Insider Series: From Chokepoints to Checkpoints: Oil and the New Indo-Pacific Order
Australia and Singapore to boost energy relations during an era of oil shortages. Source: AFP / LianHe Zaobao / Chia Ti Yan
Fuel crises historically have always made states wary of unrest. Fuel issues have overthrown governments, impacted national economies and even resulted in conflicts. Yet in the Indo-Pacific region, the ongoing oil crisis is doing something more than this. In addition to generating instability, the fuel shortage is slowly bringing countries closer together.
The ongoing crisis is anything but abstract. The rise in tensions between the US and Iran has once again made people think about the Strait of Hormuz, which remains one of the key energy chokepoints in the region. Around one-fifth of the world's oil trade takes place in the Strait. With tensions arising from the increased presence of naval fleets, the threat of seizure of vessels and other risks involved, there are concerns that the free passage of oil will be disturbed. Even the possibility of a total shutdown of the Strait has already caused price volatilities. The effects for Indo-Pacific countries that rely mostly on Middle Eastern energy are immediate.
It is no secret that energy insecurity has played a major role in shaping geopolitics in the region. The so-called 'Malacca dilemma' of China, the reliance on sea routes vulnerable to disruption during a crisis, explains China's aggressiveness in the South China Sea and attempts to develop alternative ways to transport oil. The simple logic is that if the access to energy supplies is threatened, the state should seek to control them.
However, in the context of the current crisis, the problem becomes more complex and interesting. The volatility of the market, coupled with the lack of certainty about the stability of the supplies, forces states not only to compete, but also build closer relations to ensure stable energy inflow. Energy insecurity results in greater interdependence.
Australia is one of the few countries in the region that is not facing the problem of finding energy suppliers. It is a steady provider of energy, which allows it to use its export opportunities to establish more extensive cooperation. This is especially vivid with respect to the relationship between Australia and Singapore, which recently has entered a new level of cooperation in the form of the Australia-Singapore Comprehensive Strategic Partnership. In the context of energy security, this means that Singapore, as the country heavily dependent on imported energy, seeks stable suppliers, whereas Australia uses Singapore's demands for establishing military cooperation and coordination of actions during potential emergencies.
Similar trends can be observed in relations between Australia and Japan, which for many decades has been receiving 40 per cent of the total amount of LNG produced in Australia. Japan's demand for reliable oil and gas suppliers helps cement a strategic relationship, which also manifests itself in reciprocal defense agreements like Reciprocal Access Agreement or joint defense exercises and operations. Energy security plays an integral part in building up trust that leads to military cooperation.
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Finally, the case of India needs to be mentioned, as India becomes increasingly interested in diversified sources of oil due to its status as the largest oil importer in the world. In this case, Australia's involvement in Indian oil markets and its efforts to provide stable supplies are being rewarded with military cooperation and joint security efforts.
All the described aspects are supported by the involvement of the wider regional community in the matter. Quadrilateral Security Dialogue pays considerable attention to cooperation in energy security, which may not be apparent at first glance, given the focus on military and naval cooperation. AUKUS can also play an important role here by contributing to the establishment of a more robust strategy that would take into account the issue of securing energy supplies and developing resilient infrastructure.
All things considered, we are witnessing the emergence of a new trend, according to which energy can serve as a means of political influence. Australia's status as a reliable energy provider gives it additional leverage to establish cooperation with other states and expand its influence.
Of course, not everyone is convinced that these relations are inherently stabilising. Quite the opposite, they are likely to further aggravate geopolitical tensions, especially considering the rising influence of China. The increasing attempts to diversify energy sources and ensure their supply through non-contested routes are likely to result in the increase in strategic competition in the future.
Nevertheless, the deeper the connections get, the more difficult it gets to view each other as enemies. Long-term energy arrangements, infrastructure and strategic cooperation create barriers to disruption, which increases costs of any possible action. Interdependence itself becomes a mechanism of prevention of potential conflicts.
Australia, in particular, finds itself in an advantageous position with regard to this trend, as it can benefit from its status of a reliable energy source to establish cooperation within Indo-Pacific countries. It finds itself involved in a process of geopolitical competition, yet it is no longer just an oil importer or exporter.
Thus, the Indo-Pacific region enters a period when competition and cooperation go hand in hand, complementing each other. The recent events in the Strait of Hormuz show how unstable the current situation is and how much work there is to do. However, they also demonstrate how the states try to cope with the challenge by creating more connections.
