Decline in Domestic Production
Change in Gas Production in Europe (2007)
Italy -11,5%Denmark -11,4%United Kingdom -9,5%Germany -8,4%Romania -3,1%Netherlands -1,2%Poland -0,8%Norway 2,4%
Change in Gas Production in Europe (bcm, 2007)
United Kingdom -7,6Germany -1,3Italy -1,2Denmark -1,2Netherlands -0,8Romania -0,3Poland 0Norway 2,1
Source: BP -7,6
- In the period of crisis the consumption can go down.
- BUT the production will go down faster.
Needless Looking-for Alternatives?
- Low price – low investment to alternative energy
- Uranium – 25% of European Market is Russia
- Coal – 10% of European Market is Russia
- Biofuel – Russia is the most realistic producer in Europe
- Difficulties with diversification of supply
- Fanatic looking-for diversification of supply gives birth to the idea of diversification of demand
- The diversification for the sake of diversification
Stucture of European Gas Market (2006)
Caspian Region and Libya | 2% |
Algeria (pipeline gas) | 5% |
LNG | 5% |
Norway | 18% |
Russia | 25% |
Domestic Production | 45% |
Growth of Gas Export to West Europe (January-June 2008)
Germany 49,80%France 29,76%Italy 26,61%Austria 11,35%Finland 7,50%
Growth of Gas Export to Central Europe (January-June 2008)
Macedonia 94,59%Hungary 86,67%Slovenia 85,79%Czechia 43,13%Slovakia 39,07%Poland 37,07%
Source: Neftegazovaya Vertikal
“Word of honour” Reserves
- The confirmation of the estimate of Turkmen gas reserves, previously voiced by official Tashkent, by GCA
- The optimum estimate of the South Iolotan and Osman reserves is five times the size of Dovletabad (the primary source of Turkmen gas for Gazprom), previously thought the nation’s biggest: a low estimate amounts to 4 trillion cubic metres of gas, an optimum one to 6 trillion, and a high one to 14 trillion cubic metres of gas
Forecast of Oil (mln tons) and Gas (bln cubic meters) Production in Turkmenistan
300 260 250 175 200 160 Oil 150 110 Gas 72 100 50 30 50 10 0 2007y 2015y 2020y 2030y
Source: Turkmen government
BUT
- GCA has worked in Turkmenistan since it was ruled by Turkmenbashi. It is perfectly aware of local political realities and was again invited through its “connections,” without a tender held
- Is it enough for decision to build pipeline from Turkmenistan?
“Symmetric Response” to Europe?
Two strategic tasks of «Gas OPEC» :
- attempt to dissociate the gas market from the oil market and make pricing for gas independent on the oil market situation
- attempt to share markets between major gas powers
This project is of interest for playing in the long term
Proved Gas Reserves of Gas Triplet (trillion cubic meters, 2007)
50 44,65 45 40 35 27,8 30 25,6 25 20 15 10 5 0 Russia Iran Qatar
Source: BP
BUT
- Creating rules of the game in the gas market that will resemble those in the oil market will technically be possible only after a considerable rise in the ratio of liquefied gas in total global consumption, as well as a rise in the quantities of gas that may be redirected from one consumer to another by utilising a wide network of crossing gas pipelines and distribution systems
- At present, however, out of all the founders of the “Organisation of Gas Exporting Countries” only Qatar actively deals with liquefied gas, while Gazprom continues to rely on long-term contracts for supplying gas to its traditional consumers
- As for Iran, on account of the underdeveloped state of its gas industry it even has to import part of the fuel to satisfy domestic requirements
The New Energy Friends of Europe?
The New Energy Friends of Russia?
Formula of Oil Friendship?
$25 bln/$50 per barrel/7,4 = 67,5 mln tons
High Hopes
Forecast of Pipeline Export to Russia (bcm)
2007 2008 2009 2010 2015 2020 2025 2030Contracts in force 153,7 161 165,1 166,6 189 189 189 189New contracts 29-33 30-36 30-38 30-38
The Forecast of Gas Production in Russisa (bcm, optimistic scenario)
2010y 7172015y 8452020y 9412025y 9742030y 981
Source: Gazprom
Russian Gas Production Dynamics
2002y 2,5%2003y 4,2%2004y 2,2%2005y 1,1%2006y 2,4%2007y -0,5%2008 (10 months) 3,50%
Changes to Gazprom’s Investment Programme for 2008 ($ billion)
New programme Old programmeCapital investment 22.88 20.65Long-term financial investment 12.51 9.94Expected earnings 139.36 126.01Borrowings 3.88 3.88
Source: Gazprom
Situation in Upstream
Situation on Main Brown fields
| Year of putting into operation | Max Production | Year of Max Production | Production in 2007 |
Medvezie | 1972 | 75,3 | 1983 | 19,3 |
Urengoiskoe | 1977 | 276,2 | 1987 | 94,4 |
Yamburgskoe | 1986 | 174,2 | 1994 | 109,9 |
Situation on Main Operable Green fields
| Year of putting into operation | Max Production | Year of Max Production | Production in 2007 |
Pestsovoe | 2004 | 27 | 2007 | 27 |
Uzhno-Russkoe | 2007 | 25 | 2009 | 1,3 |
Beregovoe | 2007 | 10,5 | 2010 | 0,8 |
Source: Gazprom
Cross Ownership in Energy Sector
- Cross Ownership in Energy Sector can be the best solution
- Europe can control situation in Russian Upstream if Western companies will be minority shareholders in Russian upstream Project
- News from Shtokman? Ask Total and StatoilHydro
Thank you!