See “FBI, Interpol Host Critical Infrastructure Symposium”

“FBI Director James Comey was in Miami yesterday July 7, where he spoke at the opening of the four-day International Law Enforcement Critical Infrastructure Symposium. The event, co-hosted by the FBI’s Weapons of Mass Destruction Directorate and Interpol, has drawn senior law enforcement officials from more than 90 countries to explore and share best practices for managing WMD and counterterrorism threats targeted against critical infrastructure and to identify common approaches to protect infrastructure and key resources.

Also participating in the symposium are domestic first responders, corporate security officers, and other U.S. federal partners.

“Today, critical infrastructure is all encompassing,” said Director Comey. “It is everything to our country and our world—our dams, our bridges, our highways, our networks,” he added, explaining that the threats we face to our interconnected systems—such as bioterrorism, agroterrorism, and sabotage—are as diverse as our infrastructure itself.

Comey cited examples of threats to infrastructure, to include the armed assault last April on a California power station, the 2008 attack in Mumbai in which gunmen opened fire at a number of locations, and last year’s deadly shootings at a Kenyan shopping mall. He also noted the ninth anniversary of the July 7, 2013 strikes by terrorists who bombed the London Underground and a double-decker bus in a series of coordinated suicide attacks.

“We know these threats are real,” Comey told the audience. “We must together figure out ways to protect our infrastructure, to work together to strengthen our response to a terrorist attack, a tragic accident, or a natural disaster.”

While touching on topics ranging from terrorism, cyber, and WMD threats to training, partnerships, and intelligence, Comey’s theme throughout underscored the importance of open communication and information sharing with our partners in the U.S. and abroad.

Interpol, as an international police organization, is an important partner on which the Bureau relies heavily to help combat threats of all types. The FBI, through its liaison with Interpol, is able to leverage 190 member countries to address challenges around the globe—a very important ability in a constantly evolving global threat environment.

Comey also highlighted the work of the FBI’s WMD Directorate, each FBI field office’s WMD coordinator, and of the agency’s two regional WMD assistant legal attachés in Tbilisi and Singapore. “They integrate our counterterrorism, intelligence, counter-intelligence, scientific, and technological components and provide timely analysis of the threat and response,” Comey said. “The goal is to shrink the world to respond to the threat.”

The symposium provides the opportunity for participants to help work toward that goal. Through networking and discussions on how to coordinate and cooperate on critical infrastructure preparedness and protection efforts, attendees will strengthen existing partnerships and develop new ones. By rallying the international community around defeating a common threat, our collective chances of success increase.

Director Comey said that the US’s greatest weapon in this fight is unity, which is developed through intelligence sharing and interagency cooperation. “It is built on the idea that standing together, we are smarter and stronger than when we are standing alone,” he said. “Because no one person—no FBI agent, no police officer, no agency, and no country—can prevent or respond to an attack on critical infrastructure alone.””

http://www.fbi.gov/news/stories/2014/july/fbi-interpol-host-critical-infrastructure-symposium/fbi-interpol-host-critical-infrastructure-symposium?utm_campaign=email-Immediate&utm_medium=email&utm_source=fbi-top-stories&utm_content=334495

Collect Open Data is hacking?

M-am oprit la un articol publicat pe defenseone.com, zilele acestea: “The Military Is Already Using Facebook to Track Your Mood”, scris de Patrick Tucker.

As spune doar ca directorul DIA afirma ceva destul de diferit: acesta nu este un experiment, ci o practica – prelucrarea datelor publice. În cazul în care cineva nu-și vrea datele cu caracter personal prelucrate, el sau ea nu ar trebui să posteze pe internet! Acest lucru este, desigur, valabil si pentru LinkedIn, sau alte rețele de socializare: nu este nevoie de hacking a site-ului pentru colectarea datelor.

Bogăția de date Open Source este enorma și a explodat odată cu creșterea internetului. Dar chiar și înainte agențiile, s-au folosit de mulțimea de date Open Source. Cine nu a auzit de dumbfounding? De asemenea, sursele deschise de date sunt actualizate în mod frecvent printr-un singur “Search”.

Interesant:

“Critics have targeted a recent study on how emotions spread on the popular social network site Facebook, complaining that some 600,000 Facebook users did not know that they were taking part in an experiment. Somewhat more disturbing, the researchers deliberately manipulated users’ feelings to measure an effect called emotional contagion.

Defense One recently caught up with Lt. Gen. Michael Flynn, the director of the Defense Intelligence Agency who said the U.S. military has “completely revamped” the way it collects intelligence around the existence of large, openly available data sources and especially social media like Facebook. “The information that we’re able to extract form social media — it’s giving us insights that frankly we never had before,” he said.

In other words, the head of one of the biggest U.S. military intelligence agencies needs you on Facebook.

“Just over a decade ago, when I was a senior intelligence officer, I spent most of my time in the world of ‘ints’ — signals intelligence imagery, human intelligence — and used just a little bit of open-source information to enrich the assessments that we made. Fast forward to 2014 and the explosion of the information environment in just the last few years alone. Open-source now is a place I spend most of my time. The open world of information provides us most of what we need and the ‘ints’ of old, they enrich the assessments that we’re able to make from open-source information.”

http://cdn.defenseone.com/defenseone/interstitial.html?v=2.1.1&rf=http%3A%2F%2Fwww.defenseone.com%2Ftechnology%2F2014%2F07%2Fmilitary-already-using-facebook-track-moods%2F87793%2F

Fracking Europe

The availability of American shale gas and if and when it happens a settlement of the Iranian nuclear issue, of the Israeli-Palestinian conflict and Turkey’s (the most convenient point of transit) entry into the EU would of course change the situation, but the prospect of supplies of American shale gas is the only one to be almost immediate. Observers are also closely following progress in talks for an association agreement between Ukraine (another major point of transit) and the EU. Yes, there is a question of costs, but the infrastructure could have been developed, not to replace Russian gas, but to avoid Gasprom to be build a quasi-monopoly.

US shale gas will be transported to Europe by gas tankers, a technology that was developed long ago and allowed Algeria to sell large quantities of LNG to the US and France, which is also used by Qatar. Though some countries like France have prohibited shale gas and oil exploration, their companies, like GDF Suez of France (GDF Suez is Europe’s largest LNG importer and the world’s third-largest seller of LNG with a portfolio of 16m tones a year), are busy exploring for shale gas in the US and have already prepared plans for the port infrastructure in France and at least another European country. The US is expected by the International Energy Agency to be the world’s largest natural gas exporter by 2020 (and the largest oil exporter too), though it expects these exports to plateau soon after.

“The US is poised to overtake Russia as the world’s largest producer of oil and natural gas this year, a startling shift that is reshaping energy markets and eroding the clout of traditional petroleum-rich nations”, wrote The Wall Street Journal on Oct. 2, 2013.

Shale-rock formations of oil and natural gas have fueled a comeback for the US that was unimaginable a decade ago. Russia meanwhile has struggled to maintain its energy output and has yet to embrace the technologies such as hydraulic fracturing that have boosted US reserves.

The US ascendance comes as Russia has struggled to maintain its energy output and has yet to embrace technologies such as hydraulic fracturing that have boosted American reserves.

In May, 2013 the Department of Energy authorized the Freeport LNG project in Texas to export to countries that do not have a trade agreement with the US, including Japan and the members of the EU. It was the first such approval to be granted for two years and only the second ever.

Twenty-six proposed US LNG plants have applied to the Department of Energy for export permits, but only one – Cheniere Energy’s Sabine Pass development in Louisiana – had been granted permission to sell to countries that do not have a trade agreement with the US. The US energy department said it would work through the remaining applications in order. Japan is already the world’s largest importer of LNG, and the crippling of its nuclear industry by the 2011 meltdown at Fukushima Daiichi atomic power station has only increased its demand.

Freeport has signed deals to sell its gas to Osaka Gas and Chubu Electric of Japan, and BP of the UK. The export project is owned by a consortium including Osaka Gas and Michael Smith, Freeport’s founder and chief executive. Separately, Japanese and European companies said they would invest billions of dollars in another proposed gas export project, the $10bn Cameron LNG plant in Louisiana. Mitsui, Mitsubishi and Nippon Yusen of Japan, and GDF Suez of France which had already agreed to buy LNG from Cameron, will offer construction financing in return for equity stakes totaling 49.8 per cent.

In June, 2013 representatives from the Azerbaijan-based consortium, Shah Deniz II, approved the Trans-Adriatic Pipeline (TAP) over the U.S.-backed Nabucco West proposal. The 870-kilometer TAP will connect with the previously approved Trans-Anatolian pipeline (TANAP), crossing Greece, Albania, and the Adriatic Sea to deliver 10 billion cubic meters (extendable to 20 billion cubic meters) of Azerbaijani natural gas to Italy, and subsequently, other countries in the European Union. In light of American and European policy goals to diversify the sources of natural gas to Europe, TANAP and TAP must be seen as successes.

Europe’s and other countries’ dependence on Russian gas are about to be reduced, though there is no doubt the Gasprom will remain a major player.

Poland could also become an important producer of shale gas without running afoul of EU environmental legislation.
To answer questions about costs: they are quite high, but thanks to shale gas world natural gas prices have gone down and some countries could be priced out. Natural gas prices have started stopping being linked to oil prices, and US gas export gas could go down by another 35 percent within 4 year, but the price differential will certainly be absorbed by infrastructure investments though part of those will be met by governments (roads, etc) when needed. Countries like France which has been importing LNG for 40 years (from Algeria) have an advantage in this respect, though they will have to expand and overhaul their facilities.

The US lags far behind Europe in terms of LNG use, but European LNG prices are still aligned with oil there – which is of course in the interest of Qatar, Russia, Algeria, etc, as long term oil prices can only rise (even though they might go down temporarily as a result of the economic slowdown in Europe, China, India, etc).

One wouldn’t bet so much on shale gas developments in Europe, at least in the short term, as environmental concerns are an impediment. Europe should accelerate the diversification of her natural gas sources towards US, Canadian and even when available Ukrainian and Polish shale gas, LNG from Qatar and Algeria, perhaps more from Norway, etc., but that won’t be achieved overnight even with the new sense of urgency – the crisis in Ukraine. The share of natural gas in the manufacturing industry’s energy purchases is significantly higher in Europe than in the US. Algeria has significant traditional LNG supplier to certain south European countries. Algeria has been exporting LNG to Europe for decades but exports to the US floundered after a dispute on prices. The latest good news is that Algeria’s probable natural gas reserves have almost doubled since the beginning of this year. Ukraine herself has a potential major shale gas producer.

While a country like France is adamantly opposed to fracking – even shale oil and gas exploration is banned – nuclear power electricity plays a larger role than in any other country in the world, with the nuclear power industry providing over 80 percent of the country’s total electricity consumption. Last but not least, reversing the flow of gas from Germany and other countries to Ukraine is easier said than done, as the pipelines and their compression stations have not been designed for a reversal of the flow – but it is of course possible.

On the issue of dependence on Russian gas, everyone knows that the US won’t be able to export LNG from shale gas in large quantities before 2016.

The internet crime and its cost to society

There is not such thing as privacy anymore. There is no privacy on the Internet for sure! Privacy on Internet is just a notion that was introduced to keep the “political correct” appearance. The loss of self-identity into the masses led to the need of being noticed and discovered. Therefore, there are new generations that feel they need to share, follow, show, talk, say their existence. In the past we knew that privacy means safety, today the need to be heard or to be seen is bigger than the self preservation one.

More international bodies centralizing information on cyber crime is not probably a useful idea, while exchanging best practises, views and intelligence is always useful, not only between governmental bodies but with private bodies as well. There is no perfect method to evaluate the cost of cyber crime. I do believe in international cooperation and am not opposed to such bodies as clearing houses for intelligence that need to be shared. But certainly a state body is not going to share its technologies with a number of states who spy on its country: the technology to intercept communications between criminal organizations or to defeat hackers is the same as that which allow interception of foreign government communications and security against foreign state-sponsored hackers. As to “lawful interception” of communications, does everybody agree on that? No country will ever recognize as lawful intercepts made by another country. Part of those roles are already assumed at least in theory by Interpol, NATO and other civilian and military regional organizations. NATO remains weak on the issue and its capabilities need to be augmented. I am not sure new international bodies will not simply add a new layer of bureaucracy. Agencies are most often cooperating on ad hoc basis with other national agencies and probably don’t need an international body to further this cooperation. Such international bodies would also increase the likeliness of leaks.

I have a question: is the individuals’ pursuit of happiness the governments’ job?

“Global Energy Security Conference- The Way Forward” in May 2014

Europe’s leaders have been completely preoccupied by the economic crisis and its political and social consequences. Surprisingly, Germany has become the cautionary tale as its trailblazing emphasis on renewables has driven electricity prices up and placed an uncomfortably heavy subsidy burden on Europe’s largest economy, where the current subsidy scheme is estimated to cost businesses and consumers $32 billion per year. Barring major technological breakthroughs or a markedly improved economic outlook for Europe, widespread and economically sound renewable energy seems to be off the table for the time being. The fact that emission targets were not cut underscores that the majority of European countries will remain politically committed to relatively low emission levels. EU members will delay the implementation of renewables but will also continue to move away from high-polluting, coal-fired power plants – favoring the middle ground offered by natural gas and, to a lesser degree, clean coal technology for power generation, particularly because of the relatively low costs for both commodities.

The reality is that Europe will be hard-pressed to find cost-effective alternatives to natural gas from Russia, the world’s largest producer and the only consistent supplier of cost-competitive, high volumes of the commodity in the region. The European Union will place a greater emphasis on its collective bargaining and enforcement power to negotiate lower prices from Russia across the board for all of its members, and the development of liquefied natural gas import facilities will continue apace with the expectation that global liquefied natural gas prices will drop by the next decade. But as the economic crisis continues to blight Europe and the low energy price lobby grows stronger on the Continent, political leaders in Europe will focus on cost-effective solutions.

Again there are cost-effective new suppliers coming. The first category will be shale gas, which according to calculations made by Total, GDF-Suez and the EU, will be cheaper, despite transportation costs, than current Russian prices. As to Algeria, which has been an LNG exporter to Europe since I believe 1968, using the first modern methane tankers (at one time Algeria exported more LNG to the US than to Europe), her proven resources seemed to be dwindling, but recent major discoveries should boost the country’s exports. And of course there is Qatar. The idea is not to kick out Russia as a major supplier, but to cut EU dependency on Russian gas, and to introduce much more price competition, forcing Russian prices down. Note that Poland and the UK could become large shale gas producers, even though initially most imports will come from the US. Both the US Department of Energy and the International Energy Agency expect the US to become a net oil and natural gas exporter by 2020, certainly the world’s largest oil producer and arguably the largest LNG producer, and the world’s largest exporter of oil and gas by 2022. At the same time production is expected to plateau after a time and it is possible that the US will again become a net importer later, though in smaller quantities. CNAS believes unconventional energy production will continue to shape the world energy map.

“The future of global economic growth in the coming decade relies significantly on changes related to energy security as the global energy demand continues to grow. According to the World energy outlook, with the United States moving steadily towards meeting almost all of its energy needs, the BRIC economies (especially India and China) and the EU present the major catalysts of global energy demand growth. Russia and Brazil are other major consumers of energy but they tend to satisfy their consumptions through their domestic resources.

Due to the impact of many factors related to geopolitics, market factors and polices on the global energy market, there were both continuity and changes in some trends related to the global energy market in recent years:

While energy import continues to increase for most major importers, The USA energy import bill has decreased by 40% in the last 5 years due the shale gas boom. While demand for coal is decreasing for the OECD countries it is still increasing for India and China. The exploitation of shale gas resources in EU can create a trend of decreasing EU bill of energy sources import.

Brent crude oil has sustained a high average price of above $110 since 2011. The interim agreement with Iran on its nuclear programme will definitely lower the risks of oil export disruption passing the Strait of Hormuz, the narrow artery through which 40% of global sea-borne oil exports pass. However, The instability in Iraq and Libya, the Syrian conflict, struggle in the Southern part of Yemen; all these factor are.

Disrupting the production of oil and will have impact on the supply of oil to the global market. It will remain to see how the geopolitical situation in the wider middle east and the north Africa will impact the oil price.

Electricity price differentials are also large, with industrial consumers in Japan, Europe and China paying on average more than twice as much for electricity as their counterparts in the United States. Energy costs can be vital to the competitiveness of energy-intensive industries. These industries- including chemicals, primary aluminium- account globally for 20% of industrial value added, 25% of industrial employment and 70% of industrial energy use ( International Energy agency). Demand for these products, in the emerging economies, drives the growth in energy demand.

Despite the fact the share of fossils fuels is expected to decrease in the medium range it will continue to have biggest share in filling the global energy demand .Clean energy sources (Renewable and Nuclear) will carry on their growth in the global energy demand. But there is still a distinct disparity between different parts of the world in their energy mixes.

Energy Efficiency can help dealing with high energy costs for the major consumer. Renewable, nuclear power and unconventional gas can help achieving energy efficiency. Although the trend of global energy demand is clear, there are many scenarios regarding the sources of supply and efficiency policies for the major consumers.

Energy for the Most Vulnerable:

For the second time, the Global Energy Security Conference will address the challenge of energy security for the most vulnerable. In 2011, nearly 1.3 billion people worldwide lacked access to electricity and more than 2.6 billion relied on the traditional use of biomass for cooking. Over 95% were located in Asia and sub-Saharan Africa.

Through the annual Global Energy Security Conference, we aim to contribute to the same programme by bringing forward creative projects from different parts of the world aimed at supporting countries suffering from deficiencies in their energy security.

With partners from the corporate world, international organisations, NGOs, and research institutions participating, the programme is aiming to support the implementation of energy projects for populations with limited, to no access to multiple energy options.

The Conference provides platforms for these kinds of projects to be presented to government officials and to potential partners for their implementations.

The Conference

This conference is a gathering of Global stakeholders involved the global energy security to address these issues to have an insight into the various scenarios that transform the energy landscape of our world. The Conference will bring together some of the world’s most relevant thought leaders from business, government, international organisations, NGOs, media and civil society. During the two day Conference, participants will engage in sessions that will explore new and existing energy trends, challenges and creative solutions to address one the world’s most topical and challenging issues:

  • Threats to energy supply and routes of supply coming from many sources.
  • Policy areas for energy efficiency?
  • Investment in infrastructure required ensuring the global supply?
  • The impact of geopolitics in the Middle-East and North Africa, the future relations between Russia and European Union for gas exports.
  • What are alternative ways to respond to energy supply disruption? How efficient are they?
  • The economics of alternative sources of energy for different economies : renewable energy and nuclear energy.
  • Will energy producers disagreeing agendas and interests impact investments
  • Opportunities across the globe?
  • What is the effect of energy diplomacy, and what are its real motivations and long-term sustainability?
  • Assess the achievements of the global environment agenda so far, the promises of alternative and renewable energies and will study the critical issue of nuclear security.
  • Innovation solutions to tackle issues related energy access for the most vulnerable population of the world?

Objectives:

  • Develop policy recommendations based on multi-stakeholder consultations at a global level.
  • Provide a platform for sharing knowledge and expertise amongst experts from across the globe.
  • Provide a platform for presenting innovative projects from different part of the world to contribute to global energy security.
  • Boosting private public partnership in implementing new conceptual projects for the most vulnerable countries in terms of energy security.”

The conference’s programme can be dowloaded form here:http://www.gdforum.org/pdfs%20to%20download/Global%20Energy%20Security%20Conference%20Programme-%20January%202014.pdf

Energy and EU

Various countries have been over some time trying to harness tidal energy, but with little success until now. The biggest project until 2011 was the French “Usine Marémotrice de la France” inaugurated in 1966 by Charles De Gaulle and which never produced more than 240 megawatts at a uncompetitive cost. In August 2011 however the ROK inaugurated the slightly more powerful Sihwa Lake tidal power plant which produces 254 MW. Recently British companies have demonstrated pilot devices that are much smaller but more efficient.

There is controversy over the EU’s ocean energy action plan, which allegedly will put a lot of public money in the pockets of the likes of Alstom, EDF, E-on, DCNS and Scottish Development International. This type of controversy is often attached to EU-financed projects, such as the very costly Galileo satellite positioning system which has yet to become operational.

In the matter of energy the EU Commission is evolving towards nonbinding European regulations, in part because national policies are too divergent. This is a defeat for the various Green parties. The latter were also defeated in France which is putting again the emphasis on nuclear energy, which accounts for over 80 percent of electricity production, at the expense of renewable energy plans which are being shelved. Germany, after her decision to phase down its nuclear power plants, not being able to rely principally on renewable energy sources in the foreseeable future, is increasingly buying nuclear-produced energy from France (as Switzerland, a country that has bilateral agreements with the EU and is slowly moving towards membership). Barring major technological breakthroughs or a markedly improved economic outlook for Europe, widespread and economically sound renewable energy seems to be off the table for the time being.

It is likely however that European dependence on Russian gas will significantly decrease as a result of shale gas imports from the US but also local production in Poland and the UK. This is the reverse of what’s happening with nuclear energy, with Germany shunning it but buying nuclear-origin electricity from France: the latter has imposed a total ban on shale oil and gas exploration and exploitation on her territory, but as encouraged French companies like Suez to invest in shale gas exploitation in the US and Total in the UK, and will import that gas which should be significantly cheaper, in spite of sea transportation costs, than Russian gas until the latter will be lowered. Natural gas is a lesser pollutant than oil: in his state of the union speech two days ago, president Obama has announced incentives to switch from coal and oil to natural gas, although its automotive use will stay in lmy view limited.

Challenges in Finding Alternative Supplies – EU commissioner for Climate Action Connie Hedegaard in Brussels on Jan. 22.

With the European Union battling a crippling economic crisis, Europe’s high energy and electricity costs have become politically and financially untenable and have sapped support for costly, environmentally friendly policies in many member countries. Reflecting this situation, the European Commission in mid-January unveiled its new energy and environment strategy through 2030, which softened Brussels’ longstanding push for the development of renewable energy sources while maintaining binding targets for carbon emissions. However, the impact of this particular EU policy change will be limited, particularly compared with the broader trends that govern energy markets in Europe.

Early drafts of the policy cited statistics showing that average industrial electricity prices in the European Union are more than double those in the United States, while industrial natural gas prices reach up to four times that figure. However, they remain competitive compared to Taiwan, South Korea and Japan. The comparative advantage gap between Europe and the United States, its main industrial competitor in the developed world, has been steadily growing because the United States has benefited from a domestic energy production revival in the past few years, engendering relatively industry-friendly government policies that have kept costs for industrial energy consumers low.

Industry leaders in the European Union hoped that the target for greenhouse gas emission reductions would be tempered, but the commission kept the binding goal on the higher end, at 40 percent lower greenhouse gas emissions compared to 1990. Beyond renewables and emissions, the commission’s new non-binding policies on shale gas development essentially give carte blanche to its members to regulate this new industry as they see fit – a move the United Kingdom lobbied for heavily.

The largest change in the commission’s paper indicates that renewable energy targets for 2030 will not be binding on a nation-to-nation basis but on an EU-wide basis. This provision makes direct enforcement much more difficult by relying on a nebulous concept of “harmonization” for countries to move away from fossil fuel energy generation. The push for renewable energy has its roots in the years of financial security before the crisis, when the main threat in the energy sphere was Europe’s dependence on Russian imports and the popular demand for cleaner energy production. In less than 10 years, EU member states more than doubled the share of renewable energy in their total energy mix.

The picture began to shift dramatically after 2008. Europe’s leaders have been completely preoccupied by the economic crisis and its political and social consequences. Surprisingly, Germany has become the cautionary tale as its trailblazing emphasis on renewables has driven electricity prices up and placed an uncomfortably heavy subsidy burden on Europe’s largest economy, where the current subsidy scheme is estimated to cost businesses and consumers $32 billion per year. Barring major technological breakthroughs or a markedly improved economic outlook for Europe, widespread and economically sound renewable energy seems to be off the table for the time being.

The consequences of the commission’s policy shift, which will still need to be approved by EU members, should not be overstated. The fact that emission targets were not cut underscores that the majority of European countries will remain politically committed to relatively low emission levels. EU members will delay the implementation of renewables but will also continue to move away from high-polluting, coal-fired power plants — favoring the middle ground offered by natural gas and, to a lesser degree, clean coal technology for power generation, particularly because of the relatively low costs for both commodities.

The internal readjustment of self-inflicted high energy and electricity cost premiums due to renewable subsidies may help halt the European Union’s decline in competitive advantage, but it will be nowhere near enough to get the struggling European economy back on its feet. Europe’s longstanding high industrial electricity and energy costs are primarily driven by broader questions of imports sourcing and pricing – which will become the focus of European policy at the national and supranational level as the Continent’s leadership faces escalating political pressure due to Europe’s stagnating growth and high unemployment.

Within this context, Europe’s energy future will depend on the evolution of some key trends, domestic and international, which Stratfor has followed for several years. In this analysis, we will focus nearly exclusively on natural gas, given the global and relatively transparent nature of crude oil trading and the overwhelming importance of natural gas to Europe, since it accounts for well over a quarter of the total energy consumption on the Continent.

Indigenous reserves of conventional natural gas (and oil) are slated to continue declining in Europe, despite Norway’s limited but notable success in periodically finding replacement reserves. Much attention has been directed at Europe’s attempts to replicate the United States’ success in unconventional natural gas production. The European Commission report included a weak first attempt at an EU-wide strategy for shale development, a mostly irrelevant provision since the obstacles to unconventional natural gas production have mainly been unique to each country. We expect bureaucratic red tape and strong opposing interest groups (some rumored to be connected with Moscow) to continue delaying progress in Central Europe – as has clearly been the case so far in Poland and Romania. Concurrently, we are also extremely pessimistic on a reversal of social opposition to shale gas production in continental Western Europe -pressure that has not abated in either France or Germany.

The second developing trend to keep watching is the growing integration of European natural gas markets through EU-level policy and physical interconnection. A more integrated and clearly regulated pan-European market helps avoid major import price discrepancies between member states and, in the future, will give the bloc major negotiating leverage against Moscow when it comes to negotiating contracts with its largest consumer market — resulting in broadly lower average prices in the medium to long term. While Russia will attempt to diversify its customer base by expanding its energy exports to East Asia, existing field and infrastructure logistics will ensure that Moscow will remain deeply beholden to the European market.

A third dynamic that will have an influence on the energy sector in Europe will be the development of natural gas sources beyond Russia and Europe proper — a key imperative for policymakers who see the strategic danger of replacing declining indigenous production with more Russian imports to meet the expected stable demand.

Due to several factors – the low availability of investment capital in recession-stricken Europe, the strength of Russia’s competing South Stream pipeline project, Moscow’s strong leverage in Turkmenistan and the political risk still associated with Iran – we do not see a high-volume pipeline route from the natural gas-rich Eastern Caspian to Europe emerging in the next few decades. The only project that will materialize, the Trans-Adriatic Pipeline, will be limited in volume and geographic range.

We also do not expect North Africa to significantly ramp up natural gas exports to Europe in the medium to long term for two reasons. First, domestic consumption in North Africa is rising steadily, limiting the availability of natural gas for expanded exports. This trend is compounded by years of lagging production. While Algeria is moving toward a gradual opening of its significant conventional and unconventional natural gas reserves to foreign investors, the country is experiencing its own political transition and will proceed cautiously given how critical energy revenues are for managing the complex balance of power in Algiers. Egypt and Libya, the region’s other natural gas exporters, are likely to remain mired in political instability that will make production and export increases unlikely over the next decade.

Shipments of liquefied natural gas from around the world provide a coherent alternative for Europe in terms of supply stability and diversification, but it remains a toss-up price-wise. Buoyed by rapidly growing demand, the East Asian natural gas market is likely to continue commanding high prices in the short to medium term on the spot market, even as large Australian and North American projects come online in the second half of the decade, with East African projects joining the fray after 2020. In the medium to long term, the picture becomes more complicated as large volumes of liquefied natural gas will create more homogeneous (but not necessarily lower) prices for the commodity around the world.

Finally, another trend is the decline of nuclear power. Following the Fukushima Daiichi nuclear power plant disaster, a host of countries in continental Europe (with the notable exception of France) completely shut down their nuclear power programs. Despite a tepid resurgence, it remains unlikely that nuclear power will become a much more significant chunk of the European energy mix. The main barrier for large-scale development of nuclear energy in Europe, even outside of Germany, will continue to be the high upfront costs that are economically untenable when compared to relatively low fossil fuel costs.

Ultimately, the reality is that Europe will be hard-pressed to find cost-effective alternatives to natural gas from Russia, the world’s largest producer and the only consistent supplier of cost-competitive, high volumes of the commodity in the region. The European Union will place a greater emphasis on its collective bargaining and enforcement power to negotiate lower prices from Russia across the board for all of its members, and the development of liquefied natural gas import facilities will continue apace with the expectation that global liquefied natural gas prices will drop by the next decade. But as the economic crisis continues to blight Europe and the low energy price lobby grows stronger on the Continent, political leaders in Europe will focus on cost-effective solutions – even if they have to concede some of their current policies that make sense on a strategic level, in particular the construction of expensive diversification projects.