It is Imperative for Brics Countries to Strengthen Energy Security Cooperation

The Eighth Meeting of Brics Leaders was held in GOA, a city in south India on October 15 and 16. This is another major diplomatic event of China to strengthen communication and innovative collaboration with the outside world, especially the developing world, following the G20 Hangzhou Summit. Since it was first mentioned in 2001, Brics has become a realistic and effective mechanism from a mere concept, and the Bricks summit, as a dialogue and cooperation platform for emerging economies, has provided beneficial references for the global society to think about new patterns of governance and development. Before the GOA Summit, at the time of G20 Hangzhou Summit, Chinese President Xi Jinping held an unofficial meeting of with Brics leaders, and put forth four proposals on strengthening Brics cooperation: first, jointly innovate growth patterns; second, jointly improve global governance; third, jointly safeguard international equity and justice, to build a peaceful and stable development environment; and fourth, jointly promote international development and cooperation, to take the road of sustainable development.

Either to strengthen the cooperation between Brics countries, or to further seek the economic patterns to jointly innovate growth, the five Brics countries must find some important projects for joint cooperation, as the grasp to push forward the new round of cooperative innovation and inclusive development; from this point of view, and also considering the realistic situation in the economic and social development in the five Brics countries at present, we think that it is imperative for the Brics countries to strengthen cooperation in energy security, as the five countries can well complement with each other in the cooperation in the energy security field, with optimistic prospects.

The energy security situation in the Brics countries is not quite optimistic

The Brics countries include China, Russia, Brazil, India and South Africa, respectively located in four continents of the world and in both south and north hemispheres, with unique geographic advantages; the total territories account for 29.6% of the world total, and population for 42.6% of the world total. As a whole, the Brics countries have massive populations, large economic size and rich energy resources; but there are differences among the five countries in a more detailed analysis. Russia and Brazil are countries with great surplus of energy, and export of energy serves an important economic pillar in the countries; while China, India and South Africa are big manufacturing countries with large populations and great gap in energy supply and demand, being countries heavily depending on energy imports.

To any sovereign country, energy security not only includes how to get energy in a steady and effective manner, but also how to effectively produce energy, and use the energy to make wealth for its own use. From these two points of view, in the background of global economic integration, all the five Brics countries face fairly serious challenge in energy security on different aspects.

To Russia and Brazil, the challenges in energy security are mainly from excessive production, sharp fall of oil price and lacking in technologies. To China, India and South Africa, they are the biggest energy demanders in the emerging economies as the manufacturing export industries are their important economic pillars, and they also have large populations and the industrialization and urbanization are advancing quickly. However, in the meantime, their domestic energy resources, especially petroleum and natural gas resources are limited, and their own output is far from meeting the demands in national economy development and social operation, therefore the three countries depend on import of oil and gas resources heavily.

Strengthening energy security cooperation can achieve win-win mutual benefit

In the most direct market thinking, on the one hand, Russia and Brazil are suffering from low international oil and gas prices and increasing difficulties of export, and on the other hand, China, India and South Africa had to accept exploitation under high oil and gas prices in the past for a long time. Therefore in this overall environment, there is high possibility of mutual cooperation for win-win benefit among the Brics countries. Russia and Brazil can offer China, India and South Africa bigger price reduction and more favorable conditions to an appropriate extent, while the latter can increase the purchase. Even if it cannot be directly consumed for the time being, the surplus can be used to increase the strategic oil and gas reserves of the country, to raise the capability of the country to deal with sudden incident of energy supply interruption.

In the specific cooperation, there are many projects that can be implemented among the five countries, for example, in the energy cooperation between China and Russia, Russia finally agreed to sign with China the long laid-up natural gas supply agreement, and hoped to become the largest crude oil export country to China in place of Saudi Arabia. China and Russia should fully understand the necessity and win-win nature of strengthening cooperation in the energy field in the present period, and further consolidate the results: first, the cooperation should not be limited to only some short-term contracts at reduced prices, and efforts should be made to sign long-term strategic contracts through friendly consultation based on current market prices; second, the cooperation results of the northeast natural gas pipeline project should be further consolidated, to completely settle the work of building this strategic energy import pipeline. Between India and Russia and between South Africa and Brazil, there are similar possibilities of win-win cooperation. There is more apparent geographic priority between India and Russia. Today, the GDP annual average growth rate of India is over 7%, ranking at the first place in the world, and all industries are in booming development; its demand for oil and gas import will increase rapidly in large quantity in the future, so they should reach a strategic agreement on oil and gas pipelines as early as possible. Brazil and South Africa have a huge cooperation space in the oil and gas shipping across the south Atlantic. By using the advantage of naturally short shipping lines, strengthened energy cooperation between the two countries can not only shore up the export from Brazil, but also cut the import cost for South Africa. All these actions will greatly change the present supply and demand pattern on the international oil and gas market with Middle East export as the core, and further promote the fair competition and healthy development of the international oil and gas market. They will also indirectly promote the fairness of the global economic development pattern, as a huge and factual contribution from Brics countries in actively promoting the reform of global governance structure.

The energy security cooperation of Brics countries and the “Belt and Road Initiative” should supplement each other

President Xi Jinping proposed the strategic conception of building “a Silk Road Economic Belt” and “a 21st Century Maritime Silk Road” in September and October 2013, having attracted high attention and strong resonance within the country, from the relevant countries and regions, and even in the whole world. One of the cores of the “Belt and Road Initiative” is outbound investment. Today, there are still many developing countries in the world facing the same difficulties China had in the initial period of development, and the most important issue is lacking in energy. Strengthening the investment in the energy and power fields is one of the important components of the “Belt and Road” strategy, and also complies with the essence in the energy security cooperation among Brics countries.

Many developing countries related by the “Belt and Road Initiative”, including Brics countries like India, have long suffered from the short supply of energy, especially electric power. Lacking in energy seriously affects not only the basic living standard of the people in these countries, but also the operation of local industrial enterprises, greatly hindering the local program to overcome poverty and achieve prosperity.

China should give full play to the political wisdom and market wisdom, and work out ways to well combine the energy field investment program in the “Belt and Road Initiative” with the energy security cooperation among Brics countries. China can, on the one hand, assist the relevant Brics countries to establish energy import and export channels with reasonable prices and stable supplies and demands, and on the other hand increase the capital and technology export to the power industry in relevant countries through the “Belt and Road Initiative”, to really achieve win-win results for multiple parties.

(Working unit: Beijing Academy of Social Sciences)