Energy Markets and Energy Security in Eurasia – the Key Position of the South Caucasus

Talk by Norberto Pignatti (ISET, Georgien und IZA) as part of the Research Seminar Series of the IOS Economics Department.

World energy markets have developed over time, shaped by technological progress,as well as by socio-economic development, with economic and social development – in turn – depending crucially on the quantity and the type of energyavailable. This can be clearly seen observing the patterns of energy consumption in different historical periods and at different stages of development. As pointed out by of Smil (2000) “[…] Modern societies could not exist without large and incessant flows of energy[…]”. With 69% of world population and 63.2% of world GDP, Eurasia is the main consumer of energy in the world (71.7% of world PEC) and – overall – a net importer of fossil fuels. Eurasia produces 58.5% of World Oil (consumes 65%), 57.4% of Natural Gas (consumes 64.9%), 79.4% of Coal (consumes 87.6%). Energy security concerns are at the top of the agenda of most Eurasian countries, both of net energy exporters and net energy importers. This quest for energy security impacts and is impacted by geopolitics, as dramatic recent events have been highlighting. The available information shows a quickly evolving landscape, and suggests that in the medium-term Eurasia is going to see increasing competition for energy sources. In this context, South-Caucasus, at the crossroads of Europe and Asia occupies a strategic position and emerges as a keyregion for energy security, subject to intense competition between the EU and Russian Federation (but also – increasingly - China).