SBI Markets CEO: Azerbaijan is a significant player in global energy transit market – INTERVIEW
Baku, June 11, AZERTAC
The Azerbaijan State News Agency (AZERTAC) presents an exclusive interview with Sam Barden, founder and CEO of SBI Markets, an international trading and management consultancy.
- You have been analyzing the dynamics of energy markets for many years. What transformation do you consider the most significant in the last 10 years?
- The most significant transformation has been the rise of the US shale industry, driven by technology advances. This has made the USA a net oil exporter and in the top three oil producers in the world, alongside Saudi Arabia and Russia. This is changing the oil dynamics and control of oil markets away from OPEC, as neither USA or Russia are OPEC members. This in turn has changes the political dynamics of the global oil markets, and underscores why President Trump is close to both Saudi Arabia and Russia.
- Which direction do you think the global energy market is heading after the 2022 energy shock?
- I think global energy markets will head towards a more coordinated diplomatic and political focus in order to remove future risks of price shocks driven by war. This is largely been led by BRICS and the Global South, as emerging economies are coming together and focusing on technology rather than ideology, and respecting each other’s Sovereignty and Nationality underwrites by Peace through Trade. This is a fundamental shift from the last 80 years of post-World War II of U.S. unilateralism to global multilateralism.
- How do you assess the prospects for oil and gas in the context of the transition to "green energy"? Is this a shift or a strategic correction?
- I think the heat and pace of transition to green energy has largely stopped. Green washing, exporting of emissions by developed countries and continually high prices of "Green Energy", and endemic corruption in structured markets in relation to Renewable Energy Developments (I experienced this directly in the Australian Renewable Sector) has put oil and gas back in focus. Also, let’s not forget we use 100 million barrels of oil per day, and renewables is not replacing this, ever. We need to focus on energy efficiency, or Least Energy Cost, as first envisioned by Chris Cook, former Director of the International Petroleum Exchange in London.
Least energy cost refers to least energy usage or input per output of production. This relies heavily on political cooperation, something the BRICS and Global South have a chance of achieving. Oil and Gas is an integral part of the Global economy, and will remain so for at least the next 150 years.
-How equitably are energy flows distributed in the world? Who benefits and who loses from the current market architecture?
- As noted above, the global architecture is changing, driven by multilateralism through BRICS and the Global South. This will mean a more even distribution of energy, and a more transparent price discovery mechanism in global markets. China has a big role to play here and is playing this through BRICS and new pricing platforms in Shanghai. Neo Cons are the big losers.
- What is your attitude to the idea of de-dollarization of commodity trade? How realistic is it and what is behind it?
- The USD is not going away, and the world is not de-dollarizing any time soon. However, multilateral frameworks will mean the dollar will be, and is, being de-weaponized, meaning the US government will no longer be able to us sanctions as a political and economic tool against other nations. We are already seeing this is not working against Iran and Russia, and is just distorting price discovery of base assets and driving trade offshore and underground. Its inefficient, and de-weaponizing the USD is in the interest of the USA, as it seeks huge in bound investment as part of MAGA (Make America Great Again).
- Can we talk about the formation of "energy alliances" outside the traditional OPEC and G7 formats?
- OPEC is largely a last century organization. Two of the top 3 oil producers are not in OPEC. Real supply and demand are being driven by emerging economies of the Global South, BRICS, and the multi-lateral frameworks. Energy Alliances are being made along the lines of transparency and direct settlement between nations.
- How do you assess the role of Azerbaijan as a transit and energy country? How important is it for Europe in the context of energy rethinking?
- Azerbaijan is a significant player in the global energy transit market, particularly for natural gas, due to its substantial oil and gas reserves and its strategic location. It acts as a vital link in the Southern Gas Corridor, a project designed to bring Caspian gas to Europe, and is increasingly exporting gas to European countries. Europe will seek to pursue good relations with Azerbaijan, particularly in the context of the Russian Ukraine War, where Europe has taken an anti-Russian stance, and therefore not having open and transparent trade with Russia's energy sector, to the detriment of Europe.
- Azerbaijan is investing in renewable energy, including "green zones" in Karabakh. Can the country become a leader in this segment at the regional level?
- There is no reason why not, however, oil and gas will always be far more important to Azerbaijan then green energy ever will.
- What do you think is behind the increased attention to the Trans-Caspian Corridor (Middle corridor)? Is there a chance that it will become a sustainable alternative to the northern and southern routes?
- The Middle corridor is essentially in place to drive trade between China and Europe. It is a good hedge against potential political disruptions, particularly with Russia and Europe. I don’t think it will be a sustainable alternative to the northern and southern routes, but it may be a "troika" member with the north and south. This approach is in line with BRICS methodology, which China is a prime mover of.
- What is the role of China and Iran in the future infrastructure and energy architecture of the South Caucasus?
- Huge. Russia will also play a constructive role in this. Iran is the global sleeping giant, whose markets hold un-tapped resources, critical minerals and geographic location to link nations. Watch this space.
Other news in this section
