The Geopolitical Economy of Global Gas Security and Governance: Implications for the UK
Lead Research Organisation:
University of Leicester
Department Name: Geography
Abstract
The prospects for the future demand for natural gas and its role in the global energy mix are more uncertain now than they have ever been. The global economic crisis has dampened demand, while increased global LNG capacity and surging unconventional gas production in the US has increased supply, resulting in a 'gas glut' that could last to the end of this decade. At the same time, debate continues about the role of natural gas as a 'bridging' or 'transition' fuel to a low carbon future. Most recently, as result of events in Japan, the so-called 'nuclear renaissance' is being reassessed, potentially resulting in a renewed 'dash for gas' (or worse coal). All of this at a time when the UK (and the EU more generally) is facing increasing gas import dependency. However, current UK energy strategy projects a decline in natural gas consumption, but these projections are premised on increased efficiency savings, substantial growth of renewable energy, the construction of new nuclear and the deployment of carbon capture and storage technology. If this strategy fails or elements are delayed, then UK gas demand and import dependency could be substantially higher than currently projected. Therefore, it is critical to the UK's energy security to develop a clear understanding of the geopolitical drivers, governance challenges and risks shaping current and future global gas security through to the late 2020s and beyond.
While there is considerable research on energy security, we maintain that it is deficient when it comes to assessing global gas security. First, because it is largely focused on oil and the material and commercial nature of natural gas is very different; second, because it is predominantly state-centric and fails to appreciate the importance of non-states actors, companies and markets; third, it often fails to explain what governance means; and, fourth, because much of it lacks a conceptual framework and supporting methodology. In the Phase 1 of the project, we address these deficiencies by developing a 'geopolitical economy approach' to gas security that combines: a) geopolitical analysis of energy security, b) the relational approach of economic geography and c) work on network and multi-level governance and scalar politics.
In Phase 2, this framework is applied to three case studies that focus on the key issues shaping gas security in the major regional markets that dominate the global gas industry: Eurasian gas exports to Europe, the unconventional gas revolution in North America, and the globalization of the LNG in Asia. A three-part methodology is used to produce these case studies. Firstly, there is a phase of library and interview research; secondly, the information gathered is used together with the relation approach to economic geography to analyse the commodity chains and global production networks in each of the three sectors in their regional markets; and, thirdly, the governance networks in the three markets are identified and mapped and social network analysis is used to quantify the relative strength of the power relations between actors in the networks.
In Phase 3, the framework is used to map the governance network in the UK gas industry and the findings from Phase 2 are used to identify the various energy security and governance challenges associated with higher levels of UK gas import dependency.
The project is aimed at four audiences: the energy studies community; policy makers responsible for energy security, low carbon energy transition and energy governance in the UK and EU; the business community with interests in the gas industry and power generation and social scientists working on energy security and governance issues. A range of seminars and conference activities are planned to access these audiences and project outputs include academic journal articles aimed at the energy studies, human geography and wider social science communities, 4 policy briefings and a book on Natural Gas.
While there is considerable research on energy security, we maintain that it is deficient when it comes to assessing global gas security. First, because it is largely focused on oil and the material and commercial nature of natural gas is very different; second, because it is predominantly state-centric and fails to appreciate the importance of non-states actors, companies and markets; third, it often fails to explain what governance means; and, fourth, because much of it lacks a conceptual framework and supporting methodology. In the Phase 1 of the project, we address these deficiencies by developing a 'geopolitical economy approach' to gas security that combines: a) geopolitical analysis of energy security, b) the relational approach of economic geography and c) work on network and multi-level governance and scalar politics.
In Phase 2, this framework is applied to three case studies that focus on the key issues shaping gas security in the major regional markets that dominate the global gas industry: Eurasian gas exports to Europe, the unconventional gas revolution in North America, and the globalization of the LNG in Asia. A three-part methodology is used to produce these case studies. Firstly, there is a phase of library and interview research; secondly, the information gathered is used together with the relation approach to economic geography to analyse the commodity chains and global production networks in each of the three sectors in their regional markets; and, thirdly, the governance networks in the three markets are identified and mapped and social network analysis is used to quantify the relative strength of the power relations between actors in the networks.
In Phase 3, the framework is used to map the governance network in the UK gas industry and the findings from Phase 2 are used to identify the various energy security and governance challenges associated with higher levels of UK gas import dependency.
The project is aimed at four audiences: the energy studies community; policy makers responsible for energy security, low carbon energy transition and energy governance in the UK and EU; the business community with interests in the gas industry and power generation and social scientists working on energy security and governance issues. A range of seminars and conference activities are planned to access these audiences and project outputs include academic journal articles aimed at the energy studies, human geography and wider social science communities, 4 policy briefings and a book on Natural Gas.
Planned Impact
Who might benefit from this research?
This research project will benefit four audiences: 1) the energy studies community (inside and outside academia) working on the gas industry and its role in the global energy system; 2) policy makers responsible for the issues of energy security, low carbon energy transition and energy governance in the UK and EU; 3) the business community with interests in gas supply, consumption and security; and 4) the wider social science community working on energy security and governance issues.
How will they benefit from this research?
The project provides a comprehensive and original investigation of global gas security and associated governance challenges. The project develops a framework that is specific to the material and commercial specificities of the natural gas industry. It uses that framework and a three-part methodology to analyse three case studies each of which is of direct relevance to the UK's energy security. After the Russia-Ukraine gas disputes, the question of the geopolitics of Eurasian gas exports is a central concern of policy makers in the UK and the EU. Similarly, the completion of Nordstream and plans for a 'Southern Gas Corridor,' together with EU gas market reforms, will change the geopolitical landscape of the European gas market. We plan a series of seminars, conferences presentations, academic papers, briefing papers ad an end-of-project conference to widely disseminate our findings. Both the UK Government and UK companies involved in the UK and EU gas industry and power sector can benefit from our analysis of the Eurasian gas exports. At the same time, the so-called shale gas revolution in North America has also had a dramatic impact on the global gas industry. The loss of a North American LNG market and the seemingly abundant supply of domestic gas at low prices have contributed to the 'gas glut' that is challenging the role of oil indexation and long-term contracts in the global gas industry. This has obvious implications for the UK and the EU. Of equal importance is the question of the transferability of the shale gas revolution to Europe and Asia. For example, if shale gas production develops in some of the major gas importing and/or coal based economies (such as Poland in an EU context) this will have major implications for gas prices and carbon emissions. By focussing on the relational economic geography and governance networks associated with the shale gas revolution in North America, this project will provide new insights into the issue of transferability. This will allow a more realistic assessment of the potential for shale gas production in Europe and other key markets such as India and China. Because many see shale gas as a 'global game changer' such an analysis will be of great value to policy makers and industry analysts. Finally, in a UK and European context, the expansion of LNG imports is seen as an important means of reducing reliance on Russian pipeline gas, thus enhancing energy security. However, the expansion of LNG imports exposes EU to competition with established and new consumers in the Asia-Pacific region. In such a context, our assessment of the globalization of LNG provides important insights that can help assess and manage the commercial and geopolitical risks of increased exposure of the global LNG market. The final phase of our project examines the governance networks and power relations in the UK gas industry and uses the findings of our case study analysis to assess the major energy security and governance challenges associated with increased UK gas import dependence. The findings of this stage will be of obvious interest to all involved in the secure, reliable and affordable supply of gas to consumers in the UK. In short, the findings of our project can help the UK to manage better the consequences of its growing dependence on imported gas.
This research project will benefit four audiences: 1) the energy studies community (inside and outside academia) working on the gas industry and its role in the global energy system; 2) policy makers responsible for the issues of energy security, low carbon energy transition and energy governance in the UK and EU; 3) the business community with interests in gas supply, consumption and security; and 4) the wider social science community working on energy security and governance issues.
How will they benefit from this research?
The project provides a comprehensive and original investigation of global gas security and associated governance challenges. The project develops a framework that is specific to the material and commercial specificities of the natural gas industry. It uses that framework and a three-part methodology to analyse three case studies each of which is of direct relevance to the UK's energy security. After the Russia-Ukraine gas disputes, the question of the geopolitics of Eurasian gas exports is a central concern of policy makers in the UK and the EU. Similarly, the completion of Nordstream and plans for a 'Southern Gas Corridor,' together with EU gas market reforms, will change the geopolitical landscape of the European gas market. We plan a series of seminars, conferences presentations, academic papers, briefing papers ad an end-of-project conference to widely disseminate our findings. Both the UK Government and UK companies involved in the UK and EU gas industry and power sector can benefit from our analysis of the Eurasian gas exports. At the same time, the so-called shale gas revolution in North America has also had a dramatic impact on the global gas industry. The loss of a North American LNG market and the seemingly abundant supply of domestic gas at low prices have contributed to the 'gas glut' that is challenging the role of oil indexation and long-term contracts in the global gas industry. This has obvious implications for the UK and the EU. Of equal importance is the question of the transferability of the shale gas revolution to Europe and Asia. For example, if shale gas production develops in some of the major gas importing and/or coal based economies (such as Poland in an EU context) this will have major implications for gas prices and carbon emissions. By focussing on the relational economic geography and governance networks associated with the shale gas revolution in North America, this project will provide new insights into the issue of transferability. This will allow a more realistic assessment of the potential for shale gas production in Europe and other key markets such as India and China. Because many see shale gas as a 'global game changer' such an analysis will be of great value to policy makers and industry analysts. Finally, in a UK and European context, the expansion of LNG imports is seen as an important means of reducing reliance on Russian pipeline gas, thus enhancing energy security. However, the expansion of LNG imports exposes EU to competition with established and new consumers in the Asia-Pacific region. In such a context, our assessment of the globalization of LNG provides important insights that can help assess and manage the commercial and geopolitical risks of increased exposure of the global LNG market. The final phase of our project examines the governance networks and power relations in the UK gas industry and uses the findings of our case study analysis to assess the major energy security and governance challenges associated with increased UK gas import dependence. The findings of this stage will be of obvious interest to all involved in the secure, reliable and affordable supply of gas to consumers in the UK. In short, the findings of our project can help the UK to manage better the consequences of its growing dependence on imported gas.