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© OECD/IEA 2012
Gas markets and supplies from the former Soviet Union area I
IEA 2013 Energy Training Week
Marc-Antoine Eyl-Mazzega
Russia Programme Manager
© OECD/IEA 2012
Outline
1. Russia: energy sector transformation
Gas market snapshot
Gas exports overview and outlook
2. Ukraine: challenges and opportunities
Domestic challenges
Gas transit corridor
3. The Caspian & Central Asia:
Azerbaijan: second and third gas export streams to Europe
Gas supplies to China
4. European gas markets and imports
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1. Russia: energy sector transformation
Gas market snapshot
Gas exports overview and outlook
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Russia’s gas balance: Gazprom’s position into question
Source: Gazprom; Ministry of Energy; Novatek
Snapshot of Russia’s gas balance, 2007-2012
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Major energy sector reshuffling
Tax breaks, holidays and exemptions
Export access
Companies
Gas transportation routes to Europe
Oil exports to the Asia-Pacific
New frontier resources
New greenfields + ‘liquids rich’ gas
Privatisations
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Economic challenge: High oil prices do not deliver strong growth anymore
USD
112/
barrel
USD
109.3/
barrel
IMF: International Monetary Fund
WB: World Bank
USD 78/
barrel
USD 69/
barrel
Source: IMF, WB, OECD, Rosstat
Evolution of GDP growth, 2005-2013 (projection)
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… as oil and gas represent almost the entire export value
Source: WTO Comtrade
Value of Russia’s energy exports to major markets compared to total export value, 2011
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Gazprom’s commercial strategy in Europe in the spotlight
Source: Izvestia, 01/02/2013
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Re-organisation of gas export routes to Europe / preparations for exports Asia
Europe: high capex, lower exports
Nord Stream
Belarus corridor
Ukrainian corridor
South Stream project
Asia: high capex, short time, no contracts yet
Upstream: Chayanda, Kovytka, Sakhalin-3
LNG projects at Sakhalin-1
Vladivostok
Pipeline projects to China, Japan, South Korea
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Russia’s new upstream and mid-stream projects
Source: Gazprom / IEA
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Far East Gas Programme
Source: Gazprom
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Russian gas supplies to Europe: new routes and the issue of overcapacities
? ?
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2. Ukraine: challenges and opportunities for reforms
Domestic challenges
Gas transit corridor
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Ukraine’s gas transmission system is key for regional gas supply security
Key gas transmission system and transit position & large energy market
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Market based gas import prices are incentive for energy sector reforms
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Nord Stream + Yamal + lower demand in Europe bring gas transit to historical low
0
20
40
60
80
100
120
140
160
bc
m/y
ea
r
Transit to Moldova/ Turkey/Balkans /Russia
Transit to the EU-27
Total gas in transit through Ukraine
2012
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Imports reduced to minimum level: savings + switching + imports from EU
2012
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Reap the full benefit from an energy transformation in Ukraine
Supply side
Foreign companies getting access to licence areas + PSA
Changes to the PSA regime
Fuel switching to coal
Preparations for gas market reforms
Lower gas imports
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Opportunities on the supply side
Raising conventional/non conventional gas production
Large untapped resources
Interest from major foreign oil and gas companies
Domestic experience
Energy Community Treaty: attractive regulatory framework
Gas transmission system: key asset
Diversification of supplies now possible
Developing renewables
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Price reforms to market levels needed
Gas price and tariff comparison
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3. The Caspian & Central Asia:
Azerbaijan: second and third gas export streams to Europe
Gas supplies to China
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Corridor Phase 2: building on the Caspian’s strong export potential
Estimate of Caspian/Central Asian gas reserves, 2002-2012
The Caspian and Central Asia hold about 13-14% of the world’s gas reserves. Turkmenistan’s exceptional reserves are a fact and Azerbaijan could also soon
count more
Source: IEA
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PSA termination pushed back 5 years to 2036
Negotiations with gas buyers + TAP vs Nabucco-West: selection expected in June 2013
Current new schedule: FID end 2013, first gas in H2 2018
Sengachal terminal expansion
South Caucasus Pipeline expansion (7 bcm, 691 km)
Parallel 56-inch pipeline to AZ-GE border
2 more compressor stations on 42-inch line through GE
22 bcm by 2018
TANAP
Gas: key milestones for opening up Shah Deniz 2 production and exports
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Route and pipeline competition for 6 bcma to Turkey and 10 bcma to EU
Source: European Commission
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Southern corridor is flexibly designed with producers playing key role
Synchronisation
Strong commitment of all stakeholders
Fair and clear pipeline selection process
Producers involved
South Caucasus Pipeline
TANAP
Nabucco-West and TAP
Scalability key as there is more gas beyond Shah Deniz 2
South Caucasus Pipeline
TANAP: IGA signed and ratified
Nabucco-West and TAP
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Azerbaijan: potential for a third export stream by 2020-2025
Field/project/ structure
Reserves, proven or estimated
Companies Status Planned/ potential
production plateau
Estimate production
start
Shah Deniz 2 1.2 Tcm BP 25.5%, Statoil 25.5%, Socar 10%, Total 10%,
LukAgip 10%, OIEC 10%,, TPAO 9%.
- Front End Engineering and Design studies
- FID expected end 2013
16-20 bcm Q3 2018
Absheron 150-350 bcm Socar (40%), Total (40%), GDFSuez (20%)
- 27/02/2009: PSA
- Exploration well drillings
- 2012 Notice of Discovery and Commerciability
- Field assessment ongoing
6-15 bcm 2020-2022
Umid 200 bcm; 40 Mt con-
densate
Socar; Possibly Nobel oil
-Discovery 2010
- Two exploration wells drilled since 2009
- Technical production started Sept. 2012 from one well - Five more wells to be drilled, third in Q1 2013
- PSA likely in 2013
1Mcm/gas/day; 2-10 bcm/year
2014
Babek 400 bcm; 80 Mt con-
densate
Socar; foreign partners - Seismic surveys 6-15 bcm 2020-2025
Zafar-Mashal Socar Exploration works during the 2000 could be newly undertaken
2025
ACG deep gas 300 bcm Socar; foreign partner is very likely
PSA or specific contract to be signed in 2013 6-15 bcm 2020
Nakhichevan 300 bcm; 40 Mt
condensate
Socar, RWE - MoU signed in 2010
- PSA expected in 2013
6-15 bcm 2020-2025
Shafag-Asiman 200-500 bcm; 65 million
tonnes of condensate
Socar, BP - 2009 MoU with BP
- 2010 PSA with BP
- 2011-2015 seismic surveys, data processing and assessment - 2016-2017 exploration well drilling
2-10 bcm 2020-2025
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Other possible future gas sources
Black Sea offshore
Romania: advanced exploration Petrom (OMV)-ExxonMobil: Neptun Block; Midia block 15
Lukoil-Vanco: East Rapsodia and Trident
Bulgaria: licences awarded Khan Asparuh block: Total and partners
Iraq
Shale gas in Bulgaria & Romania
And also:
Turkmenistan
Eastern Mediterranean
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China will more than double consumption over the next five years, increasing reliance on imports by pipeline and LNG; India’s gas demand will also grow, leading
to higher LNG imports and also leaving room for supplies from Central Asia
Natural gas demand in China
0
100
200
300
400
500
600
700 bcm
Domestic Production
Imports
2009 2015 2020 2025 2030 2035
China
Source: IEA
India: Evolution of Capacity by Fuel (New Policies Scenario)
Central Asian gas supplies to China & India are in the European interest
Source: IEA
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Challenges
Central Asia: exports limited by domestic demand ?
Power + residential demand
Chemical and transportation sectors
Inefficiency + subsidies
Availability of drilling rigs in the Caspian
Turkmenistan:
No further onshore PSAs?
Sales strictly at the border
What is the top export priority ?
Investment & technical challenge
How about the offshore?
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4. European gas markets and imports
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Gas demand at lowest level, production is stable, import gap lower yet growing
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Innovative commercial conditions needed
0
10
20
30
40
50
60
70
Electricity forward Germany (€/MWh)
Gas cost + EUA (€/MWh)
Coal cost + EUA (€/MWh)
Gas plants recover fuel costs only
Gas plants lose money just on fuel
Germany: comparison of gas, coal and electricity prices, 2009-2012
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Central European gas markets more integrated
Security of supplies
Nord Stream prolongation: supplies to Czech Republic and Slovakia, Austria possible
North-South gas route being developed
Świnoujście LNG terminal
Physical dual flows Austria-Slovakia + Czech Republic-Austria+ Poland-Czech Republic
Interconnector Austria-Hungary
Interconnector Hungary-Romania
Interconnector Hungary-Croatia
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North-South gas corridor + wider Southern gas corridor
New or future
likely gas flows
Bi-directional
interconnection
that is planned
and must be built
Bi-direction
interconnection
built
Bi-directional
interconnection
already built but
that requires
upgrade
Potential for
shale gas
resources and
production
Gas
connection
planned/ to
be built
Connection
built
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Fostering liquidity and competition in markets
Diversification of supplies: Southern gas corridor/Black Sea/Polskie LNG
Market integration + gas hub
Regulation: common network and market rules + efficient & independent supervision and regulation
Access to storage capacities
Shale gas
Biogas
Energy Community Treaty
