Report on the Geopolitics of Oil and Sustainable Development Goals

Introduction

This report summarizes a discussion led by Dr. Carolyn Kissane, Academic Director and Clinical Professor at the Center for Global Affairs, New York University, focusing on the geopolitics of oil amid recent global developments. The conversation highlights the intersection of oil geopolitics with the Sustainable Development Goals (SDGs), particularly those related to affordable and clean energy (SDG 7), climate action (SDG 13), and economic growth (SDG 8).

Global Oil Production and Consumption Dynamics

• The world consumes over 100 million barrels of oil daily, with demand continuing to rise, especially in Asia.
• Key oil producers include the United States, Saudi Arabia, Russia, Canada, and China.
• Top oil consumers are the United States, China, and India, with China now the largest importer.
• OPEC+ recently announced a production cut of 1.2 million barrels per day despite tight supply, influencing global oil prices and energy security.

Impact of Russia’s War in Ukraine on Oil Geopolitics

1. Russia remains a top oil producer and continues to export oil, often at discounted prices, to countries including China, India, Turkey, and Singapore.
2. Sanctions and embargoes have led Russia to develop alternative transportation routes such as the East Siberian Pipeline to China.
3. The war has reshaped global energy security considerations and accelerated discussions on energy diversification and transition.

Energy Security and the Sustainable Development Goals

• SDG 7 (Affordable and Clean Energy): Ensuring reliable access to energy at affordable prices is critical, especially for vulnerable economies affected by oil price fluctuations.
• SDG 13 (Climate Action): The ongoing energy transition and climate change mitigation efforts are influencing oil demand and production practices, including low-emission oil initiatives.
• SDG 8 (Decent Work and Economic Growth): Oil revenues impact state budgets, with production decisions often driven by economic needs.

Challenges and Developments in the Energy Transition

• Despite the Paris Agreement, global oil demand has not decreased significantly, with peak demand projections varying among experts.
• Oil is essential not only for transportation but also for petrochemicals and fertilizers, complicating the transition away from fossil fuels.
• Investment in carbon capture and emission reduction technologies is increasing among oil-producing countries.
• The European Green Deal and similar policies aim to accelerate renewable energy adoption and reduce dependence on fossil fuels, influenced by energy security concerns post-Ukraine invasion.

Regional Perspectives and Global Cooperation

1. United States and Saudi Arabia: The recent OPEC+ production cut has strained U.S.-Saudi relations, reflecting shifting geopolitical dynamics.
2. Africa: The continent faces challenges in energy access and infrastructure development, with debates on fossil fuel investments versus renewable energy adoption.
3. Europe: Efforts to diversify energy sources include increased LNG imports from various countries and investments in nuclear and renewable energy.
4. China and India: Both countries are major consumers and importers of discounted Russian oil, expanding refining capacities and influencing global oil markets.

Nuclear Energy and Decarbonization Efforts

• Nuclear energy is recognized as a key component in achieving net-zero emissions due to its zero-emission profile.
• Countries like France, Sweden, China, Saudi Arabia, and Japan are investing in or reconsidering nuclear power as part of their energy mix.
• Challenges include high costs, safety concerns, and public opposition in some regions.

Infrastructure and Market Considerations

• Global oil and gas transportation relies heavily on extensive pipeline networks and tanker traffic.
• State-owned oil companies control over 75% of the world’s oil production, playing a significant role in geopolitics.
• Proposed and ongoing pipeline projects, such as those involving Nigeria and Algeria, are critical for regional energy security and supply diversification.

Major Challenges for the Geopolitics of Oil (Next 5-10 Years)

1. Managing tensions between major oil-producing countries and geopolitical rivals, including the U.S., Saudi Arabia, Russia, and China.
2. Addressing tightening oil supply amid increasing demand, which may exacerbate economic vulnerabilities in fragile economies.
3. Facilitating a resilient and equitable energy transition that balances energy security, economic growth, and climate action objectives.

Conclusion

The geopolitics of oil remain complex and deeply intertwined with global efforts to achieve the Sustainable Development Goals. Energy security, economic stability, and climate change mitigation require coordinated international strategies that consider diverse regional needs and the evolving global energy landscape.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 7: Affordable and Clean Energy
   • The article discusses global energy security, oil production, and the transition to renewable energy sources, highlighting the importance of affordable and reliable energy access.
2. SDG 13: Climate Action
   • Climate change and the need to decarbonize energy systems are central themes, including references to the Paris Agreement and efforts to reduce carbon emissions from oil production.
3. SDG 9: Industry, Innovation, and Infrastructure
   • Discussions on pipelines, energy infrastructure, and investments in new technologies such as carbon capture and nuclear energy relate to building resilient infrastructure and fostering innovation.
4. SDG 8: Decent Work and Economic Growth
   • The geopolitics of oil impacts economic stability, energy prices, and the economies of oil-producing and consuming countries, influencing economic growth and employment.
5. SDG 17: Partnerships for the Goals
   • International cooperation and geopolitical relationships, such as those between the U.S., Saudi Arabia, Russia, China, and African countries, are crucial for managing energy security and transition.
6. SDG 12: Responsible Consumption and Production
   • Issues of fossil fuel consumption, demand management, and the environmental impact of oil production are linked to sustainable consumption and production patterns.

2. Specific Targets Under Those SDGs Identified

1. SDG 7: Affordable and Clean Energy
   • Target 7.1: By 2030, ensure universal access to affordable, reliable, and modern energy services.
   • Target 7.2: Increase substantially the share of renewable energy in the global energy mix.
   • Target 7.3: Double the global rate of improvement in energy efficiency.
2. SDG 13: Climate Action
   • Target 13.2: Integrate climate change measures into national policies, strategies, and planning.
   • Target 13.3: Improve education, awareness-raising, and human and institutional capacity on climate change mitigation and adaptation.
3. SDG 9: Industry, Innovation, and Infrastructure
   • Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies.
4. SDG 8: Decent Work and Economic Growth
   • Target 8.1: Sustain per capita economic growth in accordance with national circumstances.
   • Target 8.4: Improve progressively, through 2030, global resource efficiency in consumption and production.
5. SDG 17: Partnerships for the Goals
   • Target 17.6: Enhance North-South, South-South and triangular regional and international cooperation on and access to science, technology and innovation.
   • Target 17.17: Encourage and promote effective public, public-private and civil society partnerships.
6. SDG 12: Responsible Consumption and Production
   • Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources.
   • Target 12.4: Achieve the environmentally sound management of chemicals and all wastes throughout their life cycle.

3. Indicators Mentioned or Implied to Measure Progress

1. Energy Consumption and Production Indicators
   • Daily global oil consumption (over 100 million barrels per day) and trends in demand and supply.
   • Production levels of major oil producers (U.S., Saudi Arabia, Russia, Venezuela, China).
   • Share of renewable energy in the energy mix (implied through discussions on energy transition and renewable investments).
2. Climate and Emissions Indicators
   • Carbon emissions from oil production, including efforts in carbon capture and low-emission oil production.
   • Progress towards commitments under the Paris Agreement and COP-28 discussions.
3. Energy Security Indicators
   • Energy prices, such as oil price per barrel (e.g., $80+ per barrel).
   • Strategic Petroleum Reserves (SPR) levels and usage.
   • Pipeline infrastructure and tanker traffic volumes.
4. Economic and Geopolitical Indicators
   • Investment flows into energy infrastructure and technology.
   • International cooperation and agreements affecting energy markets (e.g., OPEC+ production cuts, U.S.-Saudi relations).
5. Technology and Innovation Indicators
   • Development and deployment of nuclear energy capacity.
   • Adoption rates of electric vehicles and renewable technologies.

4. SDGs, Targets and Indicators Table

Source: cfr.org