2016 marked 20 years of BP’s successful partnership with Georgia, elevating the country’s role in the global economy and helping its economy and civil society. (We should note that BP has been instrumental in the creation of ISET. It was a key member of the initial donor consortium behind ISET with a core contribution of more than $2.3mln.) To celebrate this remarkable milestone, ISET hosted Mr. Chris Schlueter, Head of BP’s Georgian Section. Mr. Schlueter’s presentation started with two videos featuring BP’s 2015 Energy Outlook and comments by Spencer Dale, the company’s Chief Economist, which shed light on global energy production and consumption patterns, the increasing role of renewables, as well as current and future energy price dynamics.

Mr. Schlueter explained that the world oil market is saturated. Not only does supply exceed demands, but storage facilities are also full to the brim. This suggests that oil prices will not recover any time soon. On the one hand, low oil prices hurt high-cost oil producers in the US, bringing many projects to a halt, and reducing supply in the medium term. Unfortunately, cheap oil also hurts efforts to curb consumption of carbon energy and reduces the amount of funding available for research into low emission and energy-efficient technologies and renewables.

In his talk, Mr. Schlueter reviewed Georgia’s energy transit infrastructure as well as plans for its future development. Existing transportation infrastructure includes the South Caucasus Pipeline (also known as Baku–Tbilisi–Erzurum or BTE pipeline) and Baku-Tbilisi-Ceyhan pipeline transporting gas and oil, respectively, from the Caspian basin to Turkey and from there to the global markets. A major upgrading of the gas transport infrastructure – the South Caucasus Pipeline Extension (SCPX) – is currently implemented by BP. Of SCPX’s total budget of $2bln, roughly $400mln will be spent in Georgia, representing the single largest foreign direct investment (FDI) in the Georgian economy. The so-called Southern Gas Corridor initiative, of which SCPX is a part, will play a major role in ensuring Georgia’s energy security.