Abstract
The energy world has been going through some “game-changing” developments arising from strong demand growth in emerging economies, new supply sources, fuel diversification, technological innovations, “resource nationalism”, investment decline, climate change and CO2 trading, as well as changing geopolitical dynamics. This paper discusses the changing dynamics of the world energy, and emerging new risks in the energy industry and major regions of production, transit and consumption. It also elaborates on the problems of energy “dependence,” “independence,” and “interdependence” before setting out the future path in the world energy and messages for key stakeholders on key energy dynamics and risks.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsNotes
- 1.
It will determine when, and for what purposes, we use our cars; how high (or low) we turn our thermostats; when, where, how or even if, we travel; increasingly, what foods we eat (given that the price of producing and distributing many meats and vegetables is profoundly affected by the cost of oil or the allure of growing corn for ethanol); for some of us, where to live; for others, what businesses we engage in; for all of us, when and under what circumstances we go to war or avoid foreign entanglements that could end in war. See “The end of the world as we know it, “Michael Klare, August 2008, http://www.redpepper.org.uk/The-end-of-the-world-as-we-know-it/
- 2.
Further economic shocks, social upheaval and energy shortages could roll back the progress globalization has brought over the past few decades as the world’s institutions are ill-equipped to cope with today’s rapidly evolving risks that require effective risk mitigation and management.
- 3.
China and India will become the dominant global suppliers of manufactured goods and services. Economic aspirations in Brasilia, Moscow, New Delhi and Beijing are inextricably linked to the strength of their national energy sectors.
- 4.
The exception could be Asia with the most logical route being from western Canada (or Alaska, if backers of an “all Alaska” solution for monetizing North Slope natural gas with a pipeline to Cooke Inlet won out).
- 5.
The overall LNG production capacity of Australia – including the Ichthys project, which was given the green light in early 2012 – will exceed 80 million tonnes a year around 2018, making the country the largest LNG exporter in the world. The Ichthys LNG project, to be operated by INPEX with its primary export destination being Japan, is considered virtually a Japan-made project. As some of the Japanese buyers have formed a consortium for joint purchasing, it could provide a model case for structuring future purchasing strategies.
- 6.
Its cost is estimated to be about 30–40 % lower than the LNG procurement cost of Japan. Other LNG projects coming up in North America, if materialized as proposed, could have a sizeable impact on the LNG pricing system in the Asia-Pacific region.
- 7.
The development of a number of new pipeline projects in Europe, starting with Nord Stream, is helping to bolster transmission capacity and security of supply. Recent agreement for new pipelines in emerging markets, particularly between Russia and China, underline the importance of natural gas in the twenty-first century energy landscape.
- 8.
In this regard, particular attention will need to be paid to development of Japan-Russia relations in the era of Putin’s new administration. See Asian premium on gas strikes LNG importing countries, http://eneken.ieej.or.jp/en/jeb/1203.pdf
- 9.
In Germany, nuclear operators pay a special “renewable energy” tax, and in Poland legal arrangements designed for the development of nuclear power plants are used to improve the electrical grid so as to connect renewable sources to it.
- 10.
None of the major energy industries – oil, gas or power – developed on the basis of a spot market alone. The search for balance between competition and security is central to an understanding of the role of spot markets and long- term contracts in the global gas trade. See http://www3.weforum.org/docs/WEF_EN_EnergyVision_NewGasEra_2011.pdf
- 11.
This, coupled with the EU-funded efforts to physically interconnect the natural gas grids of EU members in Central Europe, has made it increasingly difficult for Russia to use natural gas pricing as a foreign policy tool. This is a major change in the way Moscow has dealt with the region for the past decade, when it rewarded closer ties with Russia with low gas prices (as with Belarus) and increased rates for those who defied it (the Baltics).
- 12.
Note that Brent crude has climbed 72 % over the past 4 years.
- 13.
The planned construction of LNG export terminals in Australia and the US in 2015 should lead to an increase in the security of supplies to Europe but the overall positive effect on European prices is questionable as LNG is more expensive than pipeline gas. LNG prices must fall to $9–$11 per MMBtu if it is to be affordable for buyers in the EU, India and China.
- 14.
“Energy and Security from the Caspian to Europe,” a minority staff report prepared for the use of the Committee on Foreign Relations, United States Senate, Washington: 2012, http://www.gpo.gov/fdsys/
- 15.
China’s Sinopec, for example, has established a strategic alliance with Saudi Aramco to explore for natural gas in Saudi Arabia and market Saudi crude oil in China. Likewise, CNPC will collaborate with Gazprom, to build pipelines and deliver Russian gas to China. Several of these state-owned firms, including CNPC and India’s Oil and Natural Gas Corporation, are now set to collaborate with Petroleos de Venezuela SA in developing the extra-heavy crude of the Orinoco belt once controlled by Chevron.
References
Badida J (2013) The golden age of natural gas in Europe? (Perspectives on the European Gas Industry). Retrieved from http://ua-energy.org/upload/files/Jozef_Badida_Golden_Age_of_Natural_Gas_in_Europe.pdf
Bettinger M, Finel BI, Mesnikoff A, Prentice-Dunn J, Ross L (2010) Ending our dependence on oil. American Security Project Sierra Club. Retrieved from http://americansecurityproject.org/wp-content/uploads/2010/10/Ending-our-Dependence-on-Oil.pdf
Bizshifts-Trends (2011) Rise of a global economic super-power: BRIC (Brazil, Russia, India, China)? (Major emerging global markets or new world order?). Retrieved from http://bizshifts-trends.com/2011/02/07/rise-of-a-global-economic-super-power-“bric”-brazil-russia-india-china-major-emerging-global-markets-or-new-world-order/
Dejevsky M (2012) Wake up: these new sources of energy will change the world. The Independent. Retrieved from Http://www.independent.co.uk/voices/comment/wake-up-these-new-sources-of-energy-will-change-the-world-8413389.html
Ebinger CK, Avasarala G (2012) The energy-poor BRIC. The Indian Express. Retrieved from http://www.brookings.edu/research/opinions/2012/10/19-energy-bric-ebinger-avasarala
Enoe M, He Y, Pohnan E (2012) Lessons learned: a path toward responsible development of China’s shale gas resources. Retrieved from http://www.nrdc.cn/phpcms/userfiles/download/201208/16/Lessons%20Learned%20-%20A%20Path%20Toward%20Responsible%20Development%20of%20China%E2%80%99s%20Shale%20Gas%20Resources.pdf
Exxon Mobil (2012) The 2013 outlook for energy: a view to 2040. Retrieved from http://www.exxonmobil.co.uk/Corporate/files/news_pub_eo.pdf
Foss MM (2011) The outlook for U.S. gas prices in 2020: Henry Hub at $3 or $10. The Oxford Institute for Energy Studies. Retrieved from http://www.oxfordenergy.org/wpcms/wp-content/uploads/2011/12/NG_58.pdf
Goodrich L, Lanthemann M (2013) The past, present and future of Russian energy strategy. Retrieved from http://www.stratfor.com/weekly/past-present-and-future-russian-energy-strategy
Gorenburg D (2013) Russia and China vie for influence in Central Asia. Retrieved from http://valdaiclub.com/blogs/56260.html
Hook L (2012) China: risk of conflict over resources in deep water. Financial time. Retrieved from http://www.ft.com/cms/s/0/77434050-1dd1-11e2-8e1d-00144feabdc0.html#axzz2F1u3NBaB
International Energy Agency (2012) IEA sets out the “golden rules” needed to usher in a golden age of gas. Retrieved from http://www.iea.org/newsroomandevents/pressreleases/2012/may/name,27266,en.html
Kilyakov A (2012) Gazprom may lose its position. Retrieved from http://mobile.rbth.ru/articles/2012/12/27/gazprom_may_lose_its_position_21523.html
Kolbert E (2011) The nuclear risk. The New Yorker. Retrieved from http://www.newyorker.com/talk/comment/2011/03/28/110328taco_talk_kolbert
KPMG (2011) China’s chemical industry: the new forces driving change. Retrieved from http://www.kpmg.de/docs/China-Chemical-Industry-201109.pdf
Öğütçü C, Öğütçü M (2010) Is the middle kingdom new ‘Economic Messiah’? Today’s Zaman. Retrieved from http://www.todayszaman.com/news-227164-is-the-middle-kingdom-the-worlds-new-economic-messiah.html
Öğütçü M (2013) Natural gas as the game-changer: implications for, and actions from, Turkey. Today’s Zaman. Retrieved from http://www.todayszaman.com/news-304955-natural-gas-as-the-game-changer-implications-for-and-actions-from-turkeyby-mehmet-ogutcu-.html
Oswald K, Doerler J, Seth A (2012) The future of the European gas supply. Retrieved from http://www.atkearney.com/en_GB/paper/-/asset_publisher/dVxv4Hz2h8bS/content/the-future-of-the-european-gas-supply/10192
Press Release (2009) United Nations. Retrieved from http://www.un.org/esa/population/publications/wpp2008/pressrelease.pdf
The Independent (2010) Twice the energy, half the emissions…. Retrieved from http://www.independent.co.uk/life-style/newenergyfuture/twice-the-energy-half-the-emissions-2068594.html
The Independent (2013) Why achieving a cleaner energy economy involves a series of difficult choices. Retrieved from http://www.independent.co.uk/life-style/newenergyfuture/why-achieving-a-cleaner-energy-economy-involves-a-series-of-difficult-choices-2068572.html
The World Nuclear Industry Status Report (2012) The World Nuclear Industry Status Report-2012, Retrieved from http://www.worldnuclearreport.org/The-World-Nuclear-Industry-Status-54.html
Trajonowska H (2012) Europe won’t have an energy future without nuclear power. Retrieved from http://www.europesworld.org/NewEnglish/Home_old/Article/tabid/191/ArticleType/ArticleView/ArticleID/22039/language/en-US/Europewonthaveanenergyfuturewithoutnuclearpower.aspx
U.S. National Intelligence Council (2012) Global trends 2030: alternative worlds. Retrieved from http://globaltrends2030.files.wordpress.com/2012/12/global-trends-2030-november2012.pdf
Williams J (2012) Shale gas: an American success story. Speech presented at Shale Gas Insight 2012 Conference & Exhibition, Philadelphia Convention Center
World Economic Forum (2011) Energy vision update 2011. A new era for gas. Retrieved from http://www3.weforum.org/docs/WEF_EN_EnergyVision_NewGasEra_2011.pdf
World Energy Council (2013) Energy policy scenarios to 2050. Retrieved from http://www.worldenergy.org/publications/energy_policy_scenarios_to_2050/recommendations/917.asp
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2014 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
Öğütçü, M. (2014). Changing Dynamics and Risks in World Energy: The Way Forward. In: Dorsman, A., Gök, T., Karan, M. (eds) Perspectives on Energy Risk. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-41596-8_2
Download citation
DOI: https://doi.org/10.1007/978-3-642-41596-8_2
Published:
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-41595-1
Online ISBN: 978-3-642-41596-8
eBook Packages: EnergyEnergy (R0)