of the boycott.
Some Qatari officials have long believed that gaining control of Qatari gas reserves was a main objective of the Saudi-UAE boycott.
As a result, Qatar is likely to be weary of plans by Saudi Arabia to become a global gas player. The kingdom holds the world’s fourth largest gas reserves that it so far has been unable to develop.
Amin H. Nasser, CEO of Aramco, the Saudi national oil company, said earlier this year that he expected the kingdom to massively invest in the Saudi gas sector over the next ten years. Mr. Nasser envisioned gas production increasing from 14 billion standard cubic feet to 23 billion by 2030.
“We are looking to shift from only satisfying our utility industry in the kingdom, which will happen especially with the increase in renewable and nuclear to be an exporter of gas and gas products,” Mr. Nasser said.
Qatar laid down its marker a year ago when it decided to leave OPEC, the cartel of oil exporting countries, to focus on its gas exports.
Speaking at the time, Qatari energy minister Saad Sherida al-Kaabi, articulated what is likely to shape the Gulf state’s policy even if the boycott is lifted.
“We are not saying we are going to get out of the oil business, but it is controlled by an organization managed by a country,” Mr. Al-Kaabi said.
Qatar, he said, was unwilling “to put efforts and resources and time in an organization that we are a very small player in, and I don’t have a say in what happens.”
Evolving Japan-UAE ties
Japan and the UAE share a unique relationship with each other. Japan recognised the UAE as an independent state in 1971 and opened its Embassy in the UAE in 1974 and on the other hand, UAE opened its embassy in Japan in 1973. Both nations share strong bilateral economic relations, dating back to 1961 when the first shipment of the crude oil was exported from Umm Al-Sharif offshore field in Abu Dhabi to Japan. Japan is known to be the world’s fourth-largest importer of oil. In 2017, it was the second-largest export market, behind China, for Saudi Arabia, the UAE and Qatar. The UAE became the top destination in the Middle East region for Japan’s exports, valued at $7.18 billion in 2019, taking economic bilateral relations to a great level. However, on 19 July 2020, UAE spacecraft rocketed into blue skies from a Japanese launch centre at the start of a seven-month journey to Mars on the Arab’s world’s first interplanetary mission. This mission gave a boost to its strategic relations as well as space cooperation.
Understanding their bilateral relations
The longstanding cordial relationship between the UAE and Japan has been honored for decades. In 2013, PM Shinzo Abe visited the UAE and both nations jointly announced the statement on the strengthening of the Comprehensive Partnership between Japan and the UAE towards stability and prosperity. The relations between both countries have mostly focused on the economy and trade ever since they established their diplomatic relations. Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces H.H. Sheikh Mohammed bin Zayed Al Nahyan visited Japan as an official guest in February 2014 to follow up the Joint Statement issued during the Prime Minister’s visit to the UAE in May 2013.
In 2016, the number of Japanese citizens living in the UAE totalled 4,000, while hundreds of Emirati citizens are in Japan for education and investment purposes.
In 2018, the Comprehensive Strategic Partnership Initiative (CSPI) was signed between the two countries when Abe visited the UAE. With the signing of the CSPI, the relationship between Japan and the UAE entered a new era of strategic partnership for the future and joint cooperation strategy between the institutions of the two countries. They also agreed to increase trade in areas which included renewable energy, advanced robots, artificial intelligence and health care. Ensuring cordial energy ties are critical under the CSPI. In 2018, Japan also acquired an oil concession in Abu Dhabi for the coming 40 years which proved that Japan is an important strategic energy partner in the UAE.
The leadership of the UAE has been keen on strengthening ties with Japan in areas like education, scientific research and industry. It aims to seek its ties with Japan to new levels as Japan possesses advanced technology which would serve the sustainable and comprehensive development goals in the UAE. Cooperation is very strong in the education field. The first Japanese school was inaugurated in the UAE in 2009 and began teaching the Arabic language, Islamic education and social studies to the students of the Emirates along with the Japanese curriculum. Furthermore, around 100 students from the Emirates are studying in Japanese universities for bachelors, masters and even PhD degrees.
In 2019, an attempt of initiating to teach Japanese as a second foreign language in some UAE high schools was discussed among both countries. Akihiko Nakajima, new Japanese ambassador to the UAE affirmed that ‘both nations are currently giving importance to educational cooperation’. The friendly ties were further strengthened in recent times when Sheikh Hazza Bin Zayed Al-Nahyen, Deputy Chairman of Abu Dhabi Executive Council and Dr Sultan Ahmad Al-Jaber, Minister of State and Special Envoy to Japan, attended the enthronement ceremony of the Japanese Emperor Naruhito in 2019. They wished that Japan shall achieve a brighter and more prosperous future during the ‘Reiwa Era’.
Japan and the UAE have been closely cooperating in space sciences. In October 2018, ‘KhalifaSat’ was launched into outer space from the Tanegashima Space Centre in Japan aboard an H-IIA rocket. In January 2020, Shinzo Abe made an official visit to the UAE and other Gulf countries to further bolster the strong ties which have been evolving on multiple fronts like trade, energy, technology, space and education. “UAE-Japan relations are historic and based on trust, cooperation, respect and mutual interests,” Sheikh Mohamed bin Zayed said. Abe and Sheikh Mohammad also witnessed the signing of an Energy Cooperation Agreement between supreme Petroleum Council, represented by Adnoc (Abu Dhabi National Oil Company), and Japan’s agency for natural resources and energy.
The lift-off of the Mars orbiter named Amal or Hope probe on 19th July 2020, from a Japanese launch centre is to be followed soon by China and the United States. Amal blasted off from the Tanegashima space centre aboard a Mitsubishi heavy industries H-IIA rocket. This has given a major boost to space cooperation between Japan and the UAE. Amal is set to reach Mars by February 2021, which will mark the year the UAE celebrates 50 years since the country’s formation. It points out that the launching of Amal was well planned in line with the celebration of 50 years of the country’s formation. “The UAE is now a member of the club and we will learn more and we will engage more and we’ll continue developing our space exploration program,” UAE Space Agency chief Mohammed Al Ahbabi told a joint online news conference from Tanegashima. The Amal statecraft costs $200 million and it is about the size of a small car, carries three instruments to study the upper atmosphere and monitor climate change. Japan’s services of such launches are known well for accuracy and on-time record. However, the providers are working to cut costs to be more competitive internationally. Japan also has its own Mars mission planned in 2024, where it aims to send spacecraft to the Martian moon Phobos to collect samples to bring back to Earth in 2029.
The objective of the UAE’S mission is to provide a comprehensive image of the weather dynamics and fundamentally, building a human settlement on Mars within the next 100 days. Omran Sharaf, the mission’s project manager said, “What is unique about this mission is that for the first time the scientific community around the world will have a holistic view of the Martian atmosphere at different times of the day at different seasons. Sheikh Abdullah Bin Zayed Al Nahyan, Minister of Foreign Affairs and International Cooperation has said that ‘Hope Probe’ exemplifies the distinctive strategic partnership between the UAE and Japan.
It is the first time that the UAE attempted to send a deep space mission, that of a mission to Mars. It clearly sends a strong message to the Arab youth that if the UAE is able to reach Mars in less than 50 years, then they certainly can do much more. Emiratis also believed that it represented a step forward for the Arab world and for scientists.
However, energy remains a key priority in the ongoing relations between the two countries which may contribute significantly to energy development and economic diversification in the UAE and Japan. Through space and strategic cooperation, the two countries are looking to expand and deepen the fields of cooperation. A successful mission to Mars will indeed be a major step for the oil-dependent economy seeking a great future in space. The launch of the hope probe demonstrates that effective space cooperation is a driving force for strengthening their bilateral ties. Hope is expected to begin transmitting information back to earth by September 2021.
China-Iran Deal and its implication for the region
From the past few years, the increasing partnership between China and Iran has raised major concerns among many countries. Sinking economy and the recent COVID crisis pushed Iran into the corner and China timely manifested itself as a perfect partner for Iran. The diplomatic ties between these two countries were established in 1971 and over the years China’s demand for energy and Iran’s isolation from the international community brings them together. The recent investment and security pact covered almost every sector from Telecom, banking, ports, railways and dozens of other projects. Though the secret details of the pact were leaked but soon rejected by Iranian officials.
In 2016, Xi Jinping made a state visit to Iran and then laid the structure of this deal. Soon after in 2019, China announced its plan to invest $ 400 billion. Iran’s economy is suffering greatly because of the U.S.A sanctions and needs a lifeline to revive their domestic market. Where one side, most of the companies from different nations pulled out their businesses from Iran, On the other hand, Chinese investment can play a significant role in Iran’s survival. This partnership between these two nations directly challenges U.S.A efforts to cut off Iran from the international market arena. China’s ever-growing aspirations to increase its involvement in the Middle East perfectly sync with the geostrategic location of Tehran. However, Iran’s ambition to become a regional power needs huge investment in its domestic market. That’s where both countries see themselves as an emerging partner.
China-Iran Economic Relationship
As a growing economy, China dependence on Iran’s oil is quite reasonable. Though this relationship is not just based on the energy, but even on the many different aspects. After 2016, China and Iran were agreed to increase their trading relations to $600 billion in the upcoming 10 years. The agreement was concordant with One Belt, One Road framework. A total of 17 agreements were signed, including one which relates to the Iran nuclear programme. The Chinese will help connect Tehran with Mashhad via their high-speed rail technology. After the sanctions levied by the USA and other western countrieson Iran, its dependence on China increased in recent years. The trading relationship is not only limit to purchase of crude oil but even China’s involvement inIran’s upstream and downstream production processes through major investments.From 2005, both countries signed seven upstream production agreement with each other. All these agreements involve the state-owned Chinese companies, which shows the significant presence of China in Iran.
In December 2019, Syrian president while giving an interview to a Chinese media expressed his willingness to join the BRI project and projected Syria as a perfect partner for the Chinese investment. Syria suffered a lot because of the decades of war and wanted to start the reconstruction activities in their country. Iran and China identified themselves as the ally of Syria and they even wanted to make a strategic nexus between these countries. For the reconstruction process, China is helping Syria from Port of Tripoli by setting up it as a logistic base for the reconstruction process. China wanted to link this port with Syria’s “Four sea strategy” and connect the BRI project to the eastern Mediterranean area. This whole economic bloc could challenge the American hegemony in the region. Iran and Syria are already strategic allies in this region and by adding China in this situation, it would promote the autocratic rule in the region to counter America.
The implication for the Region
Trump administration’s ‘maximum pressure’ policy towards Iran pushed many countries like India and Japan to cut off the trading ties with Tehran. This was seen as the major diplomatic blunder made by the U.S.A because of the one very simple reason that these countries could play a major role to find the middle ground for the talks between Iran and the west.As claimed by the reports, China will increase its partnership to build the ports too, getting a port in the Persian Gulf will provide the major boost to Chinese strategic plans. If China successfully expands its presence in Iran then it will lead to the major conflict between the U.S.A and China. Though China has already invested heavily on the Gwadar port, it will not hesitate to gain an upper hand in the Persian Gulf. From where Beijing can keep its eye on U.S.A movements in the region. India’s investment progress in Iran was slow and that’s the reason recently Iran started the railway track construction work on its own.
The growing instability in the region will further escalate, as the partnership will grow between these countries. China’s ambitions to expand its BRI projects and Syria’s “Four seas strategy” can become a foundation for future projects in the whole region. Syrian President Bashar Assad has promoted this four seas strategy since 2009 that would transform the Damascus into a major trading hub. Syria wanted to form an economic space between Iran, Iraq, Turkey and Syria that will shape a new bloc of nations in the region. This plan includes the four seas of the region from the Mediterranean, Caspian, Black Sea, and the Persian Gulf, which makes easy for these nations from investment to transportation.
The expanding partnership will lead to the architecture of a security structure between these three countries and will directly undermine the U.S.A presence in the region. The gradual consolidation of powers based on Anti-American and Anti-west sentiments can even form a proper security alliance where the inclusion of Turkey would be a possible scenario shortly. All these countries kind of having the same political regime one way or another, so for them it will be a great strategy to stop America’s presence from their domestic issues. If U.S.A wants to stop China’s involvement in the region, it needs to involve its key Asian partner, so that there will be some major power players in the region to maintain stability.
Are The U.S. And Its Partners Losing The Grip On Syria’s North East?
The oil-rich province of Deir Ezzor located in Eastern Syria has witnessed another escalation between the local Arab populace and the Kurdish-dominated Syrian Democratic Forces (SDF). Unexpectedly for the SDF and the U.S. military, the protesters have established control over a number of towns, and it seems they are willing to go further.
Sources close to the SDF initially reported that the protesters limited their demands by requesting a solution to a number of minor issues, but soon enough it became evident that it was not the case and the issue – and a major one – was the presence of SDF in the area. The demonstrators were quick to turn from chanting slogans to taking control of towns: in a single day they captured all of Shuhayl, Al-Hawayej, Diban and forced the SDF members to leave before blocking the roads.
The protests were sparked by a series of assassinations of influential leaders of Al-Aqidat and Al-Baqara tribes. Three Deir Ezzor sheikhs were killed in less than a week: Sheikh Suleiman Khalaf al-Kassar from Al-Aqidat was shot in Busayra village July 30. The next day Sheikh Suleiman Al-Weis who belonged to Al-Baqara was shot in the head by two gunmen on a motorcycle in Al-Dahla. Finally, Sheikh Muttshar al-Hamoud al-Hifl was shot in the outskirts of Al-Hawayej on Sunday, August 2. His relative Sheikh Ibrahim al-Hifl was also wounded in the incident but survived.
In a peculiar coincidence, a few weeks before the assassinations the tribal leaders were invited to a meeting with the SDF Commander Mazloum Abdi with the U.S. servicemen also present. The agenda reportedly included co-operation between the tribes and the SDF. It was reported that at least one of the victims, Muttshar al-Hifti, declined to participate and to engage with the Americans.
An insight into the details of these meetings can be gained through the reports about an oil deal allegedly struck by the SDF and a little known American oil developer Delta Crescent LLC. Delta Crescent was granted exclusive rights for production, refinement and export of the oil from Deir Ezzor fields potentially bringing the participants annual profit of hundreds of millions dollars, according to statements made by U.S. officials. The deal was met with harsh response from the Syrian government who labeled it a “deal between thieves”.
According to sources on the ground, the implication is that those who fell victim to the assassinations shared this view and opposed the deal. Their removal, however, has clearly failed to deliver the results intended by the masterminds behind their deaths, yet another time when the Kurds were thrown to the wolves by the U.S. who is accustomed to making their allies bear the consequences of the reckless pursuit of the American interests.
Meanwhile the SDF started to amass forces in the vicinity of the areas shaken by the unrest. The reinforcements sent from Al-Shadadi, Al-Sousa and Baghuz are gathering at the US military base near Al-Omar oil field. Moreover, two US Apache attack helicopters were spotted patrolling the area. These developments combined with lack of report on any negotiations between the protesters and the SDF leadership paint a grim picture, indicating that the SDF likely intends to use force to disperse the protests.
It is not the first time the SDF resorts to the use of force when faced with the discontent of the local populace in north-eastern Syria, although this approach had never brought the desired result. All areas affected by the protests have been subjected to dozens of raids of the SDF and the US special forces. Reports on these operations unfailingly mentioned arrests of ISIS terrorists. They failed to mention, however, what the Pentagon files under the category of “collateral damage” – deaths of civilians killed in the result of the actions of the US military and their allies.
The upheaval in Deir Ezzor is yet another evidence that the SDF, initially an independent movement, has degraded to a tool or a lever of American influence in Syria, and now finds itself fighting consequences instead of locating the root cause of the unrest – widespread corruption among the officials of the Kurdish administration and dramatic deterioration of the living conditions.
The regional turbulence created by Washington’s constantly shifting stance – or rather a lack of stance – on Syria has grown so strong it finally turned against the American interests. The latest escalation in Deir Ezzor should be considered nothing but a byproduct of this ill-designed policy and, perhaps, marks a beginning of the end of the US and SDF hegemony in Syria’s North East.
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