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How Has COVID-19 Damaged Global Energy Security?

On Monday, June 22nd, The Institute of World Politics hosted a webinar entitled “COVID-19 and Global Energy Security,” led by Dr. Sara Vakhshouri and Mr. C. Derek Campbell.

About the Speakers

Dr. Sara Vakhshouri is the founder and president of SVB Energy International, a strategic energy consulting firm with offices in Washington, D.C. and Dubai. Dr. Vakhshouri has about two decades of experience working in the energy industry with extensive experience in global energy market studies, energy strategy, energy security, and geopolitical risk. She has consulted numerous governments, public and private entities, and international organizations like the International Monetary Fund and the World Bank. Dr. Vakhshouri has a Ph.D. in Energy Security and Middle Eastern studies. She has an M.A. in Business Management (International Marketing) and an M.A. in International Relations. She is currently a professor of energy security at the Institute of World Politics and is teaching a course on Energy Security and the New Geopolitics of Energy (IWP 688).

Mr. C. Derek Campbell is the chief executive officer of Energy & Natural Resource Security, Inc., an international security company providing “best in class” physical and cyber risk mitigation solutions for Critical Energy Infrastructure and Natural Resource assets. Mr. Campbell holds a Bachelor of Science (B.S.) in Technology & Management from the University of Maryland and a Master of Strategic Studies (M.S.S.) from the U.S. Army War College, with an elective concentration in Energy & National Security.

Effects of COVID-19 on Global Energy Demand

The lecture began with a discussion of the massive reduction in global energy demand caused by the ongoing COVID-19 pandemic. These disruptions, as Dr. Vakhshouri described, explain the spat between Saudi Arabia and Russia over oil prices, in addition to the ensuing OPEC+ decision to cut back production.

Dr. Vakhshouri then highlighted the changing dynamic of critical energy infrastructure security, particularly as it relates to regional and geopolitical issues. Having expertise in the area of protecting critical energy infrastructure, Mr. Campbell succinctly described the most pressing challenges in this domain brought on by the pandemic, which are increases in physical attacks on infrastructure, as well as increases in cyber-attacks, particularly aimed at informational and operational technologies of energy assets.

He also described the recent uptick, namely in the Middle East and Africa, of attacks stemming from individuals, terrorists, or other armed groups, criminal outfits, and rogue states. This increase in attacks has come about because developers in these nations typically look upon protecting and securing energy assets as a cost or hindrance, rather than a crucial investment in maintaining credibility to investors and essential to ensuring a continuity of operations. In the oil and gas market, there has been a surge of piracy, especially in non- Organisation for Economic Co-operation and Development (OECD) countries (such as those in Africa), due to the disproportionate emphasis on producing energy rather than protecting it.

Suggestions to Improve Global Energy Security

To protect against sabotage, theft, and piracy, Mr. Campbell emphasized that everyone, from developers and operators to investors and insurers, stay vigilant to threats. Beginning with investors and insurers, Mr. Campbell called on them to change their perspective from trying to garner profit in a roughly three-year window, while hoping to avoid sabotage. Instead, they should mandate a strong security posture over an asset for it to maintain a continuity of operations over a longer period of time, oftentimes roughly ten years. This planning will not only allow the asset to remain secure, but it will allow the asset to mature and provide more profit and return on investment as time progresses.

To developers and operators, Mr. Campbell suggested that they use previously established regulatory frameworks to “assess and review” the security situation of their operations, such as the “Framework for Improving Critical Infrastructure Cybersecurity Version 1.1,” published by the National Institute of Standards and Technology of the U.S. Department of Commerce, in addition to numerous others. Furthermore, they should spot check their current physical security measures to assess and mitigate immediate and long-term risks and ensure the ability to sustain a continuity of operations in the face of challenges. This also includes understanding the local geographical terrain and physical environment of the asset, the current political situation of the area, and the potential threats posed by both elements.

In discussing the specific implications of attacks on energy infrastructure, Mr. Campbell explained that there are always secondary and tertiary impacts—whether it be a cyber-attack or a physical attack, such as the drone strike on Saudi Aramco oil processing facilities in September of 2019. Using a theoretical example to illustrate this point, Mr. Campbell explained that an attack on a diesel storage facility may seem minor in isolation but could potentially shut down an electrical grid that relies on the energy it produces. In turn, this would immediately and significantly impact daily life for countless people. These consequences, to Mr. Campbell, highlight the importance of developing a sound and comprehensive strategy to secure energy assets.

To further illustrate the points about secondary and tertiary effects of critical energy infrastructure sabotage, Mr. Campbell discussed in greater detail the attack on Saudi Aramco in 2019. While this attack cost roughly $250,000-300,000 to launch, the total ramifications totaled over $1 billion and reduced global oil production by nearly 5%.

With these risks in mind, why would certain countries or companies cut corners and fail to develop comprehensive security plans? As Mr. Campbell pointed out, many of these entities, particularly those on the cusp of global recognition and influence, intentionally do not report attacks, as this would cause an increase in their insurance costs. It would also damage their international reputation, hindering the confidence of foreign investors. Nevertheless, as Mr. Campbell demonstrated throughout the webinar, the long-term impact of ignoring the security of critical energy infrastructure creates more chaos and cost for all parties dependent on that energy source. Nations and companies should make securing their assets from a variety of global threats a priority. One never knows, for example, when a pandemic may cause an unprecedented crisis in their entire industry, creating new sets of vulnerabilities that certain actors are keen to exploit.

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