The oil sector today is going through some fundamental changes: national oil companies now control the bulk of production, with international petroleum companies more often playing a secondary role in making decisions on production, investment and markets; prices are at their highest and are more volatile than ever before. The resulting security of supply concerns are especially important in the transport sector, which almost exclusively uses liquid fuels made from crude oil and is particularly vulnerable to sharp variations in supply and prices of refined products. The rapidly growing energy demand requires major continuous investments in all fields of the energy sector, including the supply of liquid fuels.
Such changes result in investors and governments facing new types of risk and challenges. In order to best address these, the Energy Charter opened a Risk Reduction Dialogue in 2004, aimed at political and regulatory risk for foreign investors, in line with the investment-protection focus of the Energy Charter Treaty.