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New Global Commission to Examine Geopolitics of Energy Transformation

MD Staff

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The International Renewable Energy Agency (IRENA), has today launched the Global Commission on the Geopolitics of Energy Transformation, with the support of the governments of Germany, Norway and the United Arab Emirates. The Commission will examine the immediate and longer-term geopolitical implications of global energy transformation driven by large scale-up of renewable energy in the context of global efforts to tackle climate change and advance sustainable development. The Commission will be chaired by Mr. Olafur Grimsson, the former President of Iceland.

“The global energy landscape is witnessing rapid and disruptive change that will have far reaching effects on geopolitical dynamics,” said Adnan Z. Amin, IRENA Director-General. “Renewable energy resources are abundant, sustainable and have the power to significantly improve energy access, security and independence.

“At the same time, the large-scale deployment of variable sources of renewable energy such as solar PV and wind, is fostering greater cross-border energy trade and cooperation between nations,” continued Mr. Amin. “Understanding these changing dynamics in a way that informs policy makers, will be the primary goal of the commission.”

“I am delighted to chair the Global Commission on the Geopolitics of Energy Transformation, and congratulate IRENA on this timely initiative,” said Mr.  Olafur Grimsson, former President of Iceland. “The geopolitical implications of energy transformation is becoming one of the most debated issues in the global energy agenda. The Commission can make an important contribution to these global discussions, on the basis of solid evidence and analysis as well as a diverse range of perspectives,” added Mr. Grimsson.

While most geopolitical analyses of energy related issues have focused on conventional fuels such as oil and gas, the Commission will review the implications of the ongoing global energy transformation underpinned by the surge in renewables and report on how it would impact the geopolitics of energy based on rigorous and credible evidence.

The Commission will be composed by twelve leaders and experts on international energy and global security issues, with particular emphasis given to ensuring diverse geographical and expert background representation. The Commission will present its report at the 9th Session of the IRENA Assembly in January 2019.

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Energy

Solar Power: Essential for sustainable development

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Day two at the World Sustainable Development Summit in Delhi and my focus switches to renewable energy. Particularly Solar Power. The widespread uptake of this technology is critical if we are to truly begin to decarbonise and meet all of our international targets.

Over lunch I meet with Upendra Tripathy, Director-General of the International Solar Alliance (ISA) and his Senior Advisor Shishir Seth. Not only is it an honour to meet with these gentlemen, it is always a pleasure to work alongside professionals who demonstrate such personal commitment to the huge challenge of climate change.

Brainchild of the Government of India, the International Solar Alliance is a relatively new organisation that was established following the 2015 Paris Agreement on Climate Change. The International Solar Alliance recognises that solar energy provides solar-rich countries, lying between the Tropics of Cancer and Capricorn, with an unprecedented opportunity to bring prosperity, energy security and sustainable development to people.

The ISA works with these countries to overcome obstacles that stand in the way of massive scale-up of solar energy.

Simple Objectives. Fantastic Ambitions.

I am excited about the prospects that exist for close collaboration between International Solar Alliance and The Commonwealth. We can work with the ISA to support the process of getting relevant Commonwealth member countries signed up to make solar power widely available and accessible to their communities.

I am reminded of some work in The Gambia in 2014. I was at a fish-landing site in the capital Banjul. The facilities for refrigerating the catch prior to market were so very limited. Fisheries is a mainstay of The Gambian national economy and effective refrigeration facilities are fundamental to supply chain success. Access to reliable refrigeration is critical for such economies to thrive. Solar power has such potential to provide countries with a step change in energy security.

It will be very interesting to see how the ISA will enhance energy security and down the line positive economic impact. Over the next decade I hope there will be a transformation.

Here at The Commonwealth we want to see the best deal for our member countries in the conversion to low carbon technologies.

Tomorrow I leave Delhi, and head to Mauritius for the Steering Group Meeting of our Climate Finance Access Hub. I will be taking the ideas generated with the International Solar Alliance directly to our discussions.

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West Karoun: fields with promise for Iran’s oil industry

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In the last few years, especially after the implementation of the nuclear deal (known as the Joint Comprehensive Plan of Actions or JCPOA), Iran’s oil industry has been strongly focused on developing joint oil and gas fields, aiming to increase the seven-percent share of such fields in the country’s oil production.

In this regard, West Karoun oilfields which Iran shares with Iraq at the western part of Iran’s southwestern region of Karoun, have been prioritized among the country’s top development projects.

After the implementation of JCPOA in January 2016, Iranian oil industry once again broke free from the shackles of pressure which held it back from its full potential since January 2012, in which the EU agreed to an oil embargo on the country.

Immediately after the removal of the sanctions, Iranian government put it on the short term agenda to hastily increase its oil production to reclaim its oil market share lost to the fellow OPEC members due to the restrictions imposed by the West.

In doing so, plans were made for continuous increase in the country’s oil output and also development of new fields.

Following the new policies for attracting foreign investors to develop the country’s fields, in 2016, Iran introduced the Iran Petroleum Contract (IPC), which replaced the old buyback model.

Shortly after, National Iranian Oil Company (NIOC) announced that the company is in serious talks with potential foreign suitors in order to hold tenders to hand out the development projects mostly for shared fields.

According to the oil ministry’s planning, West Karoun region which includes five major fields namely North Azadegan, South Azadegan, North Yaran, South Yaran and Yadavaran, was introduced as the main candidate for the new IPC tenders.

According to the managing director of Petroleum Engineering and Development Company (PEDEC), the oil ministry targeted an output of 700,000 barrels per day (bpd) for this region, by the end of the Iranian calendar year of 1397 (March 2019).

However, the initial enthusiasm did not lead to any entrust and since mid-2016 which IPC was introduced, still no tender has been held.

Although NIOC have repeatedly said in 2017 that international energy companies including France’s Total, Malaysia’s Petronas and Japan’s Inpex are eager for the development of the Azadegan field, the tender has been postponed several times for unspecified reasons.

West Karoun holds great importance for the country’s oil industry since according to the latest studies, its in-situ deposit is estimated to be 67 billion barrels containing both light and heavy crude oils, and therefore it could have a big impact on Iran’s oil output increases in the future.

With the fields fully operational, their output could add 1.2 million bpd to the country’s oil production capacity.

The complete development of the West Karun oilfields will require about $25 billion of investment, of which only about $7 billion has been funded and spent in implementation and development plans so far.

Considering the fact that West Karoun fields are still young, pristine and untapped reservoirs (also called green fields), the government should increase the efforts to attract the necessary investment for developing these fields.

Since most of the country’s already active fields are old and obviously with aging, the recovery factor decreases resulting in a lower production rate, increasing production level requires either new technologies to keep the recovery factor from falling or new fields coming on stream.

So, again considering the issues regarding banking relations, entering new technologies would be rather a challenge for the oil ministry, thus as it is already prioritized, young and untapped oilfields should be given extra attention in the ministry’s future planning to increase oil output.

Having an estimated 67 billion barrels of in-situ oil, West Karoun fields definitely deserve the spotlight which has been put on them recently.

Hopefully, in the new Iranian fiscal (which starts on March 21), the tender for development of the Azadegan oilfield, which is the first of its kind, won’t get postponed any further and the 10 IPC deals which were promised by the oil minister to be signed by March 2018 will go through by the yearend.

First published in our partner Tehran Times

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Australia’s commitment to affordable, secure and clean energy

MD Staff

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Australia should rely on long-term policy and energy market responses to strengthen energy security, foster competition, and make the power sector more resilient, according to the International Energy Agency’s latest review of the country’s energy policies.

In line with global trends, Australia’s energy system is undergoing a profound transformation, putting its energy markets under pressure. Concerns about affordable and secure energy supplies have grown in recent years, following several power outages, a tightening gas market in the east coast and rising energy prices.

Besides assessing progress since the IEA review of 2012, the Australian government requested the IEA to focus on how Australia can use global best practices in transitioning to a lower-carbon energy system. This question points to safeguarding electricity supply when ageing coal capacity retires, increased variable renewable energy comes on line and natural gas markets are tight. In this context, the IEA also contributed to the Independent Review into the Future Security of the National Electricity Market (NEM) by Chief Scientist Dr Alan Finkel.

“The government’s efforts to ensure energy security and move ahead with market reforms have been impressive. Australia can develop its vast renewable resources and remain a cornerstone of global energy markets as a leading supplier of coal, uranium and liquefied natural gas (LNG), securing the energy for growing Asian markets.” said Dr Fatih Birol, the IEA’s Executive Director, who presented the report’s findings in Canberra. “A comprehensive national energy and climate strategy is needed for Australia to have a cleaner and more secure energy future. The National Energy Guarantee is a promising opportunity for Australia to integrate climate and energy policy.”

Along with the United States, Australia is leading the next wave of growth in liquefied natural gas (LNG). As a major exporter of coal, Australia is also a strong supporter of carbon capture, utilization and storage technologies. The report commends Australia’s efforts which can be critical globally to meeting long-term climate goals.

The IEA’s review points out that the sustainable development of new gas resources is critical for natural gas to play a growing role in the energy transition, satisfying a growing domestic gas demand in power generation and industry and to honor export contracts at the same time. The report calls on Australia to continue efforts to improve transparency of gas pricing, boost market integration and facilitate access to transportation capacity.

Welcoming the government’s energy security focus, including the creation of the Energy Security Board, the Energy Security Office, and Australia’s plan to return to compliance with the IEA’s emergency stock holding obligations, the IEA recommends regular and comprehensive energy security assessments to identify risks early on, and foster the resilience of the energy sector.

In terms of power system security, the report offers a series of recommendations on how to improve the market design of the National Energy Market (NEM), one of the most liberalised and flexible power markets in the world. To accommodate higher shares of variable renewables, the IEA recommends that the NEM prioritises measures to safeguard system stability, enhance grid infrastructure, including interconnections, and regularly upgrade technical standards. As consumer choice and prices in retail markets are liberalised across Australia, the government needs to focus on wholesale competition and demand-side flexibility, in recognition of the changing ways energy is produced and consumed, thus contributing to reducing peak demand.

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