As noted in today’s Financial Times, the story of energy in the 21st century has been the relative decline of the developed world as both a producer and a consumer.  We have been following this trend for some time now, keeping a close eye on The New Seven Sisters in particular.  As the article reports:

“…New forces with serious global ambitions such as China National Petroleum Corporation and Russia’s Gazprom have emerged on the world stage, and global markets for oil, gas, coal and uranium are increasingly shaped by emerging economies’ rapacious demand.

Those trends are set to continue and intensify. The question for the US, the European Union and Japan will be how well they can adjust to that change.

On the demand side, the strongest sustained period of global growth for decades has been fueled by a surge in energy use, which has naturally been fastest in emerging economies, being both faster-growing and less efficient in their energy use.

In 1990, countries that are not members of Opec, the rich nations’ club, accounted for 48 per cent of total energy use. By 2015, the International Energy Agency expects that figure to rise to 57 per cent.

…The rise of modern industries, together with the spread of consumer durables such as cookers, refrigerators and cars, transforms energy demand in emerging economies and gives them more influence in global resource markets. Oil product demand in North America, for example, is about 25.6m barrels per day, compared with just 7.5m b/d in China. But China’s demand rose by about 350,000 b/d last year, or 4.8 per cent, while North America’s rose 260,000 b/d, about 1 per cent.

…For gas, emerging markets are less important, but growing fast. The IEA expects China’s consumption growth to average 9.3 per cent a year from 2005 to 2015.

The emerging economies’ quest for resources has been accompanied by the rise of their energy companies as international forces. Many are equal in scale to the biggest western oil and gas businesses. Typically, they rely on the financial strength and expertise drawn from strong resource holdings in their home countries, and are still relatively weak in their new markets. That is true of the state-backed Russian industry leaders Rosneft and Gazprom, but also of Petrobras of Brazil, and PetroChina, CNPC’s listed arm.

PetroChina, which last year became the world’s largest listed company by market capitalisation based on the valuation of its shares in the Chinese market, has caught the attention of the US and Europe for its international activities – but it remains dominated by its domestic business.

Petrobras, which has enabled previously oil-poor Brazil to become self-sufficient, says its home country will be its main focus for years.

Even so, they are becoming increasingly influential, with strategies such as Petrobras’s deployment of resources and people to US territory in the Gulf of Mexico, and Gazprom’s network of agreements, investments and stake-building in central and eastern Europe. Their rise is unwelcome for big western oil companies, who find themselves facing new competition for access to resources, scarce equipment and skilled staff.

For oil consumers, however, the effect of this expansionism from emerging economies is often misunderstood. In oil, there is a highly liquid, global market. The idea, for example, that China’s investment in Africa is keeping resources away from the west is nonsensical. The dirty secret of CNPC’s controversial investment in Sudan is that it benefits US and European consumers by opening up a supply source. Each barrel China buys from Sudan is one it will not need to buy from Saudi Arabia.

The other great trend of the 21st century has been less welcome for consumers: resource nationalism. Strong growth in global demand has combined with declining production in the developed world to force up prices. This has emboldened governments in resource-rich countries from Algeria to Venezuela to try to claim more of the benefits of exploiting those resources. If taken too far, as seems to be the case in Venezuela and perhaps also in Russia, such moves damage investment and production, which in turn keeps prices high.

Rich countries are victims of their dwindling resources. The US and western Europe accounted for 19 per cent of global oil supply in 2000, but are expected to provide just 12 per cent in 2010. Their share of gas production is holding up rather better, but that too is dropping: from 42 per cent in 2000 to an expected 30 per cent in 2015.

If these countries do not want to fall even further into dependence on international markets over which their influence is waning, they will have to come up with home-grown programmes on a much larger scale than existing biofuels and other renewables, or seriously reduce consumption….”