Decision-making for supplying energy projects: A four-dimensional model

Abstract

Importing states and regions employ myriad strategies to enhance energy security, from stockpiling to diversification to efficiency programs. As has occurred in recent years, importers can seek diversification by initiating pipeline and liquefied natural gas projects, meaning they may also have to select suppliers. However, most extant pipeline evaluation models erroneously assume suppliers are known and thus neglect supplier selection. We propose a decision-making tool to augment these older models: a systematic and replicable four-dimensional model to help policymakers and managers identify suitable suppliers and prioritize the best courses of action for overcoming obstacles. The first three dimensions—timeframe, supply availability and infrastructure constraints—filter out unsuitable suppliers. The fourth dimension then assesses the political, geopolitical and commercial stability of the remaining candidates. To demonstrate the model in practice, we assess the original Nabucco pipeline proposal, which was designed to transport gas from the Caspian and Middle East regions to Europe.