In other words, the overall shortage of capital and decisions to pay off debt resulted in the postponement of major infrastructure outlays. It also meant a reluctance to exploit reserves that were economically non-viable at current oil prices, and a withdrawal from renewables portfolios with weaker or less reliable economics.

Impact on energy security 2010-2015
Long lead times in the sector mean that decisions made now could have a number of negative consequences across the different dimensions of global energy security.

These include:

• Slower expansion of upstream activities and supply side constraints. An increasing percentage of oil concessions will be won by well-capitalized national oil companies. In addition, should there be a swift rebound in demand pressure on existing transportation infrastructure could lead to a tightening gas supply market.

• Sudden leaps in energy prices. Inevitably a high proportion of the likely rises will be passed on to consumers, domestic and business alike.
  

• The failure of energy infrastructure to meet demand. Investment delays will increase the likelihood of reliability issues with ageing plants, grids and networks in developed countries. Much-needed projects in developing countries, which will bring about greater access to energy resources, will not be initiated.

• Weaker performance in emissions reduction programmes. Delays in upgrading generation assets in developed countries will also result in an inability to achieve CO2 efficiencies. Any slowdown on renewable investments will mean that certain countries/regions will fail to meet ambitious uptake targets and goals for increasing supply diversity.

• Resource nationalization. International access to new energy sources might be restricted.

What governments can do
The energy sector stimulus packages announced in 2009 (see below figures) are an important contribution to the situation, despite the relatively low levels of funds distributed, only 15% to date, and concern in some quarters that the sums involved are not sufficient to bring about a sustainable and reliable energy future.

Given the long-term nature of the industry, companies considering major strategic commitments need an enduring policy framework with appropriate parameters and incentives that can bring some predictability to their planning.

This means clear direction at the international level on climate policy and trade issues, and robust long-term strategies from national governments regarding infrastructure renewal to enhance security of supply, reliability and the reduction of carbon emissions.

Key stimulus packages for the energy sector, 2009-2011, and there the focuses are in
• Clean energy generation
• Energy efficiency
• Grid development

Country/region Amount

1. US US$ 66.6 billion
2. China US$ 46.8 billion
3. Japan US$ 8.0 billion
4. South Korea US$ 7.7 billion
5. Spain US$ 7.6 billion
6. Germany US$ 3.7 billion
7. Australia US$ 3.4 billion 
8. UK US$ 2.7 billion
9. France US$ 2.4 billion
   

What energy companies can do
To position themselves competitively for the next few years, energy companies need to address a number of issues in their planning.

They should consider how best to adjust the mix of assets, businesses or sources of supply in ways that both reduce exposure to price volatility and political instability, and enhance their capacity to respond to toughening policy requirements. In doing so, they should establish how to optimize their strategic investment capacity on a risk-return basis and ensure that their approach to debt/leverage reduction does not significantly impair their ability to achieve strategic growth.



                                                                             Tony Harkén