Governing the Emerging Global Market for Gas

Event context    

The overall demand for energy from fossil fuels is expected to more than double during the next fifty years. At the same time, the composition of the energy mix is about to dramatically change. Many observers now expect the world to consume more natural gas than oil by 2030.

So far, as a result of the difficulty and cost of transport, natural gas has very much remained a regionally traded commodity, with trade by and large restricted to the Atlantic Basin (including Europe) and Asia-Pacific region. However, in recent years we have started to witness a global market for gas in the making, driven primarily by the expanding role of Liquefied Natural Gas (LNG).

A truly global market for gas does not currently exist and will take time to develop. However, increasing demand and the changing structure of the global gas business are raising a number of critical political and economic challenges that require careful attention, not the least by the Atlantic alliance. For example, much like the oil business, gas resources are increasingly controlled by state-owned enterprises, raising concerns about the inadequacy of investment and resulting supply gaps. In addition, the rise of new consumers (in particular China and India) is raising the specter of a race for upstream acquisitions, with sometimes significant political ramifications. Somewhat related, the expansion of the LNG business further increases security concerns over existing transport “chokepoints” such as the Strait of Malacca while increasing demand and sometimes even competition for access alters the politics of pipeline construction. Finally, while natural gas is frequently hailed as a clean source of energy, it still constitutes a fossil fuel and contributes to climate change.

Event objectives

Due to the issues outlined above, natural gas is also a politically charged commodity and it is not surprising that gas markets do not operate in a political vacuum. Reliable access to gas at a reasonable cost has been, and will continue to be, of prime strategic value. This applies not the least to the transatlantic alliance, as both the EU and the US are and will remain heavily dependent on fossil fuels to power their post-industrial economies.

This Transatlantic Energy Security Dialogue, organized in cooperation with E.ON AG and E.ON Ruhrgas, brings together professionals from all relevant sectors (governments, NGOs, business, the media, think tank and universities) from both the US and the EU in order to promote constructive debate on these issues. The dialogue sessions are also designed to complement our research program on global energy governance and serve as an important forum for both presenting our ideas and receiving feedback.

Starting with an opening speech addressing the developing global gas market and the resulting implications, the conference will proceed to examine three main issues: (i) financing exploration and production (ii) political implications and (iii) short-term supply management. Two panel discussions are scheduled to address these main issues followed by the formation of small working groups to discuss some of the specific challenges and questions with respect to the development of the global gas market. In preparation for the final session of workshops, a keynote speech and additional panel discussion are scheduled to solicit additional input on transatlantic policy options.

Furthermore, GPPi and E.ON will hold a public event on the evening of 4 September 2008 entitled "A New Silk Road? The Caspian Sea and European Energy Security". More details on this event can be found here.