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Energy Security: Potential for EU-GCC Cooperation • • • • • • • • • • • • • • • • • OPEC. Annual Statistical Bulletin 2008. Parra, Francisco. Oil Politics: A Modern History of Petroleum. London, New York: I.B. Tauris & Co. Ltd, 2009. Rahim, Saad. “Regional Issues and Strategic Responses: The Gulf States.” In Energy Security and Global Politics: The Militarization of Resource Management edited by Daniel Moran and James Russell. London, New York: Routledge, 2009. Royal Dutch Shell corporate website. Saudi Aramco corporate website, www.saudiaramco.com Shell official website, “Gazprom, Shell, Mitsui, Mitsubishi Sign Sakhalin II Protocol.” http://www. shell.com/home/content/media/news_and_library/press_releases/2006/sakhalin_protocol_ 21122006.html. Accessed on May 13, 2010. Simonoff, J.S., C.E. Restrepo and R. Zimmermann. “Trends for Oil and Gas Terrorist Attacks.” Institute for Information Infrastructure Protection Research Report No. #2 November, 2005. Stevens, Paul. “Resource Nationalism and the Role of National Oil Companies in the Middle East: History and Prospects.” Journal of World Energy Law and Business 1, no. 1, (2008). “Study of Maritime Traffic Flows in the Mediterranean Sea.” Report Prepared for the Regional Marine Pollution Emergency Response Centre for the Mediterranean Sea (REMPEC). July 2008. Talmadge, Caitlin. “Closing Time: Assessing the Iranian Threat to the Strait of Hormuz.” International Security 33, no. 1 (Summer 2008): 82–117. The Uppsala Conflict Data Program, http://www.pcr.uu.se/research/UCDP/index.htm Ukiwo, Ukoha. “From ‘Pirates’ to ‘Militants’: A Historical Perspective on Anti-state and Anti-oil Company Mobilization among the Ijaw of Warri, Western Niger Delta.” African Affairs, 106/425, 587–610. US Congress, Joint Economic Committee. “The Strait of Hormuz and the Threat of an Oil Shock.” July 2007, available at http://www.house.gov/jec/studies/2007/Straight%20of%20Hormuz%20Stu dy.pdf Waddams, Frank C. The Libyan Oil Industry. Johns Hopkins, 1980, 251-53. Wennman, Achim. “Breaking the ‘Conflict Trap’? Addressing the Resource Curse in Peace Processes.” Global Governance, 2010 (forthcoming). White, Matthew. Historical Atlas of the Twenty First Century. http://users.erols.com/mwhite28/ 20centry.htm. Accessed May 21, 2010. Yergin, Daniel. The Prize. Simon and Schuster, 1991. Consulted websites: • ICC Commercial Crime Services: • http://www.icc-ccs.org/index.php?option=com_content&view=article&id=30&Itemid=12 • The International Tanker Owners Pollution Federation Limited: • http://www.itopf.com/
SESSION III: Interplay of Energy Security and Price Volatility Functioning of the International oil Markets and security Implications* Introduction Energy security is primarily a function of investment. If investment in new capacity, logistics and transmission, and emergency preparedness is timely and adequate, energy security will be guaranteed. Investment in a market economy is a function of the expected revenue stream, which in turn is a function of prices. Reliable and predictable price signals are a prerequisite for adequate investment. If prices are very volatile and/or unpredictable, enterprises will not be confident enough to invest. Energy security will be imperiled. A well-functioning market is, therefore, a key component of security. Ideally, the market should generate stable and predictable prices, i.e. prices that can be modeled on the basis of structural factors within a sufficiently narrow band to allow enterprises to have a reasonably good vision of the revenue stream that their investment might generate. The main obstacle to the security of supply of oil and gas is the growing volatility of prices and their fundamental unpredictability. This leaves enterprises exposed to very high risk and, in fact, will discourage some of them. In these circumstances, it is to be expected that enterprises will tend to be conservative and underinvest. Security itself is also dependent on prices. Customers feel secure if they can buy all the energy they need at prices that they can afford. A purely physical concept of security (meaning availability of the quantities of energy that are in demand at any moment in time) has little meaning, because demand varies with price. There always is a price at which demand will exactly equal supply – it may be a very high price, however, at which some final * This paper was written by Giacomo Luciani of GRCF customers may not be able to satisfy their “essential needs.” Oil, specifically, has a global market and any supply interruption that one can think of is quickly translated into higher prices, this being the key mechanism for rationing demand and redistributing supplies among different bidders. In the end, oil is almost never physically unavailable. But even “essential needs” are a function of prices, in the sense that in the long run customers will adjust their consumption habits to the expected cost of energy and their disposable income. In the short term, such adjustments may be difficult, and what creates insecurity is the experience of price volatility, the fact of being surprised by sudden jumps in prices which were not and could not be expected. Hence, energy security is as much a matter of perception as of objective availability. Consumers make decisions on the basis of the historically prevailing level of prices: energy may be expensive or cheap – in the sense of absorbing a large or small share of their consumption basket – and their lifestyles will adjust accordingly. Lifestyles and per capita energy consumption in Europe and Japan are quite different from those prevailing in North America, because for decades energy has been relatively expensive in the former and considerably cheaper in the latter. Nevertheless, consumers in Europe and Japan are not insecure because they have to devote a larger share of their income to energy than their North American counterparts – their level of consumption has adjusted to the price environment. Well-functioning oil and gas markets, therefore, are not only a prerequisite of energy security through their influence on investment and future availability; they are a component of security, because volatile
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Contents Introduction 5 I. The Euro
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Page 73 and 74: SESSION IV: LNG and Gas Supplies to
Page 75 and 76: had a drastically different vision
Page 77 and 78: now, China has preferred the LNG op
Page 79 and 80: considered an issue. Though the bor
Page 81 and 82: 70bcm/yr by 2020. Even if only a fr
Page 83 and 84: that Russia and China have started
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Page 87 and 88: of unconventional gas, has already
Page 89 and 90: Geopolitical Issues of Europe’s F
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Page 93 and 94: SESSION V: Renewable Sources in EU-
Page 95 and 96: • technologies, overall technical
Page 97 and 98: Figure 2: Overview of Opportunities
Page 99 and 100: onshore (378 TWh/yr), large-scale h
Page 101 and 102: world. Hence, renewable energy supp
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Page 105 and 106: Overview of RES Characteristics and
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keep the RES surcharges for the ene
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in the electricity sector, particul
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References • • • • • •
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