IEEJ: September 2013 All Right Reserved
Special Bulletin
A Japanese Perspective on the International Energy Landscape (142)

August 29, 2013

38th Japan Cooperation Forum for the Middle East
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, Japan
On August 25 and 26, the 38th Japan Cooperation Forum for the Middle East took place inDubai, the United Arab Emirates. The forum, sponsored by the Japan Cooperation Center for theMiddle East, is one of the largest-scale historic conferences in Japan focusing on Middle East
problems. A record-high around 400 people participated in the latest annual meeting.
The meeting began with an opening address by the center’s chairman, Hiroshi Okuda,
followed by keynote speeches by Nobuhiko Sasaki, adviser to the Ministry of Economy, Trade andIndustry, and Jitsuro Terashima, chairman of the Japan Research Institute. In addition, specialized
speeches were given by Koichiro Tanaka, director of the IEEJ JIME Center, Dr. Abdullah Toukan,
chief executive officer of the Strategic Analysis and Global Risk Assessment Center based in AbuDhabi, Hiroyuki Ishige, chairman of the Japan External Trade Organization, and the author. Reports
also came from Japanese ambassadors to Saudi Arabia, the UAE, Egypt, Iran, from Japanese
government organizations such as the Japan Bank for International Cooperation, Nippon Export andInvestment Insurance, the Japan International Cooperation Agency, the Japan Oil, Gas and Metals
National Corporation and JETRO, and from the private sector. Enriched reports and questions andanswers were made on a wide range of topics.
Impressively, Japanese participants in the forum indicated even greater interests in theMiddle East than earlier as the conference came amid growing global interests in the destabilizationof the Middle East and crude oil price hikes and coincided with Japanese Prime Minister Shinzo
Abe's second Middle East tour this year. The conference was unusually lively apparently because it
took place in Dubai that is a geographically convenient venue serving as a hub for the Middle East.
As mentioned above, discussions at the conference covered a wide range of topics. I here would liketo focus on two key points that are viewed as important for considering future prospects for Middle
East problems and their implications for the world and Japan.
First, the Middle East has seen growing turmoil and rising geopolitical risks. The “ArabSpring” democratic movements, which gained momentum in 2011, are now turning into an “ArabStorm.” The word “spring” is no longer suitable for the recent situation. Until just before theconference, the focus of attention was the turbulent Egyptian situation where an effective military
coup resulted in clashes between security forces and rebels led by the Muslim Brotherhood, withnearly 1,000 people killed. When the conference started, however, the Assad regime’s alleged use ofchemical weapons began to attract attention. The United States, the United Kingdom and Francestepped up criticisms against the Assad regime and were growingly expected to launch militaryinterventions in Syria. As I am writing this report, no actual military interventions are reported. Suchinterventions would be the first U.S. and European military operations in the Middle East since the1IEEJ: September 2013 All Right Reserved
2003 Iraq war and seriously affect not only Syria but also its neighbors. Tensions are growing in theentire Middle East. Depending on future developments, the destabilization of the entire Middle Eastand the international energy situation may accelerate. Future prospects for the region have become agreat matter of concern. In response to the growing Syrian tensions that were coupled with concernthat the Libyan situation may destabilize and affect oil supply, crude oil prices soared. On August 28,
the benchmark West Texas Intermediate crude oil futures exceeded $110 per barrel for the first timein 27 months, since May 2011.
Second, interests have grown in implications of great changes in the energy situation
involving the Middle East and the rest of the world, apart from the Middle East destabilization andgeopolitical risks. An important problem is how the progress and deepening of the U.S. shale
revolution as an external factor would affect the Middle East. Due to the substantial expansion ofU.S. shale gas and tight oil output, the United States, the world's largest oil and gas market, hasreduced demand for imports. The U.S. oil and gas output expansion and the possibility of U.S. oiland gas exports have led to a supply pressure. These U.S. changes should not be ignored by theMiddle East that is the world's champion in conventional oil and gas exports. The region cannot lookaway from the shale revolution's impacts and implications that are destined to widely affect theinternational market supply-demand balance, price formation processes and price levels. A greater
matter of concern to the Middle East may be how the United States’ transition to energy
independence under the shale revolution would affect its foreign policy (including its Middle Eastpolicy) and external energy policy. As a matter of course, however, I do not side with a simple viewthat the United States would lose interest in the Middle East in line with an energy import fall. U.S.
interests in the Middle East are complicated, involving Israel, Middle East peace, Iran and otherproblems. Undoubtedly, however, the shale revolution will variously and deeply affect the UnitedStates’ policy formation. The United States’ energy policy shift is expected to include a shift fromthe long-standing paradigm of how the United States as an energy importer should address energy
scarcity, or a shift from energy scarcity to abundance, attracting much attention. The paradigm has
been the base for the international energy order since the first oil crisis.
Energy problems in the Middle East include a remarkable increase in energy demand due
to economic and population growth and low energy prices. While Dubai has achieved industrial
diversification and advancement and ended its heavy dependence on oil revenues, economic
development and growth in the entire Middle East primarily depends on energy exports.
Nevertheless, the region now sees sharp domestic energy demand growth affecting its exports. Inresponse, Middle Eastern countries (particularly oil and gas producing countries) are seriouslyplanning to promote energy conservation for holding down energy consumption and to develop
nuclear and renewable energy sources as alternatives to oil and gas. But energy conservation andalternative energy development are fairly difficult, accompanied by various constraints andchallenges. Therefore, it is important for major Middle Eastern countries to cooperate with foreigncountries that have advanced technologies, knowhow, experiences and industries for energy
conservation and alternative energy development. In this sense, they have grown interested incooperating with Japan.
In the Middle East, huge investment will be required not only in energy conservation andalternative energy development but also in the entire oil and gas supply chain covering upstream,midstream and downstream sectors. The region is expected to expand demand for railways, ports and2

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harbors, roads, information technologies and other infrastructure and to develop healthcare,education and human resources. Enhancing cooperation and business relations with the Middle East,
where the middle class has increased on robust economic growth, will be significant for promoting
Japan's growth strategy and securing stable energy supply. While the destabilization of the Middle
Eastern situation, the U.S. shale revolution and other problems have made the future course of theMiddle East very uncertain, Japan's public and private sectors should make utmost efforts to address
the Middle East.

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