Global trade’s fastest-growing choke point is about to get more congested

May 13, 2013
Obsession
Energy Shocks
May 13, 2013

The world’s most contentious and strategic waterway may soon be in Southeast Asia. Oil from the Middle East and Africa that travels through the Straits of Malacca makes up 75% of oil (paywall) consumed by Japan, South Korea, and Taiwan, and 37% of China’s demand. And that pressure isn’t going to ease anytime soon. China’s latest attempt to ease dependence on the waterway—a nearly 800-kilometer pipeline between China and Myanmar—is running into problems, according to an official who told Reuters that fighting in Myanmar would likely push back the first shipments of natural gas.

China’s $2.5 billion pipeline project is only one of several attempts to resolve what Chinese officials and energy security analysts have called the “Malacca dilemma.” The straits, a 1.5 nautical-mile wide sea lane near Singapore, are considered the second largest “global choke point” after the Straits of Hormuz in the Middle East. This map from the Oil Change project at the Medill School of Journalism shows how they compare:

Tap image to zoom
Global choke points: Narrow waterways that are highly vulnerable to piracy, robbery, and competition between nations.Medill National Security Journalism Initiative

The Straits are about to get even more crowded: More oil and gas production in the US has meant that more oil exporters are targeting new customers in Asia (paywall), and more tankers are sailing for China and elsewhere in East Asia. Separatist movements and poorly monitored ports in Southeast Asia mean that maritime robbery and piracy will become bigger problems, writes Felipe Umaña for the Fund for Peace.

And while naval boats aren’t yet accompanying tankers through the waterway, Southeast Asian nations like Indonesia, South Korea, Vietnam and Singapore have been ramping up defense spending, which grew 42% between 2002 and 2011, in real terms. President Barack Obama has also ordered more naval ships in the area, just as China is adding aircraft carriers and larger ships to its navy. Against this backdrop, territorial disputes over the Spratly Islands in the South China Sea, believed to be home to oil and gas deposits, are a simmering source of tension near the straits.

Chinese state media said in 2004, “It is no exaggeration to say that whoever controls the Strait of Malacca will also have a stranglehold on the energy route of China.” This is true not just for China, but much of the rest of Asia, and is likely to be the case for the foreseeable future: The Myanmar-China pipeline will only reduce China’s dependency on oil transported through the straits from 37% to 30%.

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