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Rethinking Energy Security and What the World Got Wrong on Hormuz · The S2G Podcast

• 0:00
  SPEAKER_03: Who sits at the table, again, it's not just people in the region.
• 0:02
  SPEAKER_03: It should be, in theory, everybody in the world.
• 0:04
  SPEAKER_03: It's not just the US or Iran or Qatar or Israel or Saudi.
• 0:08
  SPEAKER_03: It should be China.
• 0:09
  SPEAKER_03: It should be everyone.
• 0:10
  SPEAKER_03: So my my view is that this is a global infrastructure issue.
• 0:15
  SPEAKER_03: Uh it's not a regional politics issue.
• 0:17
  SPEAKER_03: If it's a regional politics issue, then it's optional.
• 0:20
  SPEAKER_03: You know, people from the region can deal with it.
• 0:22
  SPEAKER_03: If it's a global infrastructure issue, then it should be a design issue that everyone that's a party to it uh should play a role.
• 0:37
  SPEAKER_00: We used to think about energy in separate boxes.
• 0:40
  SPEAKER_00: Oil and gas were commodities, electricity, a local utility, and security was the government's job.
• 0:46
  SPEAKER_00: But that's not how it works anymore.
• 0:48
  SPEAKER_00: And the Hormuz crisis has made that clear.
• 0:50
  SPEAKER_00: When nearly a fifth of the world's LNG went offline, the shock pushed up power prices in Europe and Asia, and from there, the cost of fertilizer, food, and just about everything else.
• 1:01
  SPEAKER_00: That's the argument Dr.
• 1:02
  SPEAKER_00: Amran Al-Khwari has been making.
• 1:04
  SPEAKER_00: Gulf energy is global infrastructure, and the biggest risks sit between systems.
• 1:10
  SPEAKER_00: In this episode, Sanjeev Krishnan and Frederick Michel sit down with Amran, CEO of the private investment company FORTA, who brings over 25 years of international leadership across energy, sustainability, climate tech, investment, and education.
• 1:25
  SPEAKER_00: They talk about why resilience really comes down to redundancy, how China weathered the Hormuz shock better than many expected, and what we can learn from Qatar's ability to bounce back.
• 1:35
  SPEAKER_00: The energy transition isn't just about swapping one fuel for another, but about constantly rebuilding the systems that power our lives.
• 1:43
  SPEAKER_00: So the real question is what are we building now?
• 1:46
  SPEAKER_00: And is it ready for the world ahead?
• 1:49
  SPEAKER_00: Please stay tuned for important disclosures at the end of this episode.
• 2:03
  SPEAKER_03: Thank you for having me, Frederick.
• 2:04
  SPEAKER_03: Great to see you thank you.
• 2:05
  SPEAKER_01: And uh, you know, Omran, you spend all your career, most of your career so far really at the intersection of a lot of different areas, energy, geopolitics, investment, technology.
• 2:15
  SPEAKER_01: Uh so it makes it very special to have you uh uh with us.
• 2:19
  SPEAKER_01: And um if I'm correct, you've argued very much that Gulf Security uh primarily should be uh not just understood as a regional issue uh or even as an energy issue, but you I think you you you describe uh the the Gulf Security as a global critical infrastructure issue.
• 2:39
  SPEAKER_01: So could you could you shed more light on this?
• 2:42
  SPEAKER_01: Because given what's happening this week, for example, um energy definitely seems to have become a single global system, or is about to be.
• 2:52
  SPEAKER_01: And and they there can be a lot of changes triggered by this phenomenon.
• 2:56
  SPEAKER_01: So I'd love your uh your view on this to start us.
• 3:01
  SPEAKER_03: Yeah, I think uh well, first of all, great to be here um and really, really looking forward to this conversation.
• 3:08
  SPEAKER_03: Um I think first of all, you um to answer your question, I would say, you know, everyone in energy or in geopolitics assumed we had the global energy system.
• 3:18
  SPEAKER_03: And in some level, we did.
• 3:20
  SPEAKER_03: And uh, you know, the prices are interlinked.
• 3:23
  SPEAKER_03: Uh uh a bad winter in Europe affects prices in Asia, and vice versa.
• 3:28
  SPEAKER_03: Storage levels in Europe affect uh prices in the US and in some areas.
• 3:32
  SPEAKER_03: So, you know, in some ways there are some correlations, but in other ways also the systems were several different systems and several regions are connected in some ways, but not really interconnected.
• 3:45
  SPEAKER_03: And you see that really in this in this uh current crisis where you have uh a lot of uh different systems operating, but are really failing to kind of mitigate some of these uh significant uh uh shocks that are happening.
• 4:01
  SPEAKER_03: And I think, you know, um, and to go back to the first part, yes, but uh I have been writing and advocating that golf security, hormones specifically is really uh a global issue.
• 4:13
  SPEAKER_03: It's it's three things that have changed, uh really, to make that point.
• 4:17
  SPEAKER_03: First of all, uh, who owns the risk, how you price it, and who's sitting at the table?
• 4:22
  SPEAKER_03: I mean, who owns the risk?
• 4:23
  SPEAKER_03: The risk is not just whoever is producing out of the region of hormones, the Gulf producers, et cetera.
• 4:31
  SPEAKER_03: It's the global uh market.
• 4:33
  SPEAKER_03: It's not just the oil and gas markets, also fertilizers, also helium.
• 4:37
  SPEAKER_03: Hospitals can do MRIs, et cetera, et cetera.
• 4:40
  SPEAKER_03: So that risk is everywhere.
• 4:41
  SPEAKER_03: Who prices the risk and how you price it?
• 4:43
  SPEAKER_03: It's not just supply and demand.
• 4:45
  SPEAKER_03: It's about how are you able to get the supply to the demand?
• 4:50
  SPEAKER_03: Uh, how are you able to quantify when this war is going to end?
• 4:54
  SPEAKER_03: And then who sits at the table?
• 4:56
  SPEAKER_03: Again, it's not just people in the region.
• 4:57
  SPEAKER_03: It should be, in theory, everybody in the world.
• 5:00
  SPEAKER_03: It's not just the US or Iran or Qatar or Israel or Saudi.
• 5:04
  SPEAKER_03: It should be China, it should be everyone.
• 5:05
  SPEAKER_03: So, my my my view is that this is a global infrastructure issue.
• 5:10
  SPEAKER_03: Uh, it's not a regional politics issue.
• 5:12
  SPEAKER_03: If it's a regional politics issue, then it's optional.
• 5:15
  SPEAKER_03: You know, people from the region can deal with it.
• 5:17
  SPEAKER_03: If it's a global infrastructure issue, then it should be a design issue that everyone that's a party to it uh should play a role.
• 5:26
  SPEAKER_03: I mean, if you think of the chain, for example, of LNG coming from the north field all the way to, for example, uh Belgium or in Wales, uh, and a household heating up uh their house, or uh fertilizer coming out of Qatar going all the way to Bangladesh and being part of that uh uh that cycle of farming and then affecting food prices, etc.
• 5:51
  SPEAKER_03: etc.
• 5:52
  SPEAKER_03: It's a global issue.
• 5:53
  SPEAKER_03: That's why I was always advocating for this to be a global issue as opposed to just a regional issue.
• 5:58
  SPEAKER_03: Um so that's that's where I would how I would answer that.
• 6:01
  SPEAKER_03: Of course, we we could we can go um and talk about how we got to this point, um, and that's probably a long conversation, but uh I think the more important conversation is what do we do going forward?
• 6:12
  SPEAKER_02: Many of us have become experts at the Straits of Harbor's.
• 6:16
  SPEAKER_02: I I certainly have.
• 6:17
  SPEAKER_02: Yeah, I'm joking.
• 6:19
  SPEAKER_02: Um, but what is the Western press or the narrative getting wrong about that choke point?
• 6:26
  SPEAKER_03: I think choke point is it's it's well, people are getting wrong.
• 6:30
  SPEAKER_03: Um there's several ways to look at it.
• 6:32
  SPEAKER_03: I think what they're getting wrong is that they're looking at it from oh, it's it's um it's a failure uh in security, it's a failure of uh uh you know suppliers not being able to get to the market.
• 6:44
  SPEAKER_03: But actually, it's it's a much it's a failure of the global community uh not really treating uh this this passage as a critical infrastructure for the world.
• 6:55
  SPEAKER_03: And uh, you know, frankly speaking, um the whole world not sharing the risks uh that that from the benefits they've been getting.
• 7:04
  SPEAKER_03: Uh and I think that that's the part they're not looking at.
• 7:07
  SPEAKER_03: It's very easy it's obvious, it's difficult for me.
• 7:09
  SPEAKER_03: I mean, very easy for someone to see like me coming out and saying that.
• 7:12
  SPEAKER_03: Of course, I'm from the region and I'm suffering from this more than others, but uh, frankly speaking, the whole world is suffering, just that sometimes some parts of the West are there's a bit of delay on how um it's affecting the economies, especially in the US.
• 7:28
  SPEAKER_03: But we will unfortunately see as the winter uh comes, and you'll see storage levels uh already being at at very low levels compared to the average in Europe, Asia, you've seen the crops that we missed the window on a lot of these um uh windows for farming.
• 7:46
  SPEAKER_03: I think we will see, unfortunately, that this is a global issue.
• 7:50
  SPEAKER_03: And I think that the narrative, again, is that it's a regional crisis, there's a lot of tension in that area, and therefore, you know, we need to diversify.
• 7:58
  SPEAKER_03: Actually, no, um, we need to make sure that there's a comprehensive global uh way of dealing with this uh and other uh potential areas going forward, and everyone needs to be at the table.
• 8:09
  SPEAKER_02: Is this another failure of the post-World War II global security and governance architecture, in your view?
• 8:18
  SPEAKER_03: I think it could be, but also it could be um, you know, I think I think the energy uh supply subsystem has evolved very rapidly in the last 30 years.
• 8:29
  SPEAKER_03: And every time, for example, oil came up, came on, and then we had 1973 um shock, and then the IEA came together and created uh strategic stocks to fix that.
• 8:41
  SPEAKER_03: You know, then uh gas came on and it was very stable for a long time.
• 8:45
  SPEAKER_03: People built pipelines because they thought pipelines were very stable and they connected to two different uh you know potential areas and countries and therefore would create stability.
• 8:54
  SPEAKER_03: Then LNG came on, costs came down, and uh and then the shale shale wave came on and and created more supply.
• 9:02
  SPEAKER_03: So there was really everything was just you know building, building.
• 9:06
  SPEAKER_03: Uh and and from an oil standpoint, that shock came, and they then a lot of uh things came out of it.
• 9:12
  SPEAKER_03: The Japanese uh storage system, the IEA, and so on to deal with that.
• 9:16
  SPEAKER_03: LNG came.
• 9:17
  SPEAKER_03: We haven't had that shock.
• 9:19
  SPEAKER_03: Uh gas pipeline shock came in the Russian crisis, and of course, people now try and deal with that, but LNG, we haven't had that shock, and maybe now there'll be some sort of of response.
• 9:29
  SPEAKER_03: Um and we have models of that.
• 9:31
  SPEAKER_03: And I think you know, with national storage rules and regional institutions and so on.
• 9:35
  SPEAKER_03: So I think it's it's it's a little bit of the the fragmented energy system uh and the way energy has evolved, electrification and AI and the fact that electrification will be vulnerable to cyber attacks, there will be another shock there.
• 9:49
  SPEAKER_03: So I think it's a it's a it's a combination of the energy system evolving so rapidly that the systems and institutions and the global kind of governance mechanism hasn't caught on.
• 10:00
  SPEAKER_01: Is this is this Oman what you you you've been describing as the connected framework, the idea that institutions so far, you know, were organized in a in a in a very um uh let's say uh horizontal um um manner, you know, you had you had security, you had finance, you had defense, you have trade, you had agriculture, you know, but they were all separate domains in a way.
• 10:26
  SPEAKER_01: And now with that risk coming on onto you know the the fore, they have to be much more uh uh they have to adapt in a way.
• 10:34
  SPEAKER_01: So do we have institutions that are organized with the wrong unit of analysis in a way?
• 10:40
  SPEAKER_03: Um I think I I think in a way, uh look, you could say like you know, we have the IMO that can handle maritime problem, you have the IAEA that can handle proliferation problems, you have uh and gas gas plants being attacked, so et cetera.
• 10:56
  SPEAKER_03: You have different and uh you have different mechanisms at work.
• 11:00
  SPEAKER_03: Um the so I think the the vulnerabilities aren't necessarily that these systems are working.
• 11:06
  SPEAKER_03: The vulnerabilities is the gaps in between them.
• 11:09
  SPEAKER_03: And you have to find a way to interconnect with them.
• 11:12
  SPEAKER_03: I mean, you could have interdependence, which is excellent generally to create uh security of supply and economic value, but you also need redundancy behind that.
• 11:21
  SPEAKER_03: If you have interdependency without the redundancy, it's very is very difficult.
• 11:26
  SPEAKER_03: Uh to and I think that's where resilience is.
• 11:28
  SPEAKER_03: And I think that's what um having to figure out how to price that and who pays for it and how to govern it.
• 11:34
  SPEAKER_03: This is where we're the world's gonna have to go to one way or another, because the lack not doing that will just we'll just continue the same uh crisis over and over again.
• 11:43
  SPEAKER_03: You'll see the same volatility until those gaps are addressed, those schemes are addressed, some sort of redundancy is built across the system, whether it's in the upstream, in the downstream, in the storage.
• 11:54
  SPEAKER_03: Uh, and I think the oil market's pretty good that you've seen how been able to adapt.
• 11:58
  SPEAKER_03: I think the other energy systems around that, especially the ones of the future, will have to do the same.
• 12:04
  SPEAKER_03: Um, and unfortunately, maybe even civilian infrastructure and things like that that are that are connected to energy.
• 12:10
  SPEAKER_03: It seems like uh that's something that we haven't even contemplated before, but it's unfortunately on the table now.
• 12:17
  SPEAKER_02: Well, when we think of sort of systems thinking, um sort of it's interesting as I hear you you write and speak about the paradox of interconnectedness, sort of the root cause of root causes there is no root.
• 12:30
  SPEAKER_02: It's a bunch of interconnected entanglements, whether it's security architecture, energy architecture.
• 12:38
  SPEAKER_02: Um is that a way to think about it that we're more entangled in a bunch of systems that don't speak to each other, but leads to you know food shortages and high gas bills and you know difficult um periods of time for many economies, particularly the economies that import their energy from the US or from the GCC.
• 13:00
  SPEAKER_03: Yeah, I think that's a it's a good way to look at it.
• 13:02
  SPEAKER_03: And I think that the question that leads to is who pays for this redundancy and how do you how do you price it?
• 13:08
  SPEAKER_03: Um and uh what we're seeing is not pricing it, uh not paying for it is has a huge cost.
• 13:16
  SPEAKER_03: Um you know, you see the the fortunate uh uh plant LNG plants being uh hit in Attar.
• 13:23
  SPEAKER_03: That's of course a cost for Atar, but it's a cost to a lot of consumers and a lot of traders, and a lot people make money on the on the on you know here and there and uh um opportunistically, but at the end of the day, that's a lot of supply that's not going to markets that need it, whether it's for power production or for industrial use, that needs to be priced in.
• 13:41
  SPEAKER_03: That's a global pricing that needs to be, needs to find its way through the through the system.
• 13:46
  SPEAKER_03: So I think the way you framed it is correct, but I think that the issue that we're gonna eventually get to is how do you price it?
• 13:52
  SPEAKER_03: How do you uh give economic value to it, and how do you make sure it's it's done in a in a way that makes sense and that provides redundancy and resilience to the entire system.
• 14:03
  SPEAKER_03: And that will take some time because it's a very different approach than how we're seeing things now.
• 14:07
  SPEAKER_03: It's project-based, it's supplier-based, demand-based.
• 14:10
  SPEAKER_03: It's not everyone's looking at things from silos.
• 14:12
  SPEAKER_03: That's not gonna work in this in this um much more volatile uh uh world where everything everything is affected by by things that happen across the world.
• 14:22
  SPEAKER_02: You're speaking our language about silos versus and I think we very much want to have a systems conversation today.
• 14:28
  SPEAKER_02: Sorry, go ahead, Frank.
• 14:29
  SPEAKER_01: No, I was just gonna continue that thought with uh you introduced the concept of permacrisis.
• 14:35
  SPEAKER_01: And I I'd I'd love you to sort of describe what you meant by the fact that we are in a permacrisis environment now, um, and whether that means everyone has to adapt to it.
• 14:46
  SPEAKER_03: Yeah.
• 14:48
  SPEAKER_03: I think uh look, we've always had like shocks, right, in energy systems at least with 73, 79, uh, 2022, 2026.
• 14:58
  SPEAKER_03: So like these shocks always happen.
• 14:59
  SPEAKER_03: I think what's different this time is this shock uh is truly global, right?
• 15:04
  SPEAKER_03: It's one specific.
• 15:06
  SPEAKER_03: Of course, it's compounded by what's happening in other parts of the world, like like in Nino now and Russia, but really it's one specific shock.
• 15:14
  SPEAKER_03: And I think the problem is it's not just um it's not a new kind of mood or you know, like thing that's happening.
• 15:21
  SPEAKER_03: It's the architecture that exists, right?
• 15:24
  SPEAKER_03: Uh we don't have buffers, we talked about siloed governance, uh, the architecture doesn't exist.
• 15:29
  SPEAKER_03: So we've almost designed an architecture that it's gonna continue the uh perma crisis.
• 15:34
  SPEAKER_03: Um so that's how that's that's how I've looked at it.
• 15:37
  SPEAKER_03: And um, and I've seen you also use this term and now uh it caught my attention because when I wrote about it, I hadn't I hadn't heard you say it.
• 15:46
  SPEAKER_03: So I'll you also speak my language.
• 15:48
  SPEAKER_03: Yes.
• 15:49
  SPEAKER_02: Yeah.
• 15:50
  SPEAKER_02: I think one of the things that um this sort of crisis has revealed is obviously been very painful, but I've heard it could have been a lot more painful had China not played the role that it's played.
• 16:03
  SPEAKER_02: What has China's role been?
• 16:06
  SPEAKER_02: Um, I know that in the oil markets they have not, you know, sort of bought as much as perhaps um forecasted or thought of.
• 16:15
  SPEAKER_02: How do you see China you know playing a role?
• 16:18
  SPEAKER_02: And if they do need to start buying and and building up more supply, do you think the price shocks get worse?
• 16:26
  SPEAKER_03: I think that that has been probably the most surprising uh element within the energy kind of uh discourse is how China has been able to withstand uh this crisis and also in a way, in a way, play a positive role in stabilizing prices.
• 16:44
  SPEAKER_03: And you know, the common view is that they've just been able to store a lot more than they've they've said.
• 16:49
  SPEAKER_03: They're renewable energy um kind of uh production and and and and capabilities are a lot more than than many expected.
• 16:58
  SPEAKER_03: Uh, and they have you know immense nuclear and a huge amount of coal.
• 17:02
  SPEAKER_03: So I think you know that the fact that they have all of the above approach and they've been doing it aggressively, and frankly speaking, they don't they have to to publish anything, uh allows them a lot of flexibility, but also I think um is an interesting uh uh lesson, I think, for for many following China.
• 17:20
  SPEAKER_03: I think China has been able to withstand this, and it's probably been a um stabilizing force if you look at it really from uh from a uh pricing perspective and from stability.
• 17:31
  SPEAKER_03: Now going forward is the question, right?
• 17:33
  SPEAKER_03: Uh who knows how long this can continue, and who knows how things things can change, and and uh you know we've seen politically now China uh wanting to potentially get more involved.
• 17:44
  SPEAKER_03: Um and when I first wrote about uh this crisis in April, March, and April and May, I advocated for everyone to be in the table, not just not just you know uh the ones that are directly involved, because I think it is a global crisis.
• 18:00
  SPEAKER_03: And if you think uh more than half of the energy coming out of the straits goes to China.
• 18:05
  SPEAKER_03: So they have uh a direct interest, and of course, um they have their relationship with Russia and Iran.
• 18:12
  SPEAKER_03: So they're gonna have to play a role one way or another politically for this uh to be a global solution eventually.
• 18:19
  SPEAKER_03: Um so you know they they they've they've obviously have done a very good job in planning for something like this.
• 18:26
  SPEAKER_03: Uh now the question is how long can this go for?
• 18:29
  SPEAKER_03: What will happen as winter winter uh gets closer?
• 18:33
  SPEAKER_03: Um and and and you know knock-on effects on that are hard, hard to know.
• 18:37
  SPEAKER_03: But uh it's amazing how you could talk to three experts and they'll give you three different opinions on this.
• 18:43
  SPEAKER_02: Maybe five.
• 18:44
  SPEAKER_03: Yeah.
• 18:44
  SPEAKER_03: But what but I think what has happened so far is is is is uh hard to debate, is that they've they've definitely um surprised the global market with their ability to withstand such a shock.
• 18:57
  SPEAKER_02: But you're you you kind of seem to agree with the notion that I've heard is if they went to mean reversion behavior on the demand side, like we would be in a much worse crisis.
• 19:08
  SPEAKER_03: Yeah, most likely, yes, absolutely.
• 19:10
  SPEAKER_03: I mean, just the numbers.
• 19:11
  SPEAKER_03: I mean, just look at numbers.
• 19:12
  SPEAKER_03: If you if you if if one would think they'd have to replace those volumes that they've been importing from the region that no longer are able to come out, then the knock-on effects would be substantial.
• 19:22
  SPEAKER_03: But that you know, that's not what happened.
• 19:24
  SPEAKER_03: So so yes, I mean I think that's that's fair to say.
• 19:28
  SPEAKER_02: I'd love to move the conversation to one of my favorite topics, which is the price of natural gas.
• 19:34
  SPEAKER_02: Um, since Russia made Ukraine, I feel like it's been the linchpin of our it's been for me anyway, the linchpin of a strategy of before the IRA, before any of of this work was, you know, when natural gas spiked post-Russia-Ukraine, at least from the US context, it was sort of it went parabolic a little bit for a little while, and even the urea nitrogen complex went up from I think 40 cents to$1.20.
• 20:01
  SPEAKER_02: It impacted obviously power markets, but agriculture markets, etc.
• 20:05
  SPEAKER_02: etc.
• 20:05
  SPEAKER_02: And then we had mean reversion pretty soon after.
• 20:09
  SPEAKER_02: And um, but what one of the things that is intriguing that I've heard is this potential for natural gas to go from a local regional price commodity to more global, and this notion that TTF in Europe potentially gets closer to Henry Hub and converges.
• 20:26
  SPEAKER_02: Where do you sit on all that?
• 20:27
  SPEAKER_02: I'm sure if you ask three experts, they'll have several different opinions on this topic.
• 20:30
  SPEAKER_02: But I'm curious whether you see the globalization of natural gas pricing occur similar to oil.
• 20:37
  SPEAKER_03: I mean, I think uh I actually missed the days in 1999 when I started working in gas, how things were so simple, easy to understand.
• 20:46
  SPEAKER_03: You know, gas was seen as a boring, steady commodity or or commodity type thing that you just, you know, you just but now it's become such a volatile yet important piece of our energy system.
• 20:58
  SPEAKER_03: And so it's so I I look it's very hard to predict prices, but I think what you can see obviously is this huge uh correlation between Asia and Europe that that really didn't exist before.
• 21:10
  SPEAKER_03: And then you see this huge difference between US and Europe, which is you know spreads of six, seven, nine times, which is very hard to to to um to have predicted.
• 21:20
  SPEAKER_03: Um so I think you know you they would just connect they have two connected markets basically now with a very expensive bridge.
• 21:28
  SPEAKER_03: Um and eventually that that bridge will you know will not will not continue as is.
• 21:33
  SPEAKER_03: Um but as as the US uh you know before this crisis, there was going to be a lot more supply coming into the market, and that probably is still gonna happen, a bit of delay.
• 21:44
  SPEAKER_03: But I think as that comes, um you'll see you'll see things converging a bit more than they are now.
• 21:50
  SPEAKER_03: That this this this kind of big gap is not sustainable.
• 21:54
  SPEAKER_03: And also another thing that's not maybe in the immediate but longer term is is the question of AI demand.
• 22:01
  SPEAKER_02: And if a lot of L We gotta talk about AI, it's been it's been 20 minutes.
• 22:05
  SPEAKER_02: I know something's wrong.
• 22:07
  SPEAKER_02: Yeah.
• 22:07
  SPEAKER_03: And if LNG gets, you know, US LNG gets pulled out of the US for for for you know to meet demand globally, that's gas that's not staying in the US and and gas is already uh you know having a difficult time to get to where it needs super data centers.
• 22:22
  SPEAKER_03: So this could all affect pricing and can can can get that gap closer.
• 22:27
  SPEAKER_02: Now one of the things that I'm curious about in the US is is it easier going to permit gas to LNG from a pipeline perspective or gas pipelines to AI data centers?
• 22:40
  SPEAKER_02: And I have a bet I'll make it here that it's going to be the social license of permitting gas to LNG is going to be easier than the social license of permitting gas to data centers.
• 22:51
  SPEAKER_03: Yeah.
• 22:51
  SPEAKER_03: And what does that mean for the LNG market and the AI global AI development of global AI?
• 22:58
  SPEAKER_03: It's a very interesting issue and I think it hasn't really been it's been it's been kind of um kind of very mentioned very kind of low grade.
• 23:08
  SPEAKER_03: Of course not in my backyard type data center discussions and delays is there but now you're seeing this this LNG discussion around that.
• 23:15
  SPEAKER_01: It could be interesting to see how how both of them eventually um uh get discussed uh alongside each other but yeah it's a very very uh important topic and I think it's this it's this strange issue where the US is becoming the by far the global leader in AI data center development and has excess gas but some reason can't get can get to it and what does that mean um for for for other regions but that's that's that's going to be an important uh topic I think politically also can I can I ask you what we have you on uh I'd be remiss if we don't talk about Qatar um um and the situation there given of course there's been some consequences of the latest uh hit um you know that have affected natural gas production and and um with the winter coming of course um and the demands that are gonna increase and it's not just demand for oil based it's demand for natural gas what how what are the consequences for Qatar so far um the economy of Qatar and um what do you think are the sort of two or three big main items that are on the on the desk of everyone in Doha at the moment to to try to to make progress well I think I mean just just just to be very clear I'm not in government or I'm not uh I don't work for any uh um energy Qatari energy institutions I worked before um but I can tell you like you know there are two sides to it um you've seen the FT uh you may have seen FT and other kind of um uh stories around the economic impact on Qatar I mean interestingly Qatar is probably the the one that's impacted the most in terms of uh you know inability to get supply out of the region no other you have some you have a pipeline you have some some things that can come out through land but uh essentially a huge large percentage of our country's revenues through LNG and not being able to export that's gonna have a huge impact on the on the on on the GDP and the economy.
• 25:20
  SPEAKER_03: So that that has been significant.
• 25:21
  SPEAKER_03: On the flip side is country is incredibly resilient.
• 25:25
  SPEAKER_03: You know Qatar has been through a blockade it's been through covert like everybody else has been through a huge infrastructure development in the World Cup.
• 25:37
  SPEAKER_03: And that that kind of those those that RDNA resilience being able to adjust uh is kind of part of the the way Qatar operates and we've seen this uh going very resilient the economy is still moving uh um you can go there and there's 95% uh airport traffic is back almost back to normal if not 100% now people are coming in and out even at at the the peak of the war uh and plans are still going I mean the the the trains that were hit construction uh is is back on um from what I can read is a lot a lot of the this time is taken uh is being taken advantage of for um up uh upgrading systems for uh debottlenecking and things like that so um there's no sense of this is a catastrophe even though um the the short-term impact is significant having said that you know the LNG market gas demand um is not gonna go anywhere we talked about ai we talked about um uh energy transition you know the the demand for LNG is not uh is not going to change anytime soon so I think um you know there there is a difficulty uh for everyone in the region but I think it's also a uh positive story on on resilience and being able to withstand such a shock and to think further ahead what does this mean post uh post crisis and how do we uh you've seen the news maybe last few days that Qatar is buying US LNG or acquiring US LNG for Asian customers to me that just shows um the maturity of Autar looking at it from a portfolio approach caring about their customers the value of long-term contracts uh and how you know you do whatever you can to mitigate that uh Ottar has a significant exporting facility in in in the US it has a largest LNG terminal in the UK it has a global portfolio and now with this crisis it's going to be able to think things even even more strategically I believe and put it even in a better position going forward once we get through this this this tough phase.
• 27:48
  SPEAKER_01: And you might be a bit biased but I I just in the same time it's interesting because you've you've also written very recently a a roadmap for example on on the Qatar UK uh solutions and and uh and in a really outlining the realistic manner in which uh both countries should handle it which I think is is is is some nice fresh air to have in the debate rather than being catastrophic.
• 28:16
  SPEAKER_02: Absolutely and I think Europe has a huge um I think opportunity to be honest with you uh to play a role here to leverage their infrastructure to to take advantage of the very deep connections it has with the Gulf to use this opportunity to build more resilience between two two the two uh regions um you know and that was just an example of that um and I think there's there's quite a few other examples around Europe around that I mean of course Russia was a hit but that should also be a um uh kind of a um a wake up call to to be creative and to look at who are your your allies around the world where where can you import energy in in a in a way that's in line with transition um that's reasonable economical um what infrastructure do you have what old um you know um salt caverns can you utilize what uh all the so many so many opportunities uh what even capital right for for the the the nuclear renaissance and small module reactors and etc etc so uh that for me was a low-hanging fruit you have the infrastructure sitting here you need a strategic storage for winter you can come up with a framework that allows that allows for the risks to be shared and for upside to be shared and why not uh think outside the box uh and and be creative so that that was what that was the that was the angle I was taking do you think um what if this like five years from now assuming there's a new normal and equilibrium what what if this crisis has been will be cyclical and what will be structural in terms of energy markets or I think I think yeah I think that that's a very good question.
• 30:02
  SPEAKER_03: I think more important I think is is how do we well as important maybe is how do we make sure this we manage volatility and I think it's gonna be answering both of those parts a little bit.
• 30:16
  SPEAKER_03: I think going up the chain uh looking at where are the the areas where you can have redundancy where you can have coordination layers whether it's in storage or in shipping or in geopolitical relationships and and strategic uh swaps where needed um you know even if it's bilateral as well as global I think as many of those resilience kind of uh mechanisms in place those will will will mitigate some of the shocks cyclical will happen you know you have climate change you have uh unfortunately uh more and more geopolitical uh um kind of fragmentation and and alliances being questioned so you'll have these but at least you could you could have enough um kind of new systems and new ways of of of of of uh coordinating and throughout the chain whether it's uh through investments and through um uh technology or through agreements that will hopefully manage the volatility a bit more and I think you you will have natural blocks that will deal with each other you will have natural allies you'll have um that will emerge more and more um and everyone will just have to create additional layers to the global energy infrastructure uh that will make this system hopefully more resilient and and and kind of if we have a crisis will be managed a bit more I mean it's pretty crazy that you have you have more governance and more kind of redundancy in there in the small regional airports than you do in the Straits today, right?
• 31:48
  SPEAKER_03: Just to take us think about it that way.
• 31:51
  SPEAKER_03: I think last week there was um there was a cyber attack in the UK and there was this huge issue within a few hours it was all back in place because you have all these systems.
• 31:59
  SPEAKER_03: It's been 199 days who's counting but in hormones and there's no there's no there's no fallback plans there's no systems there's no okay this happens this is what some you know some some trigger nothing it's just we're just waiting here and blockading a blockade and another blockade and it's just so I think um it's pretty it's pretty it's pretty uh remarkable when you think about it but that's a long way of answering your question I think it's a bit uh bit of everything unfortunately uh but you have to start somewhere and you have to take advantage of this of this of this crisis to build better systems and you have to start at where it makes sense and then build a in addition to that in parallel um some sort of global architecture that takes advantage of the systems you have now what does that look like is when we think of energy transition we define it as a 10,000 year phenomenon of taking useful energy and turning into useful material.
• 32:56
  SPEAKER_02: So you had fire, photosynthesis, fossil fuels is the solution to redundancy resilience just an all the above approach?
• 33:03
  SPEAKER_03: Yeah I mean exactly I mean people think of any transition as you go from you know like you said wood to oil whatever and it's actually not like that you stack things up and you by stacking things up yes you you transition eventually but that gives you just makes the system a bit more complex and and different and and we just have to have the systems and the uh uh kind of the governance that takes that in consideration but also the the the the the kind of more complicated global um breakdown of the post-world war two kind of global system that's happening um and I think that's that's what's missing so transition we've only been thinking about it from the energy source but we should think about it more from the fact that that we're we're in a new world that that we don't know how where it's gonna go and what we do know is it's gonna be more volatile and more fragmented and we need to build systems around that transition too.
• 33:58
  SPEAKER_03: How I don't know I think I know what we need to do in the short term and I think but we we know the variables and we know what you know we we know where some some some things we have to consider and then start working on it.
• 34:11
  SPEAKER_03: But definitely we can't just hope it's gonna happen by itself.
• 34:14
  SPEAKER_01: Well thank you so much Amran I think we'll we'll need to check in with you every every week if you uh if we got a good time that was a really rich discussion I really enjoyed it and I I I greatly appreciate you taking the time to do this.
• 34:29
  SPEAKER_00: My pleasure thank you so much thank you very much on my day bye bye thank you you too thank you for tuning in to the S2G podcast if you enjoyed this episode please subscribe leave us a review or share it with a friend.
• 34:40
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• 35:19
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