Any reading of the history of transit oil and gas pipelines suggests a tendency to produce conflict and disagreement, often resulting in the cessation of throughput, sometimes for a short period and sometimes for longer. It is tempting to attribute this to bad political relations between neighbours. This is certainly part of the story, but also important is the nature of the 'transit terms' - tariffs and offtake terms - whereby transit countries are rewarded for allowing transit. Put simply, the trouble with transit pipelines has a significant economic basis.
This report addresses three key questions:
- Why will oil and gas transit pipelines become more important to global energy markets in the future?
- Why has the history of such pipelines been littered with conflict between the various parties?
- What might be done to improve this record in the future and make transit pipelines less troublesome?