An Axis of Energy: The World Unites

Nations at the summit include Saudi Arabia, Kuwait, Iraq, the United Arab Emirates (UAE), Algeria, Egypt, Qatar, Libya, Oman, Syria, Yemen, Venezuela, Ecuador, Argentina and of course Brazil.

Between them, they currently pump around 27.26 million barrels per day (mbpd) of the world’s demand of 84 mbpd or around 32.5% of total production.

Dr Muhammed-Ali Zainy of the Centre For Global Energy Studies in London believes that: “Yes, Brazil in particular can play an important role in [oil] field development, especially somewhere like Iraq.

“They helped Iraq a lot in previous times. I do not think you are going to see any real concrete structures coming out of this meeting, but it could be a start of some extra political, economic and cultural bonds.”

“Brazil helped discover some of the great fields in the past in Iraq for example,” says Dr Zainy. “Along with Venezuela they can play an important role in oil field evaluations and at the same time they can win things like service contracts amongst some of the Arab nations. Of course, in return, they could be remunerated in oil.”

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Venezuela has been looking long and hard for alternatives to simply supplying the United States with its demand for crude oil. Although there have been recent fluctuations in supply, Venezuela – the world’s fifth largest exporter – averages around 13% of the daily imports of the US.

Recently, however, they have been branching out, penning new deals with Spain and a new player in the global energy market, China.

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China has also figured prominently in South American oil infrastructure. It recently signed deals to build refinery projects in Venezuela and has made some possible exploration deals as well.

This could have prompted the recent news that Venezuela wants to sell two of its US-based refineries. It says they are unprofitable and amount to “a subsidy to the US economy”, according to President Hugo Chavez.

Brazil too also exports some of its very heavy deepwater crude oil to the Chinese, being less able to refine the sour product at home.

Opec nations too have been opening up new supply routes to the Chinese markets. So this summit may spur the participating nations into more deals and a greater possibility of energy related tie-ups in the future.

“While this [summit] is not going to affect powerful organisations like Opec,” said Dr Zainy: “It may help these nations to more co-ordinated policies, some extra deals and better political relationships. Those may bear fruit in the future.”