Despite ongoing efforts to reduce the world’s dependency on oil and gas, fossil fuels remain firmly at the front and center as sources of global energy consumption. Against the background of soaring global energy demand, oil will remain a central component of the global energy mix, supplying an estimated 33 percent of global energy by 2030. Gas, strongly increasing its share of world marketed energy, will rise to an estimated 23 percent by 2030. Hence, reliable access to oil and gas at a reasonable cost are of prime strategic value for both industrialized nations and emerging economies, rendering oil and gas politically charged commodities.

Trade, investment, financing and hedging of international oil and gas are structured by a set of formal and informal institutions at the international level that have emerged since the end of the Second World War. These institutions regulate trade and investment in oil and gas through investment treaties and via bilateral (BITs), regional (RITs) and global trade agreements (WTO/GATT; NAFTA; Energy Charter Treaty); they channel financial flows into oil and gas projects by setting rules for evaluating, mitigating or hedging political and economic risks on financial markets (e.g. ratings, insurances, discount rate adjustments); and they address short-term supply risks in oil and gas, e.g. by providing emergency response mechanisms (IEA). Currently, however, three interlocking trends are profoundly challenging the institutions that traditionally govern oil and gas in the mentioned three segments:

• The rise of new consumers (i.e. China and India);
• The increasing role of state players on oil and gas markets; and
• The elevation of climate protection and resource governance to “high energy politics”.

The mainstream literature on energy security does not currently account for the above mentioned set of institutions in an encompassing way, nor does it assess the pressing issue of how these institutions can adapt to the mentioned transformative trends and meet the demands of 21st century. The research program aims to fill this gap.

To do this, the proposed study will raise these key questions:

• What are the functional logics of existing institutions governing global oil and gas on financial markets; in investment treaties and bilateral, regional and global trade agreements; and in supply risk management?
• How do these institutions need to adapt in order to meet the challenges of the 21st century in terms of security of supply at affordable prices, environmental sustainability and good governance?

The study will explore how agents (re)shape the structure of energy markets, and how pre-existing (and path dependent) institutional settings provide incentives or constraints for market actors in the context of a rapidly changing environment. Hence, the research project will focus on the "rules of the energy game" on a systemic level. Main units of analysis involve market actors, i.e. producer/ consumer/ transit countries, and oil and gas majors.

Therefore we set out to critically examine existing institutions and structures that govern oil and gas markets by evaluating whether and to what extent they provide an institutional setting that enables both producers and consumers to interact effectively given their varying goals.