January 20th, 2008 by Jonathan Stern, Oxford University
What does mean security of supply and what are the most important issues? Here is the podcast of the keynote speech I delivered at the last CESSA conference (Cambridge, 14-15 December 2007).My slides are also attached.
As Jonathan Sterns underlines, Gas security has become a term that accounts for numerous aspects, so much that one no longer knows exactly what it entails. It can be divided into two main aspects: domestic security and international security which is at the forefront of most energy issues nowadays.
As the amount of gas imported in Europe is to increase from 50% today to 70% by 2020, it is essential to make a distinction between energy dependency –import dependency- and security of supply. Most actual security-of-supply related incidents are domestic and related to “trivial” problems such as strikes and technological problems –Rough Fire-. Ageing infrastructures may cause more and more incidents. Unreliable infrastructures are not taken care off so far: most specialists and politicians are focusing on international matters.
Yet international security is important, especially with the deterioration of relationships with Russia and the power of Ukraine and Bielorussia. Still, there should be a quick development of LNG whose flexibility will be preferred to pipelines in the mid-term and will allow a diversification of gas sources. However, a new LNG terminal building is not tantamount to security of supply. It will only enable a country to compete with other countries for LNG cargos. This will as a consequence submit all countries to the law of offer and demand. How about gas security then? Will this issue still be relevant? The cost per unit of risk reduction may increase dramatically, and the consumer willingness to pay for this extra security is limited…