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Changing Dynamics and Risks in World Energy: The Way Forward

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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.


  • Energy Security
  • World Energy Council
  • National Intelligence Council
  • Geopolitical Tension
  • Southern Corridor

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    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,

  2. 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. 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. 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. 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. 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. 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. 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,

  9. 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. 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

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    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).

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    Note that Brent crude has climbed 72 % over the past 4 years.

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    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. 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,

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    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.


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Correspondence to Mehmet Öğütçü .

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© 2014 Springer-Verlag Berlin Heidelberg

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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.

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