Thanks to new energy policies, technologies and market trends the potential to use energy for political purposes has decreased in recent years, says Sir John Scarlett, former Chief of the Secret Intelligence Service MI6 and now Chairman of the Strategy Advisory Council at Statoil, in an interview with Energy Post. At the same time he notes that instability in North Africa, the Middle East and Eastern Europe has grown and energy security should remain central to nations’ overall security and military policies.
Sir John Scarlett, a former “Spy Chief” who left MI6 in 2009, is one of the speakers at a Summit on Energy Security organised by the Munich Security Conference and the ONS Foundation in Stavanger on 28-29 August. With his background in geopolitics – he was, among other things, a “Station Chief” in Moscow in the 1990s – he still follows events around Russia and in the Middle East closely. “It’s hard to be optimistic about current developments, especially in regard to Syria”, he says. “As an authoritative colleague said recently – he has never seen a more complicated problem”.
Sir John believes that the current instability in North Africa and the Middle East has already played some role in global energy markets, for example in Saudi Arabia’s oil price policy. The Saudi’s decided late in 2014 not to cap oil production despite declining prices, which ushered in an oil price crash. This decision was very likely “linked”, at least in part, to Saudi Arabia’s relationship with Iran, says Sir John. “The rivalry between these two countries goes deeper than most people understand”.
“Nord Stream 2 cannot be seen entirely apart from energy security policy. But Europe has more options of alternative supplies nowadays”
Some analysts see new alliances emerging amidst the turmoil in the region, for example between Turkey, Iran and Russia, but Sir John warns against drawing hasty conclusions. “For any new combination to work long-term, there has to be alignment on strategy, policy, and implementation in many different areas. This takes more time than people imagine.”
Risks and questions
With regard to European-Russian relations and the situation in Eastern Europe, the situation is “quite tense”, says Sir John. “There are significant immediate risks and a lot of questions about future relationships.” Nevertheless, when it comes to gas infrastructure projects, such as the proposed Nord Stream 2 pipeline, which Gazprom wants to build through the Baltic Sea from Russia to Germany, Sir John says there is less reason for Europe to worry about “overdependence” on Russia than 4 or 5 years ago.
“Nord Stream 2 cannot be seen entirely apart from energy security policy. But Europe has more options of alternative supplies nowadays, both in the form of renewable energy and unconventionals, such as US shale gas. Interconnections within Europe have also improved and the market has been strengthened thanks to the EU’s 3rd Energy Package. The market generally should be able to take care of energy security, though with a lot of but’s and if’s.”
“I believe energy security should be much better integrated with overall security policy”
Climate policy will lead to fundamental changes in the energy sector that should reduce energy dependence, notes Sir John. “The role of old-fashioned geopolitical factors will become less important in energy. The market will have a greater role to play. But there will be other risks to energy security. For example, we will need to get decarbonisation policies right.”
In any case, risks to energy security will not disappear from the political agenda soon, notes Sir John. “This will remain a crucial part of national security policy. In fact, I believe energy security should be much better integrated with overall security policy. This connection is often not made. For instance, protection of critical infrastructures is vital, not just from physical attacks, but also cyberattacks. We still have quite a long way to go.”
The role of nuclear power is an interesting example of where markets and policiest meet. In the UK a debate has emerged about the desirability of large-scale public support for the Hinkley Point C project. And not just around the cost, but also about the involvement of foreign companies (in particular from China) in the project. “On the one hand, a project like this has to be cost-competitive”, says Sir John. “But it also raises questions about the role of foreign investors which has to be understood and managed properly.”