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Editorial comment

'Dependency’ is a word often used within the context of energy discourse; more often than not in a pejorative sense.


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Severing (or at least loosening) the ties of dependency on the foreign nations that supply/buy the fossil fuels we, in turn, depend on has long been seen as something to aspire to. The US currently depends on foreign imports for around half of its oil consumption. And articles pertaining to this fact are written under the headings of ‘Oil dependence is a dangerous habit,’ ‘US foreign oil dependency: stuck between a rock and a hard place’ and even ‘Foreign oil dependency: the root cause of America’s economic pain.’ The country’s abundant domestic natural gas supplies are often touted as the saviour that will grant the US its ‘freedom’ from reliance on Middle Eastern nations that are culturally and ideologically at odds with its own. Interestingly, last year 49% of those crude oil and petroleum product imports actually came from the Western Hemisphere, with only 18% being imported from the Middle East, according to the EIA. I think that there is an important distinction to be made between the sometimes distracting notion of energy ‘independence’ and the more fundamental issue of energy security. The former is not necessarily a free ticket to the latter.

Nations are understandably driven by their pursuit of security of energy supply. Reducing the likelihood of an eternal dependency on finite fossil fuels is one of the biggest challenges of modern times. Natural gas is currently well placed to take advantage of its position between an array of problematic and unfashionable alternatives. In this issue of LNG Industry, a number of articles touch upon Japan’s recent increase in dependence on LNG as a result of damage to its nuclear energy supply. We have also witnessed Israel’s recently cleared proposal for an FSRU facility to supply its energy demands and reduce dependency on Egypt for its piped gas. In these cases, both countries are taking measures to secure energy security by both dependent and independent means respectively.

The energy industry is truly international, and therefore heavily risk-laden. Indeed, the nature of our global reliances often means we are exposed to, and involved in, foreign geographical or political tensions that we would ideally prefer to stay out of. At the time of writing, Syrian opposition activists are calling for a hesitant European Union to place sanctions against the country’s oil and gas sector, in a move that they hope will thwart the regime’s ability to bankroll its growing repression of protests. This year, we have witnessed the international consequences of civil unrest in the Middle East. However, all is not doom and gloom. UK gas producer BG Group has recently reported a 27% rise in pre-tax profits; citing high natural gas prices and a rise in gas production following the resumption of normal operations in Egypt and Tunisia. Earlier this year, BG doubled its estimates for natural gas in the Santos basin. BG chief executive Sir Frank Chapman has been quoted as saying, “We made good progress in both our exploration and production and liquefied natural gas businesses. We have invested US$ 4.4 billion in organic growth in the first half and made good progress across our major growth projects in Australia, Brazil and the USA; progress that continues to de-risk the delivery of our growth programme.”

Functional, reciprocal relationships between nations are what the industry should be striving to maintain. Understanding each other’s needs and way of thinking is necessary in any successful relationship; no more so than when relationships are played out on an international scale. Here in the UK, The Energy and Climate Change Committee is currently undertaking an inquiry entitled “The UK’s Energy Supply: Security or Independence?” The question is an apt one for consideration at this time, and it is not always true that security is found in independence. After all, ‘No man is an island, entire of itself.’