energy security – need for diversification arild moe energy security and energy efficiency:...

Energy Security – need for diversification

Arild Moe

Energy security and energy efficiency: Possibilities for Slovak-Norwegian cooperation

Bratislava, 4 October, 2007

Traditional concept - Energy Security Security of supply

– Post 1973 concept – oil focus

– ”Reliable supplies at reasonable prices”

– A seller-buyer relationship

Gas as alternative energy– diversification away from oil and coal

Now: Concern over gas supplies – little flexibility

– Russia most important supplier to Europe

Energy security - a broader concept Security of investment

– Free or at least predictable market conditions upstream • not in place in all main gas supplying

nations

Security of demand– Market conditions downstream that justify long

term investments• Long term contracts vs. spot sales• 1990s: Buyers strengthened• After 2000 – Resource owners again gaining

strength

Proper balance between producer and consumer interests not found

Interdependence between East and West not fully acknowledged

Political dialogue wanting– US-Russian energy dialogue dead– Russia-EU dialogue stalled

Has energy security deteriorated?

New EU-members: Increased dependence on Russian energy supplies for the EU as a whole – 25% of gas consumption

Russian gas supplies: Still reliable?

Russian gas diplomacy The Baltic pipeline – Nordstream:

– Increasing security of supply – or splitting EU? The conflict with Ukraine

– Unintended consequences? Demand for better downstream access and

threats to redirect exports– Not so seriously meant?

The Shtokman project– Too much back and forth

Russian ’energy superpower’ rhetoric overblown– but makes buyers want to diversify away from Russian

energy Russian down-stream integration not wellcomed

The real problem

Russia needs gas investments upstream Discrepancy between projected deliveries and

firm production plans by 2010-15 some 100 BCM – Independents important balancer, + 100-200 BCM? But

independence more and more curtailed– Central Asian gas: 100 BCM – how reliable is it?

Serious rationalisation of domestic consumption required

Pipeline refurbishment – looming technical problems?

Decision paralysis? Time is getting short

0 5 10 15 20 25 30 35 40

Belgium

France

The Netherlands

Poland

Spain

United Kingdom

Germany

Czech Republic

Italy

Denmark

Austria

Bulgaria

Croatia

Finland

Greece

Hungary

Latvia

Lithuania

Romania

Serbia

Slovakia

Slovenia

Switzerland

Russia

Norway

Norway and Russia in European gas markets 2006 (BCM)

The Norwegian potential

Source: Ministry of Petroleum and energy/NPD

Norwegian gas export infrastructure

Source: Ministry of Petroleum and energy/NPD

Outlook for energy security in Europe Direct Norwegian supplies cannot replace Russian

gas – but is very important in some markets and as part of integrated European market

Bilateral deals between importing countries and Russia understandable – but a common European policy would be more effective

More integration of the European markets will enhance energy security if short term supply problems arise

A broader approach to diversification needed to increase long term energy security

Thank you for your attention!

arild.moe@fni.no