Perspectives of Natural Gas in Europe View from Gazprom Export by Sergei Komlev Head of Contract Structuring and Price Formation, Gazprom Export 3th Russian-German Resource Forum Freiberg, Germany, March 18, 2010
Economic Downturn Impact on European Gas Demand Gas demand in Non-FSU Europe in 2009 vs. 2008 bcm 2008 Est. 2009 Change, bcm Change, % TOTAL 600.7 560.5-40.2-6.7% UK 105.9 95.6-10.4-9.8% Germany 96.6 96.0-0.7-0.7% Italy 87.9 80.3-7.5-8.6% France 49.9 47.7-2.2-4.3% Netherlands 45.2 43.0-2.3-5.0% Turkey 39.1 35.7-3.5-8.9% Sources: IEA, Eurostat, National Statistics. Russian quality gas, conversion factor 37 MJ/cm. 2
% 3 European Gas Demand Recovery Scenarios Demand Recovery Scenarios (Consumption in 2008 = 100%) 104 According to the majority of the forecast, demand recovery is expected in 2012 104,2 102 101,7 100,5 101,6 100 100,0 99,2 100,1 100,1 99,8 99,3 98 97,8 97,8 97,7 97,8 99,0 98,2 97,5 97,5 98,6 96 94 96,1 94,8 96,0 94,6 94,2 94,2 94,0 CERA. Scenario 1 CERA. Scenario 2 McKinsey PIRA Wood Mackenzie 92 2006 2007 2008 2009 2010 2011 2012 2013 Sources: Company Data.
est.2009 AVERAGE IEA CERA EIA DOE PIRA CEDIGAZ Wood Mackenzie IGU AVERAGE IEA CERA EIA DOE IGU bcmy Gas Consumption in Europe in the Long Term Gas consumption in Europe forecasts for 2020 and 2030 2009 2020 2030 800 800 700 670 634 665 723 642 684 710 677 702 734 688 705 708 723 653 600 560 583 586 565 574 500 Combination of countries may vary slightly. All the numbers are based on CAGRs, published by forecast makers. All volumes are up to a Russian gas quality standard. ZMB 4
est.2009 AVERAGE EIA DOE IEA CERA CEDIGAZ PIRA IGU AVERAGE EIA DOE IEA CERA IGU bcmy Gas Production in Europe in the Long Term Gas production in Europe forecasts for 2020 and 2030 400 2009 2020 2030 304 332 317 300 200 254 276 260 284 209 238 233 205 203 236 207 181 147 150 100 0 Combination of countries could slightly differ. All the numbers are based on CAGRs, published by forecast makers. All volumes are up to a Russian gas quality standard. ZMB 5
Recoverable Resources of Shale Gas in Europe: 16 Trillion m3 German Border Gas Prices vs. Spot Gas Prices in 1999-2010 ZMB 6 6
CERA: Unconventional Gas in Europe Remains a Wildcard 300 250 200 Bcm 150 100 50 Conventional Unconventional? 0 2000 2005 2010 2015 2020 2025 2030 2035 ZMB 7
Use of Natural Gas to Tackle Climate Change So far, the main goal pushed forward by some politicians amount to nothing more than just a decrease in hydrocarbons consumption. Meanwhile, millions of our consumers will be at the mercy of a costly model of future energy consumption, a model that they will have to pay for. Aleksey Miller, CEO of Gazprom, 24th World Gas Conference, 5-9 October 2009, Buenos Aires, Argentina. In the realm of alternatives, promising too much too soon is dangerous. It risks rendering the entire global effort both politically and economically unsustainable. And the world can t afford that Gas is the fuel that offers the greatest potential to provide the largest reductions at the lowest cost and all that by using technology that s available today. If we get it right, gas can transform the global energy outlook. Tony Hayward, CEO of BP, 24th World Gas Conference, 5-9 October 2009, Buenos Aires, Argentina. ZMB 8
Conflicting Goals of the EU Energy Policy Towards Russia The EU should reduce its energy dependency on Russia but the EU should not back out of the mutual partnership Günther Oettinger, new European Commissioner responsible for energy policy. January 14, 2010. Is it possible to build a consistent policy based on these two conflicting goals? Goal 1: promoting the strategic relations with Russia. Action plan: Upgrade projects with Gazprom participation in the EU s priority list. Consider gas projects circumventing Russia on commercial basis. Treat the EU solidarity principle as the right for any member state to buy Russian gas. Assure security of demand for Gazprom. Make broader use of natural gas in the EU s energy mix as the cleanest fossil fuel.. Goal 2: decreasing the dependency on Russia. Action plan: Downgrade projects with Gazprom participation in the EU s priority list. Award gas projects circumventing Russia with public finance in case of insufficient private support. Promote team spirit with Russophobe minority in the EU. Speak with one tough voice with Gazprom on energy matters. Subsidize any energy sources alternative to natural gas for security reasons. ZMB 9
The Investment Costs of Achieving Different Levels of CO2 Reductions in Europe by Displacing Coal-Fired Power Generation Investment in US$ bn 10 30 50 70 90 110 130 150 170 190 210 230 250 270 290 310 330 350 370 390 410 430 450 470 490 900 800 700 GHG saved by replacing half of hard coal-fired plants in the EU27 with gas-fired CCGT & costs for the same CO2 saving by other technologies solar 600 wind 500 400 Total additional cut in GHG required to achieve EU target nuclear 300 200 100 gas 0 Million tonnes of CO2e saved* ZMB 10
Gains of Using Gas in Transport Applications First, use of gas would reduce reliance on existing liquid fuel suppliers, and therefore enhance supply security. Second, emissions of key toxic fuels sulphur, combustion particulate matters (PM) and polyaromatic hydrocarbons (PAH) would be avoided, significantly enhancing sustainability. Third, the distortion of agricultural markets and cannibalisation of the supply from these markets would be avoided - enhancing both security of agricultural supply and of transport fuel supply. Fourth, a level of subsidies and incentives for biofuels could be avoided enhancing least-cost solutions and competitiveness. ZMB 11
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