Evaluation of political risk factors influencing energy supply disruption

Abstract

High dependence on imported energy supply makes a country vulnerable to risks of supply disruption. Disruptions can be in the form of government policies, external conflicts, and natural calamities. Several indicators quantifying the probability of supply disruption were proposed in past studies based on a defined set of criteria. However, factors influencing the behavior of energy exports vary per country. In this study, 12 political risk components were investigated and correlated with historical oil-export data to assess the main drivers dictating export behavior. A case study was conducted on Philippine crude oil suppliers from 2001 to 2015, and three countries were elaborated for further discussion. Results showed that oil exports are strongly correlated with internal and external conflicts in Saudi Arabia; internal conflicts in Venezuela; and socioeconomic conditions in Russian Federation. The study recommends utilizing the developed methodology to aid estimation of energy security costs based on various political risk scenarios.