Transboundary pipeline

development and risk

mitigation
William E Browning
Infrastructure Development Partnership LLP
Thomas J Dimitroff
Oil and Gas Consultant

1. Introduction
Dislocations in global supply and demand for oil and gas are becoming
increasingly marked. In the first quarter of 2007, the three largest consuming
markets (North America, Europe and Asia-Pacific) accounted for consumption of
64% of all oil and gas while, possessing only 11% of global reserves.2 The IEA
estimates that the world is likely to continue its heavy reliance upon
hydrocarbons over the coming decades and that the aforementioned dislocations
are likely to grow more acute, notwithstanding recent price retreats.3 With
remaining lower-cost hydrocarbon reserves increasingly concentrated in the
Middle East, the Former Soviet Union (FSU) and the Arctic Region, the distances
from producing fields to markets will increase, thereby requiring the construction
and operation of additional oil and gas pipelines from source to markets including
export terminal facilities for storage, loading and onward shipment via oil and
liquefied natural gas (LNG) tankers. According to the 2008 International Pipeline
Construction Report of the Oil & Gas Journal, 77,314 miles of oil and gas
pipelines are now either on planning and negotiation tables or under
construction. (Much of the interest in beginning long-planned projects is
expected to be driven by higher energy prices, growing energy consumption in
developing nations and the strong outlook for LNGs role in developing gas
markets.) Significantly, as distances from producing fields to consuming markets
increase, so will the frequency with which large-scale pipeline developments
straddle international boundaries.
Following the nationalisations and subsequent oil price shocks of the 1970s,
many large private-sector oil and gas companies were forced to diversify their search
for reserves away from OPEC countries and towards newer locations. Concurrently,
the Former Soviet Union began to diversify its oil and natural gas production and
delivery away from exclusively internal use and towards export options, initially

1 Transboundary is intended to include the international law concept of transit and transit pipelines (ie,
the transportation of energy products and materials from one state through the territory of a second (or
multiple states) for onward delivery to another state for consumption or further refinement).
2 See BP Statistical Review of World Energy 2008.
3 See International Energy Agency World Energy Outlook 2009.

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