The Globalization of Gas: Issues for China and India

Transcription

1 The Globalization of Gas: Issues for China and India David G. Victor November, 2004 Palo Alto, California David G. Victor January 28, 2005 Stanford, CA

2 Primary Energy Supply in China: Program on Energy and Sustainable Development - 2

3 Primary Energy Supply in India: Program on Energy and Sustainable Development - 3

4 Program on Energy and Sustainable Development Gas Resources and Potential Demand White: where the lights are on, satellite imagery Blue Red : Gas resources, with increasing size (USGS)

5 Program on Energy and Sustainable Development The Baker/Stanford Approach: Historical Case Studies Key first of a kind projects Compare built projects with alternatives Model of Gas Futures World Gas Trade Model (WGTM ) All major resources and supply curves All major demand centers All major gas transmission technologies

6 Seven Historical Case Studies 2. Algeria to Italy Built Projects 1. Indonesia LNG to Japan Author Lewis & von der Mehden Hayes 3. Russia to Poland and Germany Victor &Victor 4. Turkmenistan (to Iran, to Russia, to Pakistan & India) 5. Qatar to Japan Olcott Hashimoto 6. Trinidad LNG to U.S. 7. Southern Cone (Bolivia to Argentina; Argentina to Chile; Bolivia to Brazil) Shepherd & Ball Mares Program on Energy and Sustainable Development - 6

7 Program on Energy and Sustainable Development The Belarus Connector Bluestream Turkmenistan KKK Export Routes TransMed Atlantic LNG Qatargas LNG Arun LNG GasBol YABOG GasAndes 0 1,500 3,000 6,000 Kilometers Existing Proposed

8 Program on Energy and Sustainable Development The Economics Only View: Projected Gas Trade Between Regions Exports tcf Imports Central, South America Canada Russia Southeast Asia China Other Africa Mexico Europe Australia South Asia Middle East North Africa United States Other FSU Other Asia

9 Program on Energy and Sustainable Development Four Implications 1.New Market Structures Regional to Global; rising role of LNG 2.Changing Roles for Governments From Builder to Facilitator 3.Supply Security A Scramble for Gas Resources? 4.Dangers Ahead? Four Pitfalls

10 Program on Energy and Sustainable Development

11 Program on Energy and Sustainable Development Changing Role for the State Old World State-owned enterprises Tightly regulated, monopoly markets Oil-indexed gas prices New World Private operators and financing Contestable, multiple markets Gas-on-gas competition The New World: Faster or Slower Shift to Gas?

12 Program on Energy and Sustainable Development The Changing Role of the State Role of state in gas projects Private Hybrid State Yabog (Bolivia Argentina) 1972 Arun (Indonesia LNG Japan) 1978 Transmed (Algeria Italy) 1983 Qatargas LNG Japan 1996 Belarus Connector 1996 GasAndes 1997 GasBol 1998 Turkmenistan Iran 1997 Trinidad LNG 1999 Bluestream (Russia Turkey) Year

13 Program on Energy and Sustainable Development Old World: State creates demand 8 W 4 W 0 E 4 E 8 E 12 E 16 E 46 N 46 N France Morocco ^_ Bilbao Spain Mediterranean Sea 38 N 38 N ^_ Almeria ^_ Cartagena Skikda Algiers Huelva ^_ Arzew Tunis Oran ^_ 34 N Rabat 34 N Tunisia Algeria Proposed 30 N Libya 30 N In Salah Amassak ^_ Panigaglia Po Valley 42 N Rome 42 N Portugal ^_ Barcelona Madrid Italy Maghreb-Europe Hassi R' Mel Trans-Med 26 N 26 N ] Gas Pipelines Existing LNG Facilities ^_ Import ^_ Export Gas_Fields Kilometers 8 W 4 W 0 E 4 E 8 E 12 E 16 E

14 Program on Energy and Sustainable Development Security of Supply and Cartels To date, very few political interruptions Ukraine (middle 1990s) and Belarus (2004) Algeria (early 1980s) Indonesia (~2002) Argentina (2004) Is Gas Cartel Feasible? Gas Exporting Countries Forum (GECF) Large Competitive Fringe Policy responses

15 Gas Trade Interruptions Initiating Party Examples from 7 Case Studies Supplier 1. Algeria (1981 to Gas Battle with Italy, the United States and others. 2. Arun (2001). Civil unrest in Aceh disrupts shipments. 3. GasAndes (2004). Argentine government curtails shipments to Chile. Transit Country 1. Russia ( ). Gazprom refuses to transport Turkmen gas to Europe. 2. Ukraine (mid-1990s) disputes with Gazprom over volumes and payments for gas shipments. 3. Gazprom (2004) cuts supplies to Belarus (and to Europe via Belarus Connector) in pricing dispute with Belarus. User 1. U.S. Govt. (1981) disallows Algerian shipments in retaliation to price demands. 2. YABOG (1987). Argentina refuses to take or pay for full Bolivian shipments. 3. GasBol (2001). Brazil refuses full volumes contracted from Bolivia 4. Qatargas (1998). Japan demands price reductions. 5. Bluestream (2002). Turkey demands price and volume reductions for Russian gas. Program on Energy and Sustainable Development

16 Prospects for a Gas Cartel Reserves and Exports highly concentrated Exports But Russia has 28% Top 7 have 79% of exports Not all are likely Cartel members (e.g., Canada, Norway, Netherlands 30% of exports) Export concentration reflects underdevelopment of many major deposits Qatar (2.6% of world exports) is only significant Middle East player High supply elasticity many competitive fringe suppliers Program on Energy and Sustainable Development

17 Chinese Gas Infrastructure Program on Energy and Sustainable Development

18 Chinese Gas Infrastructure (2) Program on Energy and Sustainable Development

19 STAGES IN CREATION OF OIL AND GAS PIPELINE NETWORK IN THE EAST OF RUSSIA from West Siberia Gas pipeline Achinsk Existing Yurubcheno- Tokhomskoye to be built in to be built in Krasnoyarsk Kansk Sobinskoye Verkhnechonskoye Angarsk Ulaanbaatar Talakanskoye Kovyktinskoye Irkutsk Ulan-Ude Beijing Daqing Chayandinskoye Chita Shenyang Sredneviluiskoy e Yakutsk Tynda Harbin Blagoveshchensk Vladivostok Pyongyang Seoul Khabarovsk Nakhodka Okha Val Sakhalin-1 Sakhalin-2 Komsomolskon-Amur Yuzhno- Sakhalinsk Korsakov to be built in Source: Energy Systems Institute of SB RAS, Irkutsk Program on Energy and Sustainable Development

20 Program on Energy and Sustainable Development Challenges to Gas Future A. Investor confidence $3.1 trillion capital needed for next 30 years Mainly upstream (E&D, liquefaction) Inhospitable investment environments

21 Program on Energy and Sustainable Development Top 10 Exporters Exports Production Reserves (bcm) (bcm) Rank (tcm) Rank 1. Russia Canada Norway Algeria Netherlands Indonesia Malaysia Qatar United States United Kingdom

22 Program on Energy and Sustainable Development More Challenges B. Resource Curse Arun, Algeria, Russia: all affected Does the resource curse apply to gas? C. Siting and terrorism Regasification facilities D. Electricity 2/3 of expected incremental demand Will markets be restructured? Caution of Brazil Will coal fight back? Large scale renewables? Nuclear? Coal in Poland