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Transition through gas oil & gas transportation

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  • 1. Transition through Gas An Energy Accord Chris Cook Wimpole International 31 October 2012
  • 2. 21st Century problems cannot be solved with 20th Century solutions
  • 3. 20th Century - Energy Charter Stakeholders - Producers - Consumers - Intermediaries – public (State) and private - InvestorsLegal framework – Energy Charter Treaty & OrganisationInvestment – Debt and Credit (Equity) instruments
  • 4. 21st Century - Energy AccordComplementary consensual addition to Energy CharterStakeholders - Custodian - Producers - Consumers - Managers (service providers) - InvestorsLegal framework – Nondominium agreementInvestment – Prepay credit instrument (stock)
  • 5. Nondominium – What it is and is notNondominium is not an organisationParallel agreements for self-organisationClearing Union - agreement between stakeholders jointly - governs & guarantees energy stock issue & exchangeCapital Partnership - agreement between stakeholders individually- governs allocation of energy flow
  • 6. Capital Partnership Producers % Consumers Consumers (via Custodian) % %Investors Managers
  • 7. Nondominium – How it WorksAll rights held by Clearing Union as common CustodianProduction shared by Producers and Managers in accordance with Capital PartnershipBalance of production after Managers share is available to create, issue and sell Stock to InvestorsNo stakeholder has dominant rightsStakeholders have agreed stewardship rights of veto
  • 8. Nondominium – OutcomesNeutrality– no competing sovereigns as in Condominium– takes politics out of energyEquity – ethical sharing of risk and rewardStability – no stakeholder has an interest in volatilityResilience – risk is distributedComplementary – not an alternative but an addition to existing agreements
  • 9. Prepay (Stock)
  • 10. Gas Prepay – What it is & How it WorksUndated credit returnable in payment for gas suppliedStock is issued by gas producers and sold at a discount$1.00s worth of gas sold for 80c gives absolute returnof 25%Rate of Return is the rate over time at which Stock maybe returned to the issuer in payment for gas suppliedRate not fixed - depends on existence & amount of flow
  • 11. Gas Prepay - OutcomesGas LoansPrepay - direct investment in future gas productionProducer – sells gas forward; locks in price; interest-free loan until stock returned against gas suppliedConsumer – prepays for gas; locks in gas price, but notsupplyInvestor – investment in energy; if a financial investordoes not buy, a Consumer will
  • 12. Gas Prepay - OutcomesSubsidy PolicyGas price increased to global levelPopulations compensated with issue of gas stockIncentive to save gas, and exchange stock for value
  • 13. Gas Prepay - RegulationTransparencyExistence of prepay must be visible to stakeholdersManagementIssuance managed by service providers with a stake inthe outcomeManagers accountably supervised on behalf ofstakeholders collectively
  • 14. Next Steps
  • 15. Energy Co-operation - Caspian Gas 5 + 1All 5 Caspian littoral nations + TurkeyCaspian balancing point physical market priceCaspian benchmark gas priceGas Clearing UnionGas Prepay investment – gas loans fund infrastructureGas Capital Partnership - private sector service providers need minimal capital
  • 16. Energy Co-operation:Transition through Gas Eurasian Energy Clearing Union extending to EU, SCO... Energy-based framework for financing trade and funding investment in renewables and energy savings Energy standard of exchange Transition through Gas
  • 17. Energy AccordEnergy Principles – Values underpinning policy- Accessibility, Equity, Neutrality, Resilience, Security, Stability, Sustainability, TransparencyEnergy Doctrine – basis for policy - Energy Economics – least energy cost - Energy Co-operation – funding from shared surplus - Energy Resilience – distributed production and risk - Energy Savings – saving energy is saving money - Energy Standard – price dollars and oil in gas

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