admin On aprile - 5 - 2014

by Chiara Spagnoli Gabardi

Any living organism relies on an external source of energy. In the industrial world the crucial to spin the world economy. Energy Expert, Justin Dargin, in this exclusive interview explains his profession and the different areas of the field affecting our lives.

Justin Dargin is one of the world’s leading Middle East energy experts specialising in the Gulf energy sector, emergent carbon markets and regional industrialisation. His academic grounds include Oxford University, Fulbright, and Harvard University, whereas the organisations he collaborated with encompass the Organization of Petroleum Exporting Countries, World Trade Organization and the United Nations.

How did you become an Energy Expert?

I recall when I was in graduate school I had a professor who taught Geopolitics of Energy, which drew my attention. I was also interested in history, economics, and in the Middle East, but at the time, I wasn’t certain how to tie everything together. This course seemed to help integrate all of my varied interests because I had to understand the energy sector policies of Middle Eastern countries and this had a lot to do with the history and economics of the region, such as their complicated history with colonialism, as well as the sociological/religious background of the respective countries. So, somehow I felt that the energy sector was the best way to focus on all these topics that I was fond of. I really wanted to use my knowledge to try to help as much as I could, it wasn’t just about having a career. I wanted to understand this sector much more and use my understandings to help countries develop sensible energy policies that would help them meet their economic goals. After taking that course, one of my first jobs was at OPEC (Organization of the Petroleum Exporting Countries). That was a very interesting experience for me and quite stimulating, and that was when I knew I was going to be in the energy sector for the rest of my life.

Currently on what topic in the energy sector are you focusing on?

I’m now focusing on the North American shale gas revolution and how it can change the dynamics of economic diversification in the Middle East. I am also assessing the global impact of shale gas development in North America.  Shale gas production is a fairly recent phenomena, we don’t know exactly where it’s going to end up. Therefore, I hope to shed some light on this rapidly evolving field.

So will the Middle East no longer be the main hub of energy?

The Middle East is one of the major regions that produces energy in the world, so it will always be essential. We can’t talk about energy without talking about the Gulf region. But at the same time, we’re in the midst of broad based and rapid change in this sector. Other countries are competing in terms of energy export, and the Gulf region is increasing its own energy consumption. Furthermore, the US, by producing shale oil as well, is gradually regaining its status in the energy sector and becoming energy self-sufficient. Because of these dynamics, the Gulf countries have intensified trade among regions that are becoming important within energy, such as in Asia, where the Asian economies are growing quite rapidly and in need of energy.

How about oil companies, how are they changing their strategies?

In several different ways, it really depends which company we are talking about. But, we can say that in general, until the late 80s, Western based oil companies had a very dominant position in energy rich developing countries. Gradually through the acquisition of technical knowledge, many of the developing countries were able to incrementally control their own oil production and wrest control away from the Western oil companies. When this occurred, Western oil companies had to change strategy, and instead of just owning a certain oil reservoir in a developing country, had to hone their technology and technical knowledge on how to develop complex reservoirs, as well as their access to global capital market.

Through your work you’ve covered a lot the topic of Resource Nationalism, could you give a general idea of its legal, political, and economic characteristics?

Even though resource nationalism can be a somewhat broad theme, at its most elemental, it is the tendency of a country seek control or management of the energy resources within its jurisdiction. This particular philosophy came about due to anti-colonialism movements in the 1950s and 1960s. Because, the Middle Eastern (and African) natural resources were owned by Western countries and companies, the lack of national control triggered the countries to seek what they perceived as being true independence by controlling their own energy assets. Politically, we could say that resource nationalism had the goal for these countries to achieve a political independence by economically controlling and integrating its natural resources into the national economy to aid development. Controlling its national resources would enable a country to grow a national economy and have a major effect on the creating an industrial and modern economy. From a legal perspective, the national government of every country has the right under international law to control all aspects of energy production on their territory. This truly harks back to the notion of Westphalian sovereignty, i.e., that each country is sovereign and has absolute control over affairs in its own territory.

There’s been a lot of debate on Nuclear Energy, how does adopting it actually cut down costs, diminish pollution and make it an alternative source of energy?

I think nuclear energy is very interesting, and its role in the global economy is not always clear cut. For instance, if we want to comprehensively decarbonise the global economy, then nuclear energy is essential to reaching that goal. Nuclear Energy is really the only non-hydrocarbon-based energy source that is available now and produces enough energy we need in order to run the global economy. So, to that extent I would say that it would be the best alternative to hydrocarbons. However, doubtlessly, there are some problems with nuclear energy. It can be dangerous due to the potential for meltdown, and there is always the problem of where to dispose of radioactive waste. There are also security issues that may come from nuclear proliferation, as some countries could use the knowledge of uranium enrichment and try to develop nuclear weapons. But in terms of whether nuclear energy is truly more economical than hydrocarbons, that appears not to be the case.  All in all, nuclear energy is a mixed bag and it depends on what goals we want to reach (such as decarbonisation, pollution etc.) and that would determine its role in the global economy.

What do you think of the Green Energy revolution?

It’s necessary to invest in renewable energy, and I think we have not at all reached our potential in renewable energy production. There is room for growth in research, development and deployment.

Some regions have the necessary preconditions for the substantial renewable energy production. If you go to the Middle East or North Africa, you can see that they have an enormous amount of sunlight needed to produce solar energy. They could supply much of their residential sector energy needs with solar power, if deployed in a thoughtful manner. Other areas in the world ate naturally equipped to produce fuel hydro or wind power in significant amounts.

Therefore, renewable energy is going to compose a larger slice of the energy mix going forward. Without a doubt, it is coming, but it does require a clear political will as well as policies that would seek to encourage its use in the most rational way. Not as an ideological straitjacket, but as a financially viable part of the global economy.

So, clear sighted energy policies would promote the use of renewable energy in a phased way, while not unduly burdening the economy, which is still hobbled in many countries due to the global financial crisis.

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