SOUTHEASTERN EUROPE s NATURAL GAS CHOICES

Transcription

1 SOUTHEASTERN EUROPE s NATURAL GAS CHOICES Harry Sachinis, Chairman & CEO, DEPA S.A. Public Gas Corporation Investment Energy Summit: Greece, Cyprus, Israel Re-designing the European energy map March 28th-29th, Divani Apollon Palace & Spa, Vouliagmeni-Athens

2 Availability of alternative supply sources to Europe SEE Demand: 44 bcm (2025) 89%* dependence on single source Russia (44.4 Tcm) Additional export capacities to EU limited by lack of investments and increasing domestic and Far East demand. Limited upside production potential and partially exported via LNG. North Africa ## (6 Tcm) Egypt (2.2 Tcm) Source: BP Statistical Review of World Energy 2011 East Med (? Tcm) *Excludes Italy Caspian Region** (11.2 Tcm) Middle East # (32.8 Tcm) The Southern Corridor would permit the EU to tap into vast proven reserves of 46.2 Tcm. East Med may provide another diversified source of natural gas to the EU by Traditional external supply sources ** Azerbaijan, Kazakhstan, Turkmenistan Potential new supply sources # Iran, Iraq ## Algeria, Libya

3 The short-term situation in SEE ( ) ISSUES Increasing demand (just in Greece and despite the crisis, demand rose from 3.6bcm in 2010 to 4.5bcm in 2011 and approximately an additional 30% in the first two months of 2012) No transit agreement in place for deliveries through Turkey Unreliability of Turkish supply route. Gas deficit of ~7bcm in Turkey 2014 (PFC Energy) will exacerbate the situation MWh

4 The short-term situation in SEE ( ) SOLUTIONS Cooperation agreements among SEE countries. Increased regional gas storage. Expansion of existing LNG terminal in Revythousa. Construction of IGB (Interconnector Greece- Bulgaria) in order to provide up to 5bcm of either LNG or pipeline gas to SEE by New Floating Storage and Regasification Unit (FSRU) in Northern Greece to feed IGB. Cooperation among the SEE countries. Increase Gas storage in region. IGB New FSRU Revythousa LNG terminal Upgrade

5 Shah Deniz 2 choices leading to 2018: Western Vs. Northern route SD2 chose TAP over ITGI mainly for commerciality reasons. TAP lacks environmental licenses, intergovernmental agreements and third party access exemption (TPA). In effect TAP cannot be ready in time for SD2 s Final Investment Decision (FID). As a result SD2 is driven to the Northern route. With the Northern route SEE lacks adequate supply backup in case there is flow disruption in Turkey. Northern Route Western Route TAP Nabucco Vs. SEEP IGI

6 Shah Deniz 2 choices leading to 2018: The Western route revisited If the commerciality issues are resolved, SD2 should reconsider IGI because of its maturity. Western Route A combination of IGI and IGB (the ITGI system) provides for the needs of SEE. IGI should be built regardless of SD2 if the EU is serious about security of supply in SEE. ITGI system (IGI +IGB) The link between Greece and Italy would provide SEE with the required backup, leveraging gas supply from Italy, including North Africa gas. Reverse Flow

7 The alternatives for SEE: Eastern Mediterranean gas Tamar, Leviathan and Block 12 are three of the top five world s largest discoveries of the decade. Tamar 2009 Israel 257bcm Leviathan 2010 Israel 481bcm Block Cyprus 198bcm According to the USGS (United States Geological Survey) total reserves at the Levantine basin could be three times more than what has already been discovered. And there may be even more gas in Greece south of Crete. South of Crete? >16bcma export Tamar Leviathan Block 12 Estimates are that more than 16 bcma will be exported, which necessitates exports both in LNG form and through a pipeline.

8 The alternatives for SEE: Possible Routing The construction of the pipeline is technically feasible. The pipeline will be able to carry around 8bcma and will have a length of around ~1100km. The estimated transportation tariff of the pipeline is almost one third of the respective tariff for an LNG terminal. Transportation tariffs remain much lower even for delivery of gas to Italy and SEE. The pipeline will supply natural gas to Crete spurring development in new markets. The pipeline can link with the ITGI system. Gas from East Med will access the SEE and Italian markets at competitive prices as early as Source: JP Kenny East Mediterranean gas will play an important role as the EU incorporates this newly found source into it s energy policy.

9 The alternatives for SEE: Possible Routing The construction of the pipeline is technically feasible. The pipeline will be able to carry around 8bcma and will have a length of around ~1100km. The estimated transportation tariff of the pipeline is almost one third of the respective tariff for an LNG terminal. Transportation tariffs remain much lower even for delivery of gas to Italy and SEE. The pipeline will supply natural gas to Crete spurring development in new markets. The pipeline can link with the ITGI system. Gas from East Med will access the SEE and Italian markets at competitive prices as early as East Mediterranean gas will play an important role as the EU incorporates this newly found source into it s energy policy. Source: JP Kenny

10 The alternatives for SEE: Bathymetry off Eastern Crete The construction of the pipeline is technically feasible. The pipeline will be able to carry around 8bcma and will have a length of around ~1100km. The estimated transportation tariff of the pipeline is almost one third of the respective tariff for an LNG terminal. Transportation tariffs remain much lower even for delivery of gas to Italy and SEE. The pipeline will supply natural gas to Crete spurring development in new markets. The pipeline can link with the ITGI system. Gas from East Med will access the SEE and Italian markets at competitive prices as early as East Mediterranean gas will play an important role as the EU incorporates this newly found source into it s energy policy. Source: JP Kenny

11 The alternatives for SEE: Tariff Comparison The construction of the pipeline is technically feasible. The pipeline will be able to carry around 8bcma and will have a length of around ~1100km. The estimated transportation tariff of the pipeline is almost one third of the respective tariff for an LNG terminal. Transportation tariffs remain much lower even for delivery of gas to Italy and SEE. The pipeline will supply natural gas to Crete spurring development in new markets. The pipeline can link with the ITGI system. Gas from East Med will access the SEE and Italian markets at competitive prices as early as % Case I Pipeline via Cyprus Tariff Comparison Percentage compared to Max estimated value 40.1% Case II Pipeline via Israel 35.6% Case III Pipeline to Crete 100% Case IV LNG terminal 61.0% Case V Floating LNG 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% East Mediterranean gas will play an important role as the EU incorporates this newly found source into it s energy policy. Source: JP Kenny

12 The alternatives for SEE: Eastern Mediterranean gas The construction of the pipeline is technically feasible. The pipeline will be able to carry around 8bcma and will have a length of around ~1100km. The estimated transportation tariff of the pipeline is almost one third of the respective tariff for an LNG terminal. Transportation tariffs remain much lower even for delivery of gas to Italy and SEE. The pipeline will supply natural gas to Crete spurring development in new markets. The pipeline can link with the ITGI system. Gas from East Med will access the SEE and Italian markets at competitive prices as early as East Mediterranean gas will play an important role as the EU incorporates this newly found source into it s energy policy. East Med

13 The alternatives for SEE: Southstream Southstream is an advanced project and seems well on its way to being built. Russia has proven to be a reliable supplier. Southstream Southstream Southstream can use IGI as its Southern branch. IGI Southstream (Southern Branch)

14 DEPA and Southeastern Europe Southeastern Europe is a key market for some of the new sources of gas, including the Caspian and the Eastern Mediterranean, because of: its proximity to the source; its potential for growth. DEPA has had two record years in a row in terms of sales and profits, despite the Greek crisis, and can be instrumental in the developments in SEE because of it s advanced stage plans. DEPA s privatization process that just started gives the opportunity to the buyer to play a key role in this exciting and strategic market.