Key points of Russian energy strategy up to 2030 between Europe and Asia Dr. Alexey Gromov Deputy General Director Institute for Energy Strategy Moscow, Russia The future of the global gas market: an EU-Russian perspective Brainstorming workshop Milan, 30 september 1 October, 2010
Energy Strategy 2030 in the System of Documents of the Strategic Development Conception of the long-term development of the Russian Federation for the year 2020 ES-2030 Long-term forecast of the development of Russian economy for the years 2009-2030 General scheme of development of the gas industry for the year 2030 General scheme of allocation of power generating facilities for the year 2020 General scheme of development of the oil industry for the year 2030 State program of energy saving Eastern Gas Program Conception of the state program for exploration and exploitation of the continental shelf of the Russian Federation Program of longterm development of the fuel and energy complex of the Russian Far East Strategy of development of the power generation in the Russian Far East Investment programs of energy companies 2
Share of Energy sector in Economy ENERGY STRATEGY 2030 approved by decree N 1715-r of the Government of the Russian Federation of 13.11.2009 1 ST STAGE 2 ND STAGE 3 RD STAGE 2009 2013 2015 2020 2022 2030 Overcoming the crisis in the Economy and Energy sector Modernization of Energy sector Increase of power efficiency and energy saving in the Economy and Energy sector Innovative development of Energy sector New oil and gas fields development (Arctic shelf, Eastern Siberia and the Far East) Highly effective use of traditional power resources Switch to the Energy of the Future Growth of national economy and quality of life of the population 2
Foreign energy policy and ES-2030 targets: Eastern and Western vectors Western Vector (European Market) Eastern Vector (Asian-Pacific Market) Russian Gas Export, 2009 Russian Gas Export, 2030 (projected) - EU market is essential for Russian gas export (75%) - Western Vector accounts for 96% of Russian gas export (EU + other Europe) - Russia seeks for export diversification - Russia promotes eastern vector of energy export 3
Eastern Vector for Russian Energy Policy 4
EASTERN VECTOR IN ES-2030: NEW SIDES OF OLD TASK Road Map of implementation of ES-2030 : Eastern vector Eastern vector task 19 «Increase in the share of the Asia-Pacific countries in the structure of the Russian energy export to 16 17%» task 10 «Implementation of a complex of program measures for petrochemistry and gas-chemistry development in the Eastern Siberia and Far East» task 17 «Extended reproduction and attraction of human resources for development of new areas of the Eastern Siberia and Far East» Key initiatives in the Russian energy sector: Energy infrastructure: development and diversification Development of oil and gas complexes in Eastern regions of Russia Exploitation of the oil and gas potential of the Northern regions of Russia and Arctic shelf Non-fuel energy Energy saving Eastern vector ESPO pipeline, Eastern Gas Program, petro- and gas-chemistry development Sakalin, Yakutia, Magadan, Irkutsk and Krasnoyarsk regions Shelf of the East Arctic, reanimation of the Northern Sea Way Large-scale development of hydro energy and renewables Modernization of electric power and heat supply systems in the Region 5
bcm THE EAST IS A KEY DIRECTION OF DIVERSIFICATION OF THE RUSSIAN EXPORT Forecast of gas export 400 350 336-359 353-390 Gas export in Asia-Pacific region, % of total export 300 310-311 55 70-75 100 80 250 200 150 256,0 24-36 159,8 158-168 189-194 201 60 40 20 0 0 19-20 2005 2030 100 50 95,8 88-90 87-92 78-92 0 2005 1st Stage 2nd Stage 3rd Stage Europe Asia-Pacific итого 6
KEY PROJECTS IN THE EASTERN SIBERIA AND THE FAR EAST Eastern Gas Program Natural gas Export to China Sakhalin development LNG Projects in Sakhalin 7
FIRST RESULTS OF ES-2030: CAREFUL OPTIMISM 2008 2009 Strategic Indicator for the first stage of ES-2030 (2013-2015) Share of Eastern Siberia and the Far East in gas production 2% 3,7% 7-8% LNG share in gas export 0% 3,5% 4-5% Share of the countries of the Asia- Pacific Region in the structure of gas export 0% 3,5% 11-12% 8
Western Vector for Russian Energy Policy 9
WESTERN VECTOR IN ES-2030: KEY PROJECTS & GOALS Nord Stream (started in April 2010) task 19 Increase the Russian gas export to European market 160 bcm in 2008 120 bcm in 2009 2030 target - 200 bcm task 21 Promote the gas pricing system in Europe, including both long-term and spot contracts task 22-23 Bilateral investment in gas projects South Stream (projected) Shtokman (projected) 10
млрд куб. м млрд. куб. м 700 675 DISTURBING RESULTS OF 2009 ON EUROPEAN GAS MARKET 664,9 12% 250 650 625 225 600 575 583,9 583,6 200 195,4 550 525 175 158,4 168,3 24% 500 150 475 450 425 400 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 годы 125 120,3 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Экспорт Export в to дальнее Europe зарубежье Экспорт, Export всего (total) Добыча Gas production газа в РФ, (Russia) всего В Gas т.ч. production Группа Газпром (GAZPROM) Gas production has fallen to level of 2000 Gas export to Europe was reduced to a quarter 11
LONG-TERM EXPORT DYNAMICS & REASONS Composition of EU gas import Source: EEGA Factors of decrease in export expectations Europe: Competition growth (LNG, new pipelines) Pricing change (spot market vs. long-term contracts) Renewables & energy efficiency Geopolitics (Nabucco, anti-gazprom rules in 3rd Gas Directive etc.) Price situation in 2009 Russian gas (long-term contracts, Europe) Price, USD/bcm 288 LNG (US, Henry Hub) 147 LNG (Great Britain, NBP) 142 LNG (Japan, Korea) 260 LNG (Chine) 160 12
Conclusions 9
bcm EXPORT EXPECTATIONS VS. REALITY 400 375 350 325 Russian Gas Export forecast up to period 2030 368 349 Factors of decrease in export expectations Europe: Competition growth 300 275 250 300 15-20% US: refuse of future Russian LNG (the boom of shale gas production) 225 200 234 203 Asia-Pacific: competition growth (Central Asia) 175 150 2008 (факт) 2009 (факт) 2010 2015 2020 2030 Прогноз экспорта российского газа (верхний уровень по ЭС-2030) Russian gas export forecast (high level from ES-2030) Russian gas export forecast (low level from ES-2030) Russian gas export forecast (IES expectations) Прогноз экспорта российского газа (нижний уровень по ЭС-2030) Прогноз экспорта российского газа (ожидания ГУ ИЭС) Risk of decrease in export on 15-20 % 13
BALANCING EASTERN AND WESTERN VECTORS: TASKS FOR RUSSIAN ENERGY POLICY From export orientation to the domestic market Cost reduction in Russian natural gas industry Revision of investment projects - Selection of priority projects among declared in ES-2030 - Refusal of a number of ineffective projects-giants (the Southern stream, etc.) Flexibility of gas export policy - Revision of pricing system in long-term contracts of Gazprom - Flexibility increase in mutual relations with Ukraine and Central Asia 14
ISSUES FOR RUSSIA EU RELATIONSHIPS - EU gas market forecast - EU secure demand for Russian natural gas - The real need for new pipeline project in relation to future demand - The transit problem & politics toward Ukraine & Belarus - 3rg Gas Directive & Regulative issues - Bilateral investment in gas fields, pipelines, and marketing 14
Thank you for your attention! 15