Energy Policy and the Importance of the Strait of Hormuz to Asia

The sea lanes of Malacca and Hormuz are vital for energy-poor countries dependent on oil from the Middle East. China’s ill-conceived energy policy is also amplifying its regional influence there, while the US appears to be retreating. The Shanghai Cooperation Organisation, led by China and Russia, is gradually expanding.

The importance of the Strait of Hormuz

Oil tankers were attacked in the Strait of Hormuz, which reminded us of the importance of safe sea routes. In 2013, 57% of the world’s sea-transported oil and oil products passed through the Hormuz and Malacca bottlenecks. More than 85% of the oil transported through the Strait of Hormuz alone was destined for Asia (China, Japan, South Korea, India, etc.) and the rest for Europe and the USA. More than 30% of the world’s exported liquefied natural gas (LNG) is also transported through this sea route.[1] Although pipelines leading to the Red Sea and the Gulf of Oman are available, their transport capacity is very low (below 20%).   America will soon become a net energy exporter, with a much-diminished energy dependency on the Middle East, thanks to the exploitation of its shale oil and gas reserves. This may partly explain America’s disinterest in the region. Moreover, the continued existence of the US base Diego Garcia in the Indian Ocean is unclear, because the International Court of Justice concluded that the current owner England had to return the island to Mauritius. Should a return be made, the USA would need the consent of Mauritius to use the island.

The width of the navigable part of the Strait of Hormuz is only 3.2 km per direction, and it is located in and controlled by Oman.  The Hormuz Strait is connected to the Persian Gulf, where an area disputed between Iran and the United Arab Emirates lies. The US naval forces stationed in Bahrain and the air bases in Qatar always control the Persian Gulf and Arabian and Red Sea regions.

Energy independence

Energy procurement influences national security policy. China’s energy independence was 84% in 2015, while in 2016 the US was 88% energy-independent, Switzerland 49%, Germany 37%, South Korea 18%, Taiwan 11% and Japan 7% (before the Fukushima nuclear disaster in 2011 it was 20.2%).  In addition, the energy mix also plays a major role.[2] In addition to the development of renewable energies and storage technologies as well as new alternative energies such as methane hydrate, the diversification of import regions is essential to minimize the risk.

Japan, for example, heavily relies on oil (42% of total primary energy), whereof more than 86% stem from the Middle East (Saudi Arabia, UAE, Qatar, etc.)  while gas (LNG) and coal is imported from diverse countries like Australia, Malaysia, Qatar, Russia etc. In contrast to Japan, coal is the main primary energy source for China (67%). China’s oil sector is 18%, of which 51% is from the Middle East. However, China’s oil imports are very high: 7.66 million barrels per day (mio. bd) in 2016.[3] China is trying to increase its share of nuclear energy, gas and renewable energy.

South and North Korea, Japan and the USA

President Trump criticized the U.S.-Japan security agreement as one-sided and unfair. Shortly after the Osaka summit in June 2019 he said that America was protecting Japan, but that Japan had no such duty to protect the US. The reason for the unilateral agreement is Article 9 of the Japanese Constitution, which prohibits the maintenance of armed forces and the exercise of force. As compensation, Japan will cover more than 70% of the total cost of US troops and bases. Trump’s statement, however, is entirely justified. What is remarkable, however, is the timing. Trump traveled to South Korea immediately after the G20 Summit in Osaka and met with North Korean leader Kim Jong-un at the DMZ. According to the media, they met spontaneously, but the meeting might probably have been well prepared. Since the North Korean leader’s last meeting in Hanoi, Vietnam, in February 2019, failed and he lost face, he did not want to simply risk meeting with Trump without preparation. The unification of the two Koreas, and thus the withdrawal of US troops from South Korea, may be approaching. If the Korean War is finally declared finished, the US troops in South Korea will lose the legitimacy to be there. Trump’s criticism of the security agreement with Japan means that Japan should have operational forces. This is a new phenomenon. A US president is calling on Japan to do such a thing and no neighboring country criticizes or expresses concern as was customary about a remilitarization of Japan. Trump also called for China and Japan to protect their own ships in the Strait of Hormuz.

China’s Energy Policy and Regional Presence

According to a US agency, China conducted missile tests (anti-ship ballistic missiles) on an artificial island near the Spratly Islands in the South China Sea between late June and early July. In this area, the United States and allied warships are committed to free navigation. The militarization of China’s artificial islands in the South China Sea has become apparent. If shipping in this region were to be prevented or obstructed (several actors conceivable), ships would have to be diverted through southern passages, which would incur additional costs due to time constraints. As a result, China has built oil and gas pipelines from Myanmar to China and is now constructing them through Pakistan. Pipelines through the Caspian Sea and from Iran through Afghanistan to China are said to have already been planned. Peace talks between the US and the Taliban took place in Qatar in July, with reportedly positive results. Before these talks, a Taliban delegation visited China, and the Pakistani president is to meet with the Taliban leader.[4] As U.S. troops slowly withdraw from Afghanistan, the Shanghai Cooperation Organization led by China and Russia is strengthening its presence there. China has also leased some ports in neighboring countries in the Indian Ocean and the South China Sea, commonly known as the String of Pearls strategy.

China also has enormous potential to become an energy producer like the US. Large deposits of shale oil and gas are conducive to China and it is now accelerating the exploitation. Shell’s participation has already been reported.

An island nation like Japan depends on energy supplies delivered by sea. However, a possibility of pipeline delivery could also be conceivable: from Sakhalin to Hokkaido.


Because of the development of shale oil and gas production in the US, America reduced its energy dependence on the Middle East (and also its interest in the region). This means that the security risk is increasing in the region and for countries dependent on oil from the Middle East, such as Japan. China’s ever-increasing control in the South China Sea makes securing Japanese maritime traffic even more difficult. China and Russia are likely to be the beneficiaries of a possible US withdrawal from Afghanistan, accentuated by Turkey’s unclear positions toward the US and Russia as well as tensions between Iran and the US. The Shanghai Cooperation Organization is expected to expand as Afghanistan, Iran and Mongolia consider joining. Rumor purports Turkey’s entry, too. A comprehensive energy policy – which is indispensably linked to security policy – to ensure energy transport, diversification of energy suppliers and energy sources and acceleration of research in electricity technology is important for the survival of countries with low resources.

[1] Japan Petroleum Energy Center (JPEC) Report, April 28, 2015.

[2] The Institute of Energy Economics, Japan.

[3] Ministry of Economy, Trade and Industry.

[4] Upi: Taliban: Afghan peace talks with U.S. 80-90 percent finished. July 3, 2019.

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