The Palgrave Handbook of Natural Gas and Global Energy Transitions

The Palgrave Handbook of Natural Gas and Global Energy Transitions provides an in-depth and authoritative examination of the transformative implications of the ongoing global energy transitions for natural gas markets across the world. With case studies from Africa, Asia, Europe, North America, Latin America, South America, Australia, and the Middle East, the volume introduces readers to the latest legal, policy, technological, and fiscal innovations in natural gas markets in response to ongoing global energy transitions. It outlines the risk mitigation strategies and contractual techniques ― focusing on resilience planning, low-carbon business models, green procurement, climate-smart infrastructure development, accountability, gender justice, and other sustainability safeguards ― that are required to maximize the full value of natural gas as a catalyst for a just and equitable energy transition and for energy security acrossthe world. Written in an accessible style, this book outlines the guiding principles for a responsible and low-carbon approach to the design, financing, and implementation of natural gas development and commercialization. It is an indispensable text and reference work for students, scholars, practitioners, and stakeholders in natural gas, energy, infrastructure, and environmental investments and projects. Preface Acknowledgments Contents Notes on Contributors Abbreviations List of Figures List of Tables Part I: The International Gas Market: Introductory Context and Principles Chapter 1: Introduction: Nature and Scope of the International Gas Market 1.1 Introduction 1.2 Nature and History of the Natural Gas Industry 1.2.1 Informal Alliance Phase: The Seven Sisters 1.2.2 Regionalization 1.2.3 Structured Multilateral Partnerships: GECF 1.3 Low Carbon Transition and the Future of the Natural Gas Industry 1.3.1 Aim, Scope and Structure of the Book 1.3.2 Structure 1.4 Conclusion References Chapter 2: Technological Revolution in Natural Gas Developments and LNG: Policy Advancements and Their Implications for National and International Markets 2.1 Introduction 2.2 The Changing Landscape in Energy Supply and Demand and the Role of LNG 2.3 LNG: A Game-Changing Technology 2.3.1 LNG: A Distribution Revolution 2.3.2 Benefits of LNG in Providing Energy Security While Meeting Climate Goals 2.3.3 LNG Has the Potential to Meet Demand at Distance from the Production Site 2.3.4 Cost of Building LNG Infrastructure 2.3.5 Environmental, Health and Safety (EHS) Challenges and Risk Assessment of LNG 2.3.6 Potential for Hazard and Injury 2.3.7 New Technological Developments 2.4 Managing Risks and Promoting the Reliability of LNG Supply in Global Markets: Country Studies—Policies and Management of Supply and Demand 2.4.1 The Case of Algeria 2.4.2 Algeria’s LNG: Benefits and Challenges 2.4.3 The Case of Qatar 2.4.4 LNG in Qatar: Benefits and Challenges 2.4.5 The Case of Mozambique 2.4.6 LNG in Mozambique: Benefits and Challenges 2.4.7 The Case of Australia 2.4.8 LNG in Australia: Benefits and Challenges 2.5 Recommendations: Future Role of LNG in Global Energy Supply 2.5.1 Reliability and Diversity of Supply 2.5.2 Public Engagement and Social Acceptance 2.5.3 Physical Infrastructure and Transportation 2.5.4 Capacity and Regulatory Development 2.5.5 Further Research and Development 2.6 Conclusion References Chapter 3: The Role of Natural Gas in a Just and Equitable Energy Transition 3.1 Introduction 3.2 The Just Energy Transition Discourse: Significance and Contours 3.3 Natural Gas as an EPP for a Just Global Energy Transition and Green Growth 3.4 Maximizing the Full Value of Natural Gas for a Just Energy Transition 3.5 Conclusion References Chapter 4: Natural Gas and Energy Security 4.1 Introduction 4.2 Nature and Scope of Energy Security 4.3 Natural Gas in the World: Current Trends and Future Scenarios for Energy Security 4.3.1 Natural Gas and the Sustainability Pillar of Energy Security Problems for Decarbonization 4.3.2 Natural Gas and Competitiveness: The Risk of Technology Lock-In 4.3.3 Natural Gas: The Pursuit of Supply Security and Inter-state Relations Vulnerabilities at the Nexus of Natural Gas Imports and Exports Vulnerabilities for Import-Dependent States Vulnerabilities for Export-Dependent States 4.4 International Conflict and Cooperation 4.4.1 Conflict 4.4.2 Cooperation 4.5 Recommendations 4.6 Conclusion References Part II: Decarbonisation of Natural Gas: Ongoing Transformations Chapter 5: The Hydrogen Revolution and Natural Gas: A New Dawn in the European Union? 5.1 Introduction 5.2 The Production of Hydrogen 5.3 The EU 5.3.1 Political Ambition 5.3.1.1 Hydrogen Policy and Hydrogen Strategy 5.3.1.1.1 The Industrial Sector 5.3.1.1.2 The Transport Sector 5.3.1.1.3 Energy Infrastructure and Buildings 5.3.1.1.4 Investments and Support Schemes 5.3.1.2 European Clean Hydrogen Alliance 5.3.2 EU Legal Framework 5.3.2.1 EU Primary Law 5.3.2.2 EU Secondary Law 5.3.2.2.1 Electricity Directive 5.3.2.2.2 Renewable Energy Directive (RED II) 5.3.2.2.3 Gas Directive 5.3.2.2.4 Fuel Quality Directive (FQD) and Calculation Methods Directive 5.3.2.2.5 Revised Clean Vehicles Directive 5.4 Recommendations 5.4.1 Industry and Energy Infrastructure 5.4.2 Transport 5.5 Conclusion References Chapter 6: LNG’s Role in a Decarbonising Energy System: Lessons from the United Kingdom 6.1 Introduction 6.1.1 Methodology 6.2 Natural Gas and LNG in the UK 6.2.1 History and Context 6.3 The UK Energy Mix 6.3.1 Emissions 6.3.2 Natural Gas Dynamics and Infrastructure 6.3.3 Natural Gas Forecasts Coal, Nuclear and Renewables 6.4 Key Drivers and Tensions in the Role of LNG in the UK 6.4.1 Climate Change 6.4.2 Decarbonisation 6.4.3 North Sea, CCS and Hydrogen 6.4.4 Industrial Clusters 6.4.5 Security of Supply 6.4.6 Competitiveness 6.5 Addressing the Energy Transition Dynamics: Multi-level Perspective Analysis 6.5.1 Regime Status: Summary 6.5.2 Transition Context 6.6 Conclusion Appendix References Chapter 7: Russian Natural Gas Exports and the Energy Transition 7.1 Introduction 7.2 The Current Place of Russian Gas in the European Energy Mix 7.3 The Key Immediate Challenges for Russian Gas Exports to Europe 7.3.1 Potential Responses to the Energy Transition Threat to Russian Gas: Assume It’s Not Going to Happen 7.3.2 Potential Responses: Demonstrate the Environmental Benefits of Gas 7.4 Developing New Strategies for a Decarbonized Energy System 7.4.1 Potential of a Hydrogen Strategy 7.4.2 Diversification Away from Europe 7.5 Conclusion References Chapter 8: Regulating Gas Flaring Emissions from Upstream Operations on US Federal Lands and in Nigeria 8.1 Introduction 8.2 Developing Natural Gas for Domestic and International Markets 8.2.1 International Gas Commercialization Options 8.3 Regulating Emissions in the Nigerian and US Gas Sector 8.3.1 The Gas Production Framework in Nigeria 8.3.2 The Nigerian Flare Gas Commercialization Programme 8.3.3 Gas Flaring and Waste Prevention on US Federal Lands Comparison of BLM’s 2016 and 2018 Final Revisions CAA New Source Performance Standards (NSPS) for Oil and Gas Systems Reversing the Trump Rollbacks 8.4 Addressing Sustainability and Decarbonization in Gas Operations 8.5 Conclusion References Chapter 9: A Political Economy of Energy Transition: Privatizing Natural Gas Assets in Gulf Arab States 9.1 Introduction 9.2 Natural Gas Development Trajectories 9.3 Privatization Agendas in the Gulf 9.4 Gas Privatizations: Unrealized Potential? 9.4.1 Subsidies and Price Distortion 9.4.2 Labour Reforms 9.4.3 Changing Tax Regimes 9.4.4 Political Considerations 9.5 Energy Transitions and Future Prospects 9.6 Conclusion References Chapter 10: Natural Gas Subsidies and Their Implications for the Global Energy Transition 10.1 Introduction 10.2 Subsidies, Natural Gas and the Global Energy Transition 10.3 Reform of Fossil Fuel Subsidies in Indonesia, Argentina and Colombia 10.3.1 Indonesia 10.3.2 Argentina 10.3.3 Colombia 10.4 Recommendations for Gradually Phasing Out Fossil Fuel Subsidies 10.5 Conclusion References Chapter 11: Legal Framework for Promoting Natural Gas in the Energy Transition: Lessons from Brazil’s New Gas Law 11.1 Introduction 11.2 The Brazilian Energy Matrix in the Context of Transition and the Potential of Natural Gas 11.3 Brief Overview of the Natural Gas Market in Brazil That Preceded the “New Gas Law” 11.4 The “New Gas Law” 11.4.1 Natural Gas Transport 11.4.2 Underground Storage of Natural Gas 11.4.3 Production Pipelines and Natural Gas Processing, Treatment, Liquefaction and Regasification Units 11.4.4 Natural Gas Distribution and Supply 11.5 Recommendations 11.6 Conclusion References Other Sources Consulted Part III: Stakeholders Perspectives and Regulatory/Contractual Trends Chapter 12: Natural Gas and Energy Transition for Large International Oil Companies 12.1 Introduction 12.2 Natural Gas and Climate Change 12.3 Majors’ Strategy for the Natural Gas Market 12.3.1 Shell Strategy 12.3.2 BP Strategy 12.3.3 Total’s Strategy 12.3.4 ExxonMobil’s Strategy 12.3.5 Chevron’s Strategy 12.4 Key Lessons from the Energy Transition Strategies of the Majors 12.4.1 Natural Gas Is at the Heart of the Five Oil Majors Business Strategies 12.4.2 Net Zero Targets Commitments 12.4.3 Developing New Technologies and Business Models 12.4.4 Political Uncertainness and Technological Developments Untapped Hydrogen and Power Generation Challenges Energy Storage Advances Financial Sustainability and Challenges for Energy Policymakers 12.5 Conclusion References Chapter 13: Decarbonising Shipping and the Role of LNG: International Law and Policy Trends 13.1 Introduction 13.2 Decarbonizing Shipping Under the Current Climate Change Legal Framework 13.2.1 The United Nations Framework Convention on Climate Change 13.2.2 Kyoto Protocol 13.2.3 Paris Agreement 13.3 The IMO and Its Efforts in Reducing GHG Emissions from Ships 13.3.1 The MEPC and IMO GHG Studies 13.3.2 The MARPOL Convention Annex VI Framework on Energy Efficiency of Ships EEDI SEEMP Mandatory Fuel Oil Consumption Data Collection System (“DCS”) 13.3.3 Market-Based Measures (“MBMs”) 13.3.4 Initial IMO Strategy on Reduction of GHG Emissions from Ships 13.3.5 The IMO’s Post-2018 Progress 13.4 Using LNG as Marine Fuel 13.4.1 Benefits of LNG 13.4.2 Dissents Against LNG 13.5 The Future of LNG Fuel: The Legal and Policy Trends 13.5.1 The IMO Regulations on LNG Fuel’s Safety 13.5.2 LNG Fuel Bunkering Services: The Status Quo 13.5.3 Liability and Compensation for Damages Caused by LNG as Fuel 13.6 Conclusion References Chapter 14: The Financing Spectrum for LNG Projects 14.1 Introduction 14.2 LNG Financing Structures 14.2.1 The Nature of Project Financing in LNG Projects 14.2.2 Sources of Equity Capital 14.2.3 Sources of Debt Capital Commercial Banks Export Credit Agencies (“ECAs”) Development and Multilateral Financial Institutions Other Sources Structural Framework and Security 14.3 LNG Project Financing: Success Stories 14.3.1 Qatargas 14.3.2 NLNG Plus 14.3.3 PNG LNG 14.3.4 Mozambique LNG 14.3.5 Gorgon LNG (Corporate Finance) 14.4 The Emergence of a Hybrid Financing Structure: NLNG Train 7 14.4.1 The Project 14.4.2 The Financing Plan 14.4.3 The Train 7 Financing as a New Frontier 14.4.4 A Profitable Company with Strong Sponsors and Management 14.4.5 A Track Record of Implementing Expansions and Two Decades of Operations 14.4.6 Long-Term GSAs and SPAs 14.4.7 Strategic Asset with Alignment of Interests Across the Project’s Value Chain 14.5 Conclusion: Template for the Future and Impact of Energy Transition on Financing Framework References Chapter 15: Host Government Instruments and Natural Gas Provisions 15.1 Introduction 15.2 Purposes and Types of Host Granting Instruments 15.2.1 Purposes 15.2.2 Main Types 15.2.3 Natural Gas Provisions 15.3 How Natural Gas Provisions Are Dealt with in HGIs: Case Studies 15.3.1 Brazil Concession Agreement Production Sharing Agreements Concession Versus PSA Transfer of Rights Surplus Bidding Round Natural Gas Provisions 15.3.2 Nigeria Introductory Background Natural Gas Provisions Under the Concession/Licensing Regimes in Nigeria Natural Gas Provisions Under JVs in Nigeria Fiscal Incentives for JV Gas Investments and Projects Natural Gas Provisions Under PSAs in Nigeria Conclusion 15.3.3 Trinidad and Tobago/Guyana Introduction Growth of the Petroleum Sector The History of Host Government Agreements Old Mining Leases The New Model License and PSCs Joint Venture Agreements PSC Provisions on Natural Gas Fiscal Regime 15.4 Lessons and Recommendations 15.5 Conclusion References Chapter 16: Managing Energy Transition Risks in the Natural Gas Industry: Role of Engineering, Procurement, Construction, and Commissioning (EPCC) Contracts 16.1 Introduction 16.2 Managing Risk in Traditional Natural Gas Projects 16.2.1 EPCC Contracts in Context 16.2.2 Critical Contractual Provisions Mechanisms for Variations Force Majeure Time and Delay Provisions Consistency Across the Contract Suite Governing Law Clauses Dispute Resolution 16.3 Profile of Critical Transition Risks That Might Emerge in Light of the Energy Transition 16.3.1 Global Energy Transition 16.3.2 Increased Risk in Emissions Smart Infrastructure 16.4 Allocating Crucial Legal and Contractual Risks in Natural Gas Construction Contracts 16.4.1 Reduce the Risk of Change of Scope in the Transition Change in Law Variation Provisions Force Majeure Fundamental Change Balancing and Stabilisation Terms Balance of Power 16.5 Conclusion References Chapter 17: Regulatory and Technical Opportunities for Reducing Flaring and Venting Operations in Oil and Gas Fields in Brazil 17.1 Introduction 17.2 Background 17.2.1 Onshore and Offshore Activities for Oil Production 17.2.2 Flaring and Venting: An Environmental and Economic Problem 17.3 Case Study: Technical and Regulatory Aspects About Flaring and Venting Activities 17.3.1 Greenhouse Gas Emissions 17.3.2 Regulation and Government Policies 17.3.3 The Flare Pilot Device as a Technical Alternative to Mitigate Natural Gas Flaring 17.3.4 Venting Detection Method 17.4 Final Considerations References Other Sources Consulted Chapter 18: Climate Risk and Physical Resilience: Adapting Natural Gas Pipeline Infrastructure for the Clean Energy Transition in Canada 18.1 Introduction 18.2 Climate Risk and the Need to Increase Resilience of Natural Gas Infrastructure 18.3 Repurposing and Adapting Existing Natural Gas Pipeline Infrastructure to Facilitate Canada’s Clean Energy Transition 18.4 Failure to Adequately Adapt Natural Gas Infrastructure: An Emerging Field of Corporate Liability 18.4.1 Operating Safe and Reliable Natural Gas Pipeline Infrastructure in Canada 18.4.2 Climate Adaptation to Comply with Increasingly Stringent Methane Emission Regulations 18.4.3 Climate Risk and the “Failure to Adapt”: The Corporate Disclosure Obligation 18.5 Conclusion References Chapter 19: Protecting Natural Gas Investments: Trends in Investment Treaties and Investors Projections in Africa 19.1 Introduction 19.2 Africa’s Natural Gas Resources: A Panoramic Overview 19.2.1 Africa’s Natural Gas Reserves 19.2.2 Africa’s Natural Gas Production and Consumption Outlook 19.2.3 Natural Gas Price Market and Investment Market Implication 19.2.4 Gas Investments in Africa: Trend and Impediments 19.3 Protection of Natural Gas Investments: Role of Bilateral, Regional, and Multilateral Energy Investment Treaties 19.3.1 Protection of Natural Gas Investments 19.3.2 Protection at the National Level Stabilisation Clauses Investment Protection Under National Laws 19.3.3 Other Avenues of Protecting Investments Bilateral Investment Treaties (BITs) Multilateral Energy Investment Treaties: The Energy Charter Treaty Arbitration Clauses 19.4 Conclusion and Recommendations References Chapter 20: International Trade Rules and Natural Gas Export: Trends and Challenges in National Markets 20.1 Introduction 20.2 International Trade of Natural Gas: The Trends 20.2.1 The World Trade Organization (WTO) and Natural Gas 20.2.2 The Role of Geopolitics in the Trade of Natural Gas 20.3 Natural Gas in the Kurdistan Region: An Overview 20.3.1 The Geopolitics of Natural Gas in Kurdistan 20.3.2 The KRG’s Geopolitics: Opportunities and Limitations 20.4 Legal and Institutional Reform 20.4.1 Legal Reforms at the Global Level 20.4.2 Reforms at the National Level 20.5 Conclusion References Chapter 21: Harnessing Opportunities for Synergy Between Natural Gas and Renewable Energy: Trends and Legal Requirements 21.1 Introduction 21.2 The Importance of System Strength and Inertia in Power Systems 21.2.1 Challenges in Maintaining System Security Requirements with Increasing VRE Generation 21.3 Identifying Opportunities for Synergy Between Gas-Powered Generation and Renewable Energy 21.3.1 Firming VRE for Longer Durations and During Peak Demand Periods 21.3.2 Hybrid Energy Solutions in Remote and Off-grid Locations 21.3.3 Integrating GPG with High Levels of VRE: A Look at the State of South Australia 21.4 Valuing Gas-Powered Generation in Electricity Markets with High VRE: Options for Legal and Regulatory Reform 21.4.1 Ensuring Resource Adequacy Amidst Ageing Thermal Generator Retirement 21.4.2 Provision of Essential System Services, Scheduling and Ahead Markets 21.5 Conclusion References Chapter 22: Energy Transition and the Role of Women: Advancing Gender-Aware Transition in the Natural Gas Industry 22.1 Introduction 22.2 Clean and Sustainable Energy for All Women: International and Regional Law Framework 22.2.1 The African Charter on Human and Peoples’ Rights (ACHPR) Act 22.2.2 Maputo Protocol 22.3 The Search for Gender Justice in Nigeria’s Oil and Gas Sector: Review of Extant Legal Framework for the Oil and Gas Industry in Nigeria 22.3.1 Constitution of the Federal Republic of Nigeria, 1999 (CFRN) (as Amended) 22.3.2 Petroleum Act 22.3.3 National Oil Spill Detection and Response Agency (Establishment) Act, 2006, as Amended 22.3.4 Nigerian National Petroleum Corporation (NNPC) Act 22.3.5 Nigerian Oil and Gas Industry Content Development (NOGICD) Act 22.4 Advancing Gender Rights in the Oil and Gas Industry 22.5 Conclusion References Chapter 23: Promoting Cooperation in Natural Gas Development: Lessons from the Balkans and the Eastern Mediterranean 23.1 Introduction 23.2 Attempts and Opportunities of Regional Cooperation 23.3 Challenges to Regional Cooperation in the East Med 23.3.1 Period of Almost Two Decades Long Détente and Normalization Between Turkey and Greece 23.3.2 Resurfaced Tensions as Obstacles to Regional Cooperation: How Things Deteriorated (Yet Again) Between Turkey and Greece 23.3.3 What Are the Challenges? Can Things Go Back to Normalization? 23.4 How Challenges Can Be Overcome, and What Are the Ways Forward for Promoting Regional Cooperation in Natural Gas Development 23.4.1 Opportunities and Challenges Posed to TANAP 23.5 Recommendations 23.6 Conclusion References Part IV: Lessons Learned and Future Directions Chapter 24: Energy Transitions and the Future of Natural Gas Law, Policy, and Research 24.1 Introduction 24.2 How the Global Energy Transition Is Transforming Natural Gas Law and Policy 24.2.1 Reform of Natural Gas Policy in Cognizance of Climate Change and Paris Agreement 24.2.2 Domestic Energy Demand Per Country 24.2.3 Global Energy Poverty, Especially in Developing African Countries 24.2.4 Effects of the COVID-19 Global Pandemic on Energy Transition 24.3 The Search for Dynamic Legal Innovation: The Case of Nigeria 24.3.1 Applicable Legislative Framework Petroleum Legislation Environmental Impact Assessment Act 1992 Flare Gas Regulation, 2018 Petroleum Industry Act (PIA), 2021 The Nigeria Gas Transportation Network Code, 2020 24.3.2 Policy Framework 24.3.3 Energy Transition in Nigeria and the Future of Natural Gas: Context and Challenges 24.4 The Need for Innovative Legal, Policy, and Research Agenda for the Energy Transition 24.5 Conclusion References Books Journal Articles Book Chapters in Edited Works Online Documents Chapter 25: The Future of Natural Gas: Synthesis and Summary for Policy Makers 25.1 Introduction 25.2 Natural Gas and the Global Transition Towards Clean Energy: A Synthesis 25.2.1 Relevance and Contribution of Natural Gas to the Energy Transition 25.2.2 The Need for a Just and Fair Energy Transition Sustainable Energy Subsidies 25.2.3 Reducing Environmental and Social Risks Carbon Capture and Utilization 25.2.4 Managing Transition Risks Sustainable Financing for the Energy Transition The Importance of Synergy Between Industries 25.3 Conclusion References Index The Palgrave Handbook of Natural Gas and Global Energy Transitions provides an in-depth and authoritative examination of the transformative implications of the ongoing global energy transitions for natural gas markets across the world. With case studies from Africa, Asia, Europe, North America, Latin America, South America, Australia, and the Middle East, the volume introduces readers to the latest legal, policy, technological, and fiscal innovations in natural gas markets in response to ongoing global energy transitions. It outlines the risk mitigation strategies and contractual techniques focusing on resilience planning, low-carbon business models, green procurement, climate-smart infrastructure development, accountability, gender justice, and other sustainability safeguards that are required to maximize the full value of natural gas as a catalyst for a just and equitable energy transition and for energy security across the world. Written in a user-friendly style, this book outlines the guiding principles for a responsible and low-carbon approach to the design, financing, and implementation of natural gas development and commercialization. It is an indispensable text and reference work for students, scholars, practitioners, and stakeholders in natural gas, energy, infrastructure, and environmental investments and projects. Damilola S. Olawuyi, SAN, FCIArb is Associate Professor of Law at Hamad Bin Khalifa University, Doha, Qatar. He is also Chancellors Fellow and Director of the Institute for Oil, Gas, Energy, Environment and Sustainable Development (OGEES Institute) at Afe Babalola University, Ado Ekiti, Nigeria. He is an Independent Expert of the Working Group on Extractive Industries, Environment, and Human Rights Violations in Africa, formed by the African Commission on Human and Peoples Rights. Eduardo G. Pereira is Professor of Natural Resources and Energy Law at Siberian Federal University, Russia, and is a full-time, part-time, honorary, associate, adjunct, researcher and/or visiting scholar at a number of other leading academic institutions around the world (including the University of West Indies, University of Sao Paulo, Strathmore University, Agostinho Neto University, University of Aberdeen, and Externado University of Colombia, among others)