The best way to ensure energy security is to rely on the world market
The Economist in its special report on energy security supports The Acorn’s case for India to invest in domestic LNG infrastructure and energy markets instead of risking taxpayers money on an adventurous pipeline project in Iran and Pakistan.
If the Ukraine story has a moral, it is that energy security depends on the existence of a global market free from political interference, plus maximum diversity of supply. [The Economist]
Gas is arguably most vulnerable to unforeseen interruptions of supply. Oil is reasonably easy to trade, but in most gas markets the pipeline between the gas field and the gas burner locks producers and consumers in an exclusive embrace. But a market in tradable liquefied natural gas (LNG) is rapidly emergingâ€”flows to Europe have more than doubled over the past decade and represent about one-quarter of the world’s total cross-border gas trade. Some $100 billion could be invested in LNG over the next decade. This has big implications for the gas industry, because it is possible now to import gas from distant, underdeveloped producers at reasonable prices. Over the next decade, there might even be routine price arbitrage between markets. [The Economist]
Related Post: An Ukrainian lesson (for India)