Energy Trap?
Promising areas with low production cost oil and gas have almost totally been depleted
Areas where such opportunities still exist have a high degree of political risk (Iran for gas and Iraq for oil)
The most industrially developed countries have not enough resources. In the European Union this has led to a serious decline in the production of oil and gas that has continued for several years now. In the US, gas production is growing at a fast rate but proven reserves of hydrocarbons are rather scanty
The sector is rapidly ageing, which prevents new fields from being commissioned too actively
Economic Crisis and Energy
Economic crisis will scarcely reduce world energy consumption. Crisis will not stop the growth of population.
But in short-term crisis will decrease the oil prices. And in long-term it can make the energy shortage more serious. It will be more difficult to launch new projects. Greenfield projects are becoming increasingly expensive to develop. And money will be more expansive. Projects with difficult-to-recover oil and gas will be mothballed. Decline of production on traditional fields along with shortage of investment to greenfields can result in gap between production and consumption of fossil fuel.
Low oil prices will seriously decline the investment to alternative energy.
Economic crisis can only postpone the acute shortage of energy resources
No Full Alternative for Fossil Fuel
The list of problems of alternative energy sources:
“Energy Authoritarianism”
Restriction of energy consumption: e.g. U.K wants to prohibit the energy-intensive plasma-panel.
Next step - special standards of power consumption for all home appliances in U.K.
In U.K. the number of electronic devices in household increased from 17 to 47 on average during last 30 years. The number of TV sets is 60 mln.
Struggle with commodities with carbon footprint.
Prohibition of incandescent lamps.
Diversification of Gas Suppliers is the Most Difficult Task
Main problems of alternative suppliers:
High political risks
No proved reserves (except Iran)
Serious problems in middlestream
They are in the focus of European interest – and they want to derive benefit from it
Competition with China
Localization of Gas
The Appetite Comes with Eating
“Word of honour” reserves
After the increasing of interest of Europe to Central Asia Gazprom made concessions to Stan-states. The result is the increasing of gas prices and transit coast
Kazakhstan increased the price of transit – now it’s $1.7 per 1,000 cubic metres per 100 kilometres. It means that in 2010 the price will be the same as in Slovakia (Ukraine formula)
We don’t see serious increasing of gas production in Stan-states 2008: Uzbekistan production 3,7%. Russia bought 9,6 bcm in Uzbekistan in 2007 and will buy 16 bcm in 2009
Turkmenistan: Russia bought 42,6 bcm in 2007 and 45 bcm in 2008
The Increasing Role of Gas Import
Nabucco – only 31 bcm per year in 2014-2015
But the drop of gas production in Europe (with Norway) can be more than 10 bcm per year. So Nabucco can be compensating for domestic upstream problems at best
2015 can be the peak of gas production in Norway
Nabucco is not a business project – it’s a belief in gas diversification (in Nabucco we trust)
Turkey as a new Ukraine?
Turkey will relate the gas transit with membership in EU
New transit corridor will be under control of United States (Iran – new policy of Obama, Azerbaijan, Georgia, Turkey)
The same problem can be in Ukraine – but in Ukraine UE has more opportunities to change the situation
Gas production - 664,999 bcm
(653,108 bcm in 2007); 1,82%
Gigantic Plans
Forecast of Pipeline Export to Russia (bcm)
Source: Gazprom
Too Much Difficult Projects
Source: Gazprom
European Opportunities in Russia
The gas industry in RF is facing several fundamental challenges and tasks: the need to revive old fields (primarily in Western Siberia) and increase the gas recovery factor on brownfield sites; the need to multiply investment in new projects; the need to create new gas extraction centres in Eastern Siberia; the need to launch full-scale offshore production in the northern seas and the Far East, which means production in a complex geological and natural environment
The lack of investment
Growing technological backwardness compared to Western countries
Problems for Russia – opportunities for Europe
Where is the Place for New Pipeline Projects?
New Transit Agreement: Gazprom guarantees minimum transit of 110 bcm through Ukraine to Europe until 2019
2009 – Export to Europe through Ukraine will be not less then 116,913 bcm
It will be Difficult for Europe to avoid “Ukrainian Problem”
Europe is thinking that Ukraine is the problem of Russia
The agreement that was signed as a matter of emergency, in spite of all the relaxed atmosphere of the last few days permeating comments by officials, does not at all guarantee that the “gas war” will not be resumed at least in the near term
Russia has actually no effective mechanisms of pressure on Ukraine
The future of gas transport system in Ukraine is still a question
Programmer of Peace
Integration of Nabucco and South Stream
Realization of idea of Gas transport consortium in Ukraine
Concerted candidate on President elections in Ukraine
Refuse from pipelines to China
Refuse from mutual blackmail with diversification
Refuse from “pipeline wars”. Diversification by means of LNG