Today I'm joined by Said Nachet, who is a fellow professor in the Master of International Energy at the Paris School of International Affairs. Said teaches a full course on energy security and he's therefore the best person to discuss how security preoccupations interfere or interact with the energy industry. So welcome Said. Thank you. My first question would be, is security of energy supply an important occupation in the mind of governments these days or is it perhaps preoccupation of the past? Well, security of supply has always been on the top of the agenda, the political agenda of most consuming countries. It has been in the past and the focus was on accessibility of resources and their availability to fuel the consuming economies. Across the time, there were other concerns that emerge and we today focus on the energy security from other perspectives as well. That is the affordability of the energy and its acceptability, meaning that we have to produce energies that are in line with desirable and more sustainable energy in future. Yes. So there is a debate about what we mean exactly about energy security. Some people tend to expand this concept to include environmental aspects and social aspects meaning that if some energy system is not viable from the environmental point of view, then it cannot be secure. But from the point of view so to speak strict energy security that is the availability of oil, gas, electricity when it is needed, is this still a preoccupation or perhaps less so than it has been in the past? Well, it is still a concern for most countries, and energy security is a very important element of any energy policy broadly speaking. Now, today resources are all over the corner. We have plenty of resources. We will speak in couple of years ago about the peak oil, but since then production and supply have been increasing over the years and we don't see any shortage over the decades ahead of us, and the concern has moved to other concerns. As we're speaking on security of supply, the issue is important to countries and policymakers, but that doesn't mean that we are running short for energy. In fact, ever since 1973 on the OEPEC embargo on United States and in the Netherlands, the weapon of oil supply has been used rather by consumers against the producer and the other way around. Isn't it the case? These we have seen the first embargo on oil and that was where the first time we thought to talk about oil as a weapon. But since then, the issue have moved to the consumer side, and there was some attempt by some countries to impose sanctions on some producing countries to prevent them from gaining market shares and gaining revenues to serve some purposes. So the limitations of oil use was done over the last years more from the consumer society and from the business society. In general, what relates also about the situation for example, in the Strait of Hormuz or in other so-called choke points where a lot of traffic takes place and is potentially interrupted, it seems to me that this has a bit declined as a source of preoccupation. Would you agree with this? Well, I mean if you look really to the market and to the global trade, no demand went and met over the years. Of course we can have some tensions here and there, but the global market forces are working and we always find a way to replace the missing barrels from one place by barrels produced in other place. Actually, we focus so much on quantity, the quantity dimension, but the quality dimension sometimes may be more problematic than the pure physical number of barrels that we are looking at. How much the boom in shale oil production in the United States has contributed to this feeling of greater security in the supply of oil? Well, the mindset of the policymakers and experts has really completely changed over the last years. A decade or so ago, we were talking about peak oil, and the growth of shale oil coming from the US which was doubled, that's production between 2008 and 2018 has completely changed the perception about the global oil supply. We have today a much larger an ample amount of oil available to consumers and at the same time, we see a lot of policies that are being implemented in order to limit that consumption, which may raise an issue of the imbalance between the supply and demand in the years to come. As a matter of a fact, the producing countries nowadays worry about security of demand. Well, if we look at the demand side of the market, the picture is pretty uncertain with all the developments that are taking place to replace fossil fuels by cleaner energy when it comes to CO-2 emissions, and that leads to a large band of possible oil demands over the three, four decades ahead of us. To make the investments to be made today because the investment of today is the supply of tomorrow, it makes such investment more difficult to realize. Leave aside the overall perception about the fossil fuels and that include oil. Leave aside the development on the technological front where we have the perception about more electric vehicles coming on stream and displacing certain amount of oil from the markets. Yes. How about the supply of natural gas because today perhaps preoccupations about security of supply of natural gas are most important especially in Europe, but also in China I would say than preoccupations about oil? Well, in the gas markets, we have seen also very large shifts over the recent years. First, we have also the same phenomena that affected the oil, that is the shale gas that was developed in the US. Second, is the thirst of Asia, in particular China, for natural gas, and that is leading to complete change of the trade flows across the globe. The industry and the markets are reacting to this and putting some flexibility in the way gas used to be traded at not trying to get to much shorter type of contract to be able to grab market opportunities and value-added depending on the destinations of the gas. But all in all, the shifts to Asia is seen by many Gaza players as a source of trade opportunity. In Europe, third-world countries are greatly worried about excessive dependence on Russian gas. Is this exaggerated you believe or is it warranted? Well, again, if we call on history just to provide us with some indication, none of the supplies to Europe coming from Russia has been under stress. Even under the Soviet Union era, we started to see some difficulties after the collapse of the former USSR and the tensions in central Europe. Europe has this luxury of having so many suppliers around the continent. We have Russia of course but we have also Norway, we have Algeria, we have Libya, we have Nigeria, we have many others new producers come in to fuel the continents, and we have the new gas coming from the US. So the threat of Russia in my view is overstated and if we of course any country will tend to limit dependence on a single supplier whether Russia or another to a certain amount, but if you look at the numbers, the Russian gas is still competitive and the demand of Europe has been met quite satisfactory way over the years. Still when it comes to power generation, there are countries that believe that coal is a factor of securities with something that improves their security profile and therefore should be maintained and there should not be purely and simply a shift from coal to gas, right? Well, I mean, when one put himself in the shoes of a policymaker of any country, if you've got energy resources available beneath your feet, you will use them. Because that's an endowment that will make your economy competitive, that is more secure, and that will create jobs, and you will have an approach that is more broader than pure energy approach. We could think in terms of of of wealth creation. So most countries who have coal, tends to use coal whether in Latin America, in Africa, in Asia, and elsewhere even in Europe. The issue is not coal itself, the issue is the CO2 emitted from the use of coal. So we have altogether tried to work on solutions that can make all the fossil fuels cleaner. Because actually when we look forward, the demand for energy as a whole would be such important that we will need all energies altogether and we are not playing one energy against the other. All energies have advantages and disadvantages and we may need to work on the economic tool on the technologies that help the policymakers and countries whether they are producers or consumers, to solve those drawbacks in order to meet the future energy demand for the benefit of all. In recent times, there has been a growing attention for the dimension of cybersecurity, cybercrime, cyberterrorism all of those. In the electricity grids, the electricity system is collapsing, especially vulnerable to the danger, the threat of cybercrime or cyberattacks. What do you think about, what do you make of this, what might be the consequences? Well, once we have said that energy is the blood of the modern economies, that we cannot run our plants without energy, that we cannot fuel our cars and have mobility services without energy, that we cannot have any service where we can make think of without energy, it comes naturally that those who wants to harm targeted countries will look at the energy supplies as one of the targets, possible targets. Electricity is one of the growing form of energy for our daily life. We think about smartphones, with think about computers, and electrification is increasing every day. So it comes naturally that cyberattackers will look at this kind of systems just to affect the economies of the targeted countries. There are no ready-made solutions, but there are some techniques that companies are using and utilities are used when it comes to electricity to prevent this kind of attacks and intrusions. There are solutions that depends on specific sectors. But all in all, all companies or players from the industry have taken this threat very seriously, and they are allocating budgets and human resources to make their companies and utilities more resilient to this increasingly dangerous risk. Yes. At the same time we always speak of relying more and more on electricity and that is taking place. It's a trend that is clearly being displayed in, what should they say. The the experience of the past has always been that you really take the threats seriously only once you have been affected by it. So do we need to wait until we get a major blackout because of some ill intentioned actors whether private or governmental before we take this matter more seriously? Well, if we look at the grouping of the of economies in the OECD countries, some countries have already put in place bodies and entity in charge of combating this kind of risks. We get regulation that exists in Europe in the US. We have already noticed couple of attacks, cyberattacks. We can list those one of them that have targeted not only electric utilities but some major oil producers, sometimes as a retaliation to other perceived kind of attack. It is taken really very very seriously, because it can harm the availability of resources and the security of supply that we mentioned earlier. So it's taken very, very seriously actually. Okay. Thank you very much. We hope that the measures being taken will be effective if needs be. Thank you very much. Thank you Giacomo.
