Ensuring Energy Security beyond Conventional Boundaries -Three essays on energy security with geopolitics, bargaining power and market structure-

Abstract

This study seeks to introduce a methodology for analyzing the fundamental cause of fossil fuel procurement in order to accurately explain the current phenomenon beyond traditional interdisciplinary boundaries. The concept of non-traditional security has gained increasing importance as the international community has begun to recognize that the promotion of security requires not only maintenance of territorial and military security of state but also safeguarding of human communities from all threats, including unconventional, non-military risks at the supra-, inter-, and intra-state levels. It can be emphasized that energy security through the lens of human security focuses on spreading loss deeply and widely. In order to avoid energy insecurity, inter-state cooperation or supra-state actors are needed. Even though non-security issues have become increasingly common in almost all aspects of society, fossil fuel procurement remains an important goal of the nation-state. Furthermore, fossil fuel procurement results in geopolitics factors. This research aims to examine and explain the current state of fossil fuel procurement based on the understanding that there are overlapping perspectives regarding energy security between resource economics, international political economics, and geopolitics. First, the research attempts to provide a rationale for comparing the options for potential pipeline construction in Northeast Asia, and to explain the debate about realistic options for Northeast Asia. In addition, the proponents of pipeline natural gas (PNG) gas supply have begun to recognize the significance of non-traditional issues, which require cooperation from each state to promote regional security, although traditional security concerns still dominate the agenda of governments in terms of access through territorial borders and route decisions. To consider the linkage structure, network game and the link-based flexible allocation rule are applied to determine the benefits and bargaining power of Northeast Asian pipeline construction options. This could establish that the pipeline linkage structure comprises different values depending on which country participates in the pipeline coalition comparing the value of each route, the value allocated to each country, and their relative bargaining power. Consideration of the first mover could explain the reason for selecting the Russia–China–South Korea route or the Russia–North Korea–South Korea route in the decision on Northeast Asian pipeline. Second, this study attempts to identify the factors that determine the contract price of Europes long-term contract, and to figure out to what extent this would affect the contract price. Gas sales and the purchase agreement are dealt with at the firm level, even though the characteristics of natural resources primarily represent a strategic or politicized commodity of the nation-state, making the contract price an issue that should be dealt with at the national level. This study introduces LASSO analysis and double selection in order to establish the factors among potential variables that determine the long-term gas contract price. This alternative approach is motivated to figure out the price-determining factors in bilateral long-term gas supply contracts that display high-dimensional data and that underwent difficulty in conventional estimation. With respect to bargaining power, the state of a consumer countrys market structure is a pivotal factor responding to the suppliers priority in the bilateral long-term contract. The results of our study signify that there is a room for buyers to negotiate preservation of loss arising from transportation costs. Factors that are assumed to have influence over the bargaining power of supplier and consumer countries during negotiations inherently have geopolitical characteristics. Third, this study attempts to determine the relationship between energy security and the institutional environment in the generation sector. It is an attempt to expand the security dimension to include intra-state energy delivery issues. The effect of liberalized restructuring—entry liberalization, privatization, and vertical divestiture—on the supply reliability in four separate sub-sectors of the electricity industry is evaluated empirically. This study attempts to establish how energy security is related to the restructuring of the electricity industry in the generation sector through the random effect model. Institutional change that is originally intended to enhance efficiency could depart from the initial goal in the generation sector.