Supply and demand (background and statistics)

In order to understand the politics in the energy sector, we need to understand the infrastructure and the numbers that back up the politics. According o Keppler, Europe has a great geopolitical advantage when it comes to securing energy supplies – Europe is within the “pipeline distance” (3000 km or less) of two thirds of global gas reserves. The other advantageous thing about Europe is that the consumers are relatively energy efficient (most of them). Europe is the global leader in reducing greenhouse gas emissions, an effort that also reduces hydrocarbon dependence. Several European companies such as BP, Shell or Total are amongst the world leaders in the exploitation of hydrocarbons. According to the researcher in the energy security policy Michael A. Toman, energy security is fundamentally an international problem that transcends any one country’s supply picture or policy measures; effective measures to countervail energy disturbances may require significant international cooperation. The proposal of Budrys is to use the geopolitical approach to the problem of energy security. Energy security becomes energy geopolitics, or geoenergetics. Geoenergetics is one of the aspects producing the strongest correlation between geography and economics, which shows how the unequal distribution of natural resources on the Globe brings geoeconomic advantage and power to specific areas. Geoenergetics may also be used to define energy policy as the use of energy systems to achieve desired goals. Actors which implement such a policy are geoenergetic actors.

According to Budrys, based on the dependence of political formations geoenergetic zones can be classified in the following manner: producers, transporters and processors, and third, consumers. Identification of the types of actors in the entire geoenergetic scheme allows for the determination of the trend, nature and strength of their interdependence. The first type, the producers, are countries where energy sector has a predominant position in the economy, they seek for the development of relations with consumer states in search for the new markets. 

These states are usually in the periphery of the geoeconomic zone, they are technically less advanced, have cheap labour force and their economy is closely connected to energy resources. Examples of such states include Russia, the Caspian Sea Basin, Western and North Africa, the Caribbean Sea basin, the Persian Gulf. 
Transportation and processing zone is the one that includes countries from Central and Eastern Europe and South Asia. These are countries that import energy from production zones. Most of them have high energy intensity and comparatively lower energy efficiency. Some of them have vast transportation networks (like Ukraine of Belarus). In economic terms these countries still have cheaper, yet qualified work force and competitive economies. The core consumption zones are the Western Europe, North America, Japan and South Korea. These are states of highly qualified labour force, producing high quality end products and holding advanced technologies. 
Tomas Janeliunas and Arunas Molis offer a grouping of the countries based on their perception of energy security and specific interests. These groups are formed in respect to demand and access to energy sources:

1. Industrialized states, net importers of energy (e.g. USA, Germany, Japan). The gap between domestic energy supply and demand is increasing, and the demand growth rate is lower than the estimated world annual average of 1.7% till 2030. The domestic energy infrastructure of these countries is pretty well developed; priority is given to the introduction of new technologies to reduce dependence on energy imports.

2. Exporters (e.g., Saudi Arabia, Norway). Countries in this sector can differ greatly from each other in energy consumption, but they have sufficient resources. It is often the case that energy export infrastructure requires development and economy is depending on global energy prices. The main priorities are diversification of energy exports markets, ensuring capital and investment in the infrastructure, and for some nations – meeting the needs of the population, creating active demand for the energy sector‘s services. 

3. Largest emerging markets with a fast-growing energy demand (e.g., China, India, Mexico). There is a sweeping growth of domestic energy infrastructure, although it is still underdeveloped (e.g. 57% of the population in India and 34% in South Africa do not have electricity). Energy prices have a fairly great influence on the economy. The main priorities are to reduce dependence on energy imports and meet the needs of the population.

4. Net importers of energy with medium incomes (GDP per capita). The demand growth rate in these countries is higher than the world's estimated annual average, the energy infrastructure is still underdeveloped in some areas (over 10% of the population do not have electricity). Main priority is meeting the growing demand for imported energy.

5. Net importers of energy with low incomes (GDP per capita below $826). The energy infrastructure is poorly developed; about 30 % of population does not have electricity. Priority – meeting growing demand and ensure investments in infrastructure and field development. When we are talking about energy security of the European countries and Lithuania, it is very important to understand that even though all countries face certain threats they are not equal. The threat that interests us is the one arising from the EU – Russia relations; in particular from the ability to ensure a secure and stable supply of natural energy resources. There are countries that have more alternatives than others when dealing with the diversification of energy supplies. In the article published by the European Investment Bank, Atanas Kolev and Armin Riess classifies countries into three groups according to dependence on the raw material imports.