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The (New) Political Economy of Oil and Gas: The Implications of the Changing Dominant Paradigm of International Energy Development

  • Andrey A. Konoplyanik
Chapter
Part of the International Political Economy Series book series (IPES)

Abstract

It is contended that the role of three classic models of energy—Hubbert’s curve, Hotelling’s rule and Chevalier’s turning point—explains the current paradigm of international energy development based on non-renewable energy resource exploitation and use. Different facets of this paradigm are examined, such as the permanent movement in an upward-right direction of the peak of Hubbert’s curve and the transformation of resources into reserves available for exploitation under four groups of limitations (geology, technology, economics and politics). Revolutionary and evolutionary technological advances and their role, together with natural factors and changes in exploration and production costs, are investigated, and the role of state in providing for scientific and technical progress is highlighted. Three types of pricing mechanisms for non-renewable energy resources that utilize and monetise Ricardian and Hotelling rents are highlighted. The conversion mechanism of unconventional resources into conventional ones is also examined.

The chapter aims to understand why the changes in the current energy paradigm are possible, in terms of both supply and demand. On the supply side, the phenomenon of US shale gas revolution has prolonged the occurrence of peak supply, and a new type of investment cycle in shale development and its consequences for the oil market have been significant. On the demand side, the influence of the accumulated effect of four historical stages on the ‘departure from oil’ developments since the 1970s and the Paris Agreement is considered.

Finally, the author investigates the possible implications of the new paradigm of international energy development on international energy governance and examines new challenges for international energy investment.

Abbreviations

bbl

oil barrel

CAPEX

Capital Expenditure

LTGEC

Long-Term Gas Export Contracts

NBRV

(Net Back) Replacement Value

OPEX

Operational Expenditure

PSA

Production-Sharing Agreements

RDD

Research, Demonstration and Development

STP

Scientific and Technical Progress

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Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Andrey A. Konoplyanik
    • 1
    • 2
    • 3
  1. 1.Adviser to Director GeneralGazprom export LLCSaint-Petersburg/MoscowRussia
  2. 2.Chair “International Oil and Gas Business”Russian State Gubkin Oil and Gas UniversityMoscowRussia
  3. 3.Centre for Energy, Petroleum and Mineral Law and PolicyUniversity of DundeeDundeeUK

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