Modelling the geopolitical impact on risk assessment of energy supply system: The case of Italian crude oil supply

Abstract

Many countries are still characterized by high fossil demand, mainly satisfied by imports due to the scarcity of local resources. These countries are more vulnerable to deterioration of geopolitical stability of suppliers, with potential negative impacts on economic growth and welfare, making science-based methodologies crucial for policy makers to monitor the security of energy supply system. The proposed model aims to quantify the risk related to the external front of the supply system, by extending the classical risk analysis approach to the geopolitical dimension, coupling the geopolitical risk of supply corridors with their energy flows and spatial dimension. The proposed methodology allows to perform risk scenario analyses, including the variation of countries' geopolitical stability and supply interruptions, at single country level and considering different energy commodities delivered through captive and maritime corridors. Finally, the developed approach is applied to the security of the Italian crude oil supply system, by discussing and comparing different risk scenarios and possible countermeasures. The obtained results highlight some possible weaknesses of the system (e.g., in case of blockade of Turkish Straits) due to limited replaceability of certain crude types (according to their physical/chemical properties), suggesting further diversification of crudes mix.