IEA was established in 1974 as a response to the oil crisis. The objective was to establish a mechanism for coordination in oil supply emergencies.What brought our Member countries together: believe that cooperation, collective action could provide something that no country could achieve on its own: enhanced energy security.Autonomous body within the OECD framework: own decision-making body: Governing Board decides on policy, budget and elects the Executive Director, 4 meetings a yearInitial role was to co-ordinate measures in times of oil supply emergencies but has developed with the IEA now a major advisor on many energy subject for our 28 member countries.
Well functioning markets are important for energy security. But what are well functioning markets?->Market balances supply and demand->Sufficient interconnections->Diversity of supply->Robust infrastructure for seasonal fluctuations (pipes, storage)->Governmentregulations(e.g. Public Service Obligations)
Oil response measures not directly transferrable
Oil imports to the United States, currently the world’s biggest importer, drop as efficiency gains reduce demand and new supplies such as light tight oil are developed.However, increasing reliance on oil imports elsewhere heightens concerns about the cost of imports and supply security. Imports to the EU overtake those to the US around 2015 and then China becomes the largest global importers after 2020. Four-fifths of oil consumed in non-OECD Asia comes from imports in 2035, compared with just over half in 2010. On the supply side, crude oil production from existing fields declines by 47 million barrels per day by 2035. Making up for this decline will require new production capacity equal to twice the current total oil production of all OPEC countries in the Middle East. In addition to conventional crude oil, the contributions of natural gas liquids and unconventional oil expand to supply one-quarter of the market by 2035. Overall, the largest production increases come from Iraq, adding 5 million barrels per day, Saudi Arabia almost 4 million and Brazil 3 million. Over time, oil supply becomes more concentrated in OPEC countries, mainly in the Middle East and North Africa. OPEC accounts for more than half of production in 2035.
Oil security remains at the core of the IEA mission and it is has become a global concern as oil markets tightenFor more serious disruptions, changing global consumption patterns require global cooperation for emergency response.IEA is increasing its cooperation with non-IEA countries which account of a growing share of global oil demand: non-IEA members participating in Emergency Response Exercises, and several have nominated a contact person in the case of emergencies.The IEA has also begun to run remote EREs designed specifically for non-member countries.
In 2011, the IEA developed the Model of Short-Term Energy Security (MOSES) to evaluate short-term security of energy supply in IEA countries. Although energy security was primarily associated with oil supply historically, the increasing complexity of energy systems requires systematic and rigorous understanding of a wider range of vulnerabilities. This is a tool to inform energy-security policies through quantifying vulnerabilities of energy systems. It is based on a set of quantitative indicators that measures two aspects of energy security: risks of energy supply disruptions; and resilience, or the ability of a national energy system to cope with such disruptions. It provides a sound platform for monitoring and assessing energy security performance across the IEA.MOSES Phase 1 focused on upstream energy supply and the oil supply chain (colored boxes). MOSES Phase 2 will extend the model to downstream aspects of the stationary energy sector (white boxes). In the planned phase 2, the IEA will develop the model for electricity security. MOSES does not aim to rank countries on the basis of their energy security. Instead, it identifies ‘energy security profiles’ of individual countries based on their risks and resilience capacities.
Rising non-OECD oil demand – Reinforces need to work with key emerging large consumers such as China & India;Existing outreach programme on energy security (e.g. Indian Emergency Response Assessment).Refining - need to do more?Individual countries should consider implications but also should we reflect more widely, possibly linking up with others (EU Refining Roundtable)?National choice on how to meet IEP stocking obligation but checked via ERR process so systems remain effective & evolve with market conditions as appropriate. Possible issue with off-shoring refining & new market participants with differing incentives may not align with existing national policies or international mechanisms. Issue not simply European - Australia & Japan are facing similar such issues.LNG bottlenecks – monitoring:Gas markets predominantly regionalised with LNG offering the potential to globalise;SEQ-SOM should monitor via regular gas market updates & share views / plans.
IEA Role in Global Energy Security
Head, Emergency Policy Division, IEA