Galkin, Philipp

  • Primary Program Oil & Gas
  • Research Interests International economic relations, regional and country studies and policy analysis

Biography

Philipp is a visiting researcher at KAPSARC, working on the economic and policy aspects of energy supply and trade. Philipp’s work at KAPSARC includes evaluating the effect of preferential trade agreements on energy flows, analysis of OPEC energy policy and deriving insights related to China’s energy policy and its impact on global markets through modeling energy supply sectors.

Publications

See all Philipp’s publications
  • Book/book chapter
  • Discussion papers
  • Methodology papers
  • Instant Insights
  • Commentaries
  • KAPSARC journal articles
  • External journal article
  • Think20 (T20)
Chapter 5: China’s energy investment through the lens of the Belt and Road Initiative

Chapter 5: China’s energy investment through the lens of the Belt and Road Initiative

The Belt and Road Initiative (BRI): Progress Amid Controversies Overview of the BRI President Xi Jinping announced the BRI in 2013 during his official visits to Kazakhstan and Indonesia. The vision for a Silk Road Economic Belt connecting Central Asia and Europe was outlined in his speech in Kazakhstan, and the roadmap for a Maritime Silk Road linking the two continents was described in his speech in Indonesia (SCIO 2016). In the eight years since its inauguration, the initiative has evolved, simultaneously shaping the global political economy. Click here to read the book

1st May 2023
Reconsidering Inventories: An International Strategy for Strategic Storage Assets

Reconsidering Inventories: An International Strategy for Strategic Storage Assets

The purpose of this report is to recommend an interconnected regional and international strategy to share the burden of developing and maintaining commercial and strategic storage infrastructure for Saudi crude oil and products through an alliance with the Gulf Cooperation Council (GCC) and other countries. If properly implemented, the project has the capacity to enhance the security of oil supply throughout the transition to a green economy. Such enhancement can be achieved through the centralized tracking and management of commercial and strategic stockpiles overseas. The initiative will forge new links in the global supply chain for crude oil and liquids and reveal new forms of financing for strategic petroleum reserves (SPRs).

26th September 2023
Cost‒Benefit Analysis for Petrochemical Projects

Cost‒Benefit Analysis for Petrochemical Projects

Cost‒benefit analysis (CBA) has been used to assess investment projects for decades with the aim of quantifying their externalities and potential impacts on social welfare. However, the domain where CBA is applied has been primarily limited to direct public financing in several sectors where such impacts are perceived to be the most pronounced. This study explores the applicability of CBA principles to petrochemical investment and utilizes the proposed framework to assess a sample ethylene production project.

14th May 2023
Energy Security and Portfolio Diversification: The Exporter’s Perspective

Energy Security and Portfolio Diversification: The Exporter’s Perspective

Despite the increasing attention paid to energy security and the continuously broadening scope of the field, the perspective of energy importing countries (i.e., supply security) has overshadowed that of exporters, who seek to ensure demand security. As official statements and policy documents illustrate, major energy exporters and relevant international organizations realize the significance of energy demand security for their economies and global markets.

25th November 2020
Market Structure, Inventories and Oil Prices: An Empirical Analysis

Market Structure, Inventories and Oil Prices: An Empirical Analysis

Understanding the relationship between crude oil prices and inventory levels is critical for policymakers and economic actors. The size of the ‘basis,’ or spread between spot and futures prices, reflects the level of inventories and can trigger arbitrage trading. The basis also reflects broader underlying market conditions and can be useful to policymakers such as the International Energy Agency and OPEC attempting to monitor and stabilize world oil markets.

24th February 2020
China’s Energy Investment Through the Lens of the Belt and Road Initiative

China’s Energy Investment Through the Lens of the Belt and Road Initiative

The Chinese government launched the Belt and Road Initiative (BRI) in 2013 as a vision to promote growth and cooperation among the economies of Asia and Europe. Over the five years since its inception, the BRI has expanded in both geographic and strategic scope. As of early 2019, 141 countries and 29 international organizations have joined the initiative, which has broadened from targeting infrastructure connectivity and logistics to wider goals of unimpeded trade, financial integration, policy coordination and  people-to-people bonds. Thousands of BRI projects have already been approved, with a total investment potential of $1.2-1.3 trillion by 2027 (IDSA 2019, Morgan Stanley 2018). 

12th January 2020
An Economic Analysis of China’s Domestic Crude Oil Supply Policies

An Economic Analysis of China’s Domestic Crude Oil Supply Policies

China’s domestic oil production has lagged the rapid growth in the country’s oil consumption since 2000, leading to a large, and growing, reliance on crude imports to meet demand. Factors including China’s current market structure and regulatory environment impede further development of the country’s oil industry, despite a number of policies aimed at protecting domestic producers. Using a short-run equilibrium model of China’s oil and gas supply industry, calibrated to 2016 data, the authors assessed the impact of market access barriers on China’s domestic production. Key findings included: Lifting all import constraints could have increased China’s import demand by around 0.29 million barrels per day in 2016. Opening China’s market to cheaper oil imports in 2016 could have saved approximately $2.8 billion, equivalent to 1.7% of the country’s oil supply costs, primarily due to import substitution for the roughly 9% of domestic production that operates uncompetitively. Improved utilization of the country’s pipeline network could cut China’s oil transportation costs by up to $600 million. The level of uneconomic oil production in China is highly sensitive to the international oil price. At $50/bbl about 9 million tonnes of domestic supplies are found to be uneconomic, accounting for about $2.5 billion of additional costs. At an average $80/bbl the number drops to 6.6 million tonnes, at a cost of $1.1 billion. Rising crude oil import prices since mid-2017 may allow policymakers to further deregulate China’s domestic oil sector.

28th May 2019
Balancing Energy Security Priorities: A Portfolio Optimization Approach to Oil Imports

Balancing Energy Security Priorities: A Portfolio Optimization Approach to Oil Imports

The idea of energy security emerged after the energy crises of the 1970s. It has evolved from the initial paradigm of assuring sufficient energy supplies to include a price affordability perspective and, eventually, many other energy-related issues, such as infrastructure, environmental impacts, societal effects, energy efficiency and governance. However, security of physical supply and price affordability remain the paradigm’s two key pillars. This study applies financial portfolio theory to the energy security issues of East Asia’s four major energy importers: China, Japan, South Korea and Taiwan. The authors calculate the relative risks associated with the dynamics of oil imports, and the import prices paid, and estimate the efficient frontiers for corresponding import portfolios. Lastly, the study runs several scenarios that simulate the effects of restructuring the four countries’ oil import portfolios and of external disruptions, notably US sanctions on Iranian oil sales. The paper’s key findings include: The short-run impact of a fully enforced Iranian oil export embargo would increase portfolio risk across the board, within a 3% to 15% range. However, the subsequent substitution of Iranian oil imports by other suppliers would prove beneficial for Japan and Taiwan. The risk premium associated with passing through the Malacca Straits would result in a 27.5% increase in price volatility for China’s oil imports, although the negative impact on its average import price level would be less pronounced, at 2.6% compared to between 5.2% and 5.8% for the other three importers.

28th May 2019
An Estimation of the Drivers Behind OPEC’s Quota Decisions

An Estimation of the Drivers Behind OPEC’s Quota Decisions

This paper identifies key determinants that appear to shape OPEC’s quota strategy and implementation. Using econometric estimations, it examines the factors that seem to most influence members’ adherence to their production commitments in the short term and what drives the organization’s quota decisions and level of compliance in the longer term.

19th July 2018
Potential Effects of Trade Liberalization on China’s Imports of Plastics From the GCC

Potential Effects of Trade Liberalization on China’s Imports of Plastics From the GCC

Petrochemical products, particularly plastics, contribute to a significant share of expanding and increasingly diverse trade flows between the Gulf Cooperation Council (GCC) countries and China. The petrochemical sector could benefit from a preferential bilateral trade regime between China and the GCC, but has been a bone of contention in the GCC-China Free Trade Agreement (FTA) negotiation process. This study applies a dual-stage model of import demand functions to estimate the impact of trade liberalization scenarios, within an FTA framework, on China’s imports of major plastics from the GCC and the rest of the world. It assesses the implications of these scenarios for all parties.

4th June 2018
The Economic Impact of Price Controls on China’s Natural Gas Supply Chain

The Economic Impact of Price Controls on China’s Natural Gas Supply Chain

Despite significant progress made by China in liberalizing its natural gas market, certain key areas such as market access and pricing mechanisms remain heavily monopolized or controlled by the government. To assess how such distortions impact the market, we developed a Mixed Complementarity Problem model of China’s natural gas supply industry, calibrated to 2015 data.

24th May 2018
The Effect of Preferential Trade Agreements on Energy Trade from Chinese and Exporters’ Perspectives

The Effect of Preferential Trade Agreements on Energy Trade from Chinese and Exporters’ Perspectives

During periods of supply abundance that lead to lower prices, commodity exporters strive to secure their market share with major importing economies. This paper seeks to cast light on what drives an exporter’s share of Chinese imports of oil, gas and coal – and we find that the strategy behind achieving this goal need not rely on pricing policies alone. China has been promoting a trade agenda that seeks to strengthen economic ties in the Asia-Pacific region and has been extending negotiations aimed at developing relationships worldwide. The country is a major energy import powerhouse; its trade deals have significant impact on the international energy trade and global energy markets. We explore the role of energy in China’s preferential trade agreements (PTAs) and extend the trade gravity model to disaggregated trade flows, estimating the impact these agreements have on Chinese energy imports.

16th April 2017
Potential Gains From Reforming Price Caps in China’s Power Sector

Potential Gains From Reforming Price Caps in China’s Power Sector

When energy sectors transition from government-controlled to market-driven systems, the legacy regulatory instruments can create unintended market distortions and lead to higher costs. In China, the most notable regulatory throwback is ceilings on electricity prices that generators can charge utilities, which are specified by plant type and region. We built a mixed complementarity model calibrated to 2012 data to examine the impact of these price caps on the electricity and coal sectors.

29th September 2016
Economic Impacts of Debottlenecking Congestion in the Chinese Coal Supply Chain

Economic Impacts of Debottlenecking Congestion in the Chinese Coal Supply Chain

China’s coal industry grew at unprecedented rates during the first decade of the 2000s in order to support equally unprecedented economic growth. In that type of environment, it is impossible for the capacities of every link in the supply chain to be correctly sized all the time. In order to understand the consequences of such mismatches, KAPSARC has developed a production and multi modal transshipment model of China’s domestic coal market, calibrated to 2011 data. This allows us to examine what the global and domestic consequences might have been had the bottlenecks not existed in 2011.

7th September 2015
The KAPSARC Energy Policy Database: Introducing a Quantified Library of China’s Energy Policies

The KAPSARC Energy Policy Database: Introducing a Quantified Library of China’s Energy Policies

Government policy is a critical factor in the understanding of energy markets. Governments create constraints and incentives that drive behavior through policy. In turn, these behaviors have fundamental impacts on the functioning of markets. Despite the critical role of policy, it is rarely approached systematically from a research perspective. One of the first and most basic steps in a systematic approach is gaining a precise understanding of what policies exist, their intended outcomes, their geographical extent, duration, and expected evolution. A systematic understanding of policy, with this level of detail, would enable the research community to answer a variety of questions that, for now, are either over-simplified or ignored. Policy, on its surface, is also a very unstructured and qualitative undertaking. There may be quantitative components, but policies are usually framed in sentences requiring interpretation of their meaning. This makes it difficult to incorporate an understanding of policy into quantitative approaches, other than by making assumptions as to the effect of policy in framing a quantitative model. The KAPSARC Energy Policy Database (KEPD) is intended to address these two energy policy research limitations. The methodology described in this paper could be applied to any set of energy policies, though this becomes a large task very quickly.

6th January 2015
World Oil and Critical Mineral Study: A Global VAR Analysis

World Oil and Critical Mineral Study: A Global VAR Analysis

Critical minerals (CMs), such as lithium, cobalt, nickel, and rare earth metals, are essential for the development of clean energy technologies across the whole value chain of wind and solar power, electricity networks, and electric vehicles (EVs). Demand for these minerals is expected to grow quickly as energy transitions accelerate. Other sectors that depend on CMs include the electronics, defense and space industries.

26th September 2023
Global Crude Oil Storage Index: A New Benchmark for Energy Policy

Global Crude Oil Storage Index: A New Benchmark for Energy Policy

The global oil market dwarfs other commodity markets. Its size and role in the energy and industrial value chains underscore its significant economic and geopolitical impacts. Thus, the consequences of oil price fluctuations extend far beyond the oil industry and can be viewed as a barometer of trends in the global economy. Several oil price benchmarks currently compete in the global market. The most popular ones, such as Brent or West Texas Intermediate (WTI), are backed by a sufficient supply of the underlying crude. They also meet the criteria for efficient trading, hedging and speculating — including having sufficient liquidity, developed futures markets, low transaction costs and strong institutional support.

13th September 2022
BRICS+ and the Future of Commodity Markets

BRICS+ and the Future of Commodity Markets

The dissolution of the Soviet Union in late 1991 marked a pivotal shift in the global economic landscape, ushering in an era characterized by increased market openness and economic integration. The years following have been symbolized by the formation of the European Union in 1993 and the establishment of the World Trade Organization (WTO) in 1995. The WTO aimed to facilitate international trade under a multilateral framework and establish a robust dispute-settlement system, reflecting the optimism of that era regarding globalization. There was a prevailing belief that a more interconnected world could promote economic prosperity and development. However, this optimism was tested as most financial crises since the 1990s occurred outside G7 countries, including the Asian Financial Crisis in 1997, the Argentine Economic Crisis between 1999 and 2002, and the Turkish Financial Crisis in 2001. In recent years, too, a deglobalization trend has emerged, reversing some of the progress of integration that was achieved in the post-Cold War era. This trend is evidenced by the increasing imposition of economic sanctions, a rise in protectionism, ongoing trade disputes, and heightened geopolitical tensions.

5th December 2024
Capturing the Value From Supply-Side Shocks in the Heavy Crude Market

Capturing the Value From Supply-Side Shocks in the Heavy Crude Market

The Russian-Ukraine conflict and sanctions on Russian crude oil flows have significantly affected world oil markets. Price volatility has increased, flows have been re-directed and there is considerable uncertainty concerning future energy policy. The implications of these changes affect all market segments including those where Russian supplies have been limited or absent. Thus, recent events have exacerbated problems observed in the already tight global heavy crude sector, where key exporters have been constrained either by sanctions (Iran and Venezuela) or by logistic bottlenecks (Canada).

29th January 2023
The RCEP and its Potential Impact on Saudi Regional Exports

The RCEP and its Potential Impact on Saudi Regional Exports

On November 15, 2020, 10 Southeast Asian economies, joined by Australia, China, Japan, New Zealand and South Korea, formed the Regional Comprehensive Economic Partnership (RCEP) – the world’s largest trading bloc, representing about a third of the global economy (BBC 2020). This comprehensive agreement covers import tariffs and other market access barriers, investment facilitation, standardization of rules and procedures, and economic and technical collaboration, among other areas.

30th March 2021
Extreme Market Distortions Canadian Crude Oil Flows

Extreme Market Distortions Canadian Crude Oil Flows

With extensive natural resources and strategic access to both the Atlantic and Pacific basins, Canada has the potential to become a global energy powerhouse – provided that the nation is successful in alleviating its infrastructure bottlenecks. According to the United States Energy Information Administration (EIA), Canada has the third-largest crude oil reserves in the world (EIA 2020).    

27th December 2020
Phantom Oil Movements: An Investigation into Opaque Ship- to-Ship Operations and Their Role in Sanction Evasion

Phantom Oil Movements: An Investigation into Opaque Ship- to-Ship Operations and Their Role in Sanction Evasion

The transportation and distribution of large volumes of oil, gas, and refined products over long distances are enabled primarily by marine shipping. Transborder pipelines serve as an additional method for transporting oil and gas. However, these pipelines are typically more expensive than marine shipping and frequently become subjects of geopolitical tension. Oil tankers constitute a critical phase in the global oil trade. In 2023, approximately 8,976 vessels were on the water and were estimated to be carrying 34.2 billion barrels of crude oil, condensates, and refined oil products according to Vortexa (2024). Most of these barrels were delivered to buyers; however, a few were held as floating storage, waiting for buyers to purchase, or used to hedge by trading firms.

2nd December 2024
Critical Minerals and the Oil Industry: The Impact of a Positive Shock to Critical Mineral and World Oil Prices

Critical Minerals and the Oil Industry: The Impact of a Positive Shock to Critical Mineral and World Oil Prices

The term “critical minerals” (CMs) refers to a distinct category of commodities, such as rare earths, critical earth minerals, and other non-fuel minerals or mineral materials that are of strategic importance to national economies and technical development and that have a high risk of being associated with supply disruptions. Consequently, the definition can vary over time and across countries. For example, in 2022, the U.S. Geological Survey added nickel and zinc while removing helium, potash, rhenium, and strontium to their list of critical minerals.

7th November 2024

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