European Energy Security and Russia: are we focussing on the right issues - PowerPoint PPT Presentation

About This Presentation
Title:

European Energy Security and Russia: are we focussing on the right issues

Description:

WHO WE ARE: a gas research programme at ... sellers of exclusive, high price business reports ... Geopolitics of Central Asian gas is not (yet) a European game ... – PowerPoint PPT presentation

Number of Views:96
Avg rating:3.0/5.0
Slides: 35
Provided by: anitaga
Category:

less

Transcript and Presenter's Notes

Title: European Energy Security and Russia: are we focussing on the right issues


1
European Energy Security and Russia are we
focussing on the right issues?
  • Professor Jonathan Stern
  • Director of Gas Research
  • Oxford Institute for Energy Studies
  • Society for International Development
  • Amsterdam, April 28, 2008

2
OIES Natural Gas Research Programme
  • WHO WE ARE a gas research programme at an
    independent academic institute, part of Oxford
    University, specialising in fossil fuel research
  • WHO WE ARE NOT
  • consultants
  • sellers of exclusive, high price business
    reports
  • WHAT WE PRODUCE independent research on national
    and international gas issues
  • HOW WE ARE FUNDED three-year sponsorship by
    companies and governments in gas producing and
    consuming countries

Information about our Institute, our Programme
and its publications can be found on our
website http//www.oxfordenergy.org/gasprog.shtml
2
Oxford Institute for Energy Studies is an
educational charity
3
Recently Published Research
  • Natural Gas Demand in Europe the importance of
    power generation, Anouk Honore
  • The New Security Environment for European Gas,
    Jonathan Stern
  • The 2007 Russia-Belarus Gas Agreement,
    Katja Yafimava and Jonathan Stern
  • US Natural Gas Prices scenarios to 2015,
    Michelle Foss
  • Gas-OPEC a distraction from important issues of
    Russian gas supply to Europe, Jonathan Stern
  • The Potential Contribution of Natural Gas to
    Sustainable Development in South Eastern Europe,
    Aleksandar Kovacevic
  • Is there a rationale for the continuing link to
    oil product prices in Continental European gas
    contracts? Jonathan Stern
  • Ukraines Gas Sector, Simon Pirani
  • The Dolphin Gas Project, Justin Dargin

Free downloads from www.oxfordenergy.org
3
4
EUROPEAN ENERGY POLICY - AGENDA
  • Energy policy issues and problems agreeing
    priorities
  • Europe, Russia and energy
  • Gas in Europe a case study of the issues
    /problems
  • Conclusions

5
European Energy Security what is the current
focus?
  • Europes dependence on imported oil and gas
    supplies will increase substantially over the
    next 10-20 years
  • Much of the oil and gas which Europe will have to
    import will need to come from the Middle East
    (oil) and Russia (gas)
  • This gives rise to two concerns
  • over-dependence leading to the potential for
    commercial/political blackmail
  • political instability/conflict within or between
    these countries leading to supply disruption

These issues periodically debated over the past
40 years, especially in relation to Russia
6
Urgent European (and Global) Oil and Gas Issues
in the late 2000s
  • Oil (and gas) prices at gt100/bbl and going
    higher??
  • Most major oil and gas producers unable or
    unwilling to increase their production and export
    capacity
  • Most OECD leaders complaining about
  • Lack of investment in new capacity by
    producers/exporters
  • Chinese and Indian attempts to attract oil and
    gas towards their rapidly growing economies

Can Europe obtain adequate oil and gas supplies
in the 2010s and at what price?
7
European Energy Security frequently discussed
problems
  • Is the problem that Europe will become more and
    more dependent on countries which we do not like
    and do not trust for our energy supplies?
  • Or is the problem that Europe will not be able to
    obtain oil and gas supplies that it will need, or
    will not be able to pay very high prices for
    them?
  • Or is the problem that the carbon which will be
    emitted in the burning of these fuels will create
    an unsustainable global climatic trends

Europe needs to prioritise problems and solutions
8
Europe, Russia and Energy a long running story
with the emphasis on gas
9
OECD European Oil Product Imports from FSU
Countries 1990-2006
Source IEA
18 of imports and 8 of demand in 2006
10
OECD European Crude Oil Imports from FSU
Countries 1990-2006
Source IEA
35 of imports and 32 of demand in 2006
11
OECD European Steam Coal Imports from Russia
1990-2006 (thousand tons)
18 of demand in 2006
Source IEA
12
Russian Gas Exports to Europe 1990-2006
Source Gazprom
27 of Europe 34 demand in 2006
13
Gazproms Exports to Europe
  • Long term contracts extended 20-30 years with
    most European buyers well before expiry dates
    legally binding agreements under international
    arbitration with liquidated damages
  • Gazprom Marketing and Trading establishes major
    presence in north west Europe trading (not just
    Russian) gas and other products
  • Nord Stream and South Stream pipelines are
    progressing

Gazproms response to unreliable transit through
Ukraine and Belarus is diversification of
pipeline routes
14
Existing pipelines taking Russian gas to Europe
15
Nord Stream Gas Pipelines
Can Baltic opposition halt or only delay
development?
16
Blue Stream/South Stream Gas Pipelines
Bulgaria-Serbia-Italy route is established
17
If all of these pipelines are built then, by
2015, Russian gas will be able to move to Europe
via
  • a northern route Nord Stream
  • a central route Ukraine/Belarus
  • a southern route Blue Stream/South Stream

Gazprom be able to arbitrage between the
routes, the power of individual transit countries
will be much reduced security will be improved
but still needs an international transit regime
18
Can Russia compete in Atlantic Basin LNG? Not
easily, quickly or very profitably
19
Chinas Gas Pipelines and LNG Terminals
No Russian pipeline gas before the late 2010s
20
Will Russia Have Sufficient Supplies for Europe?
  • Russian gas supplies will be tight from
    2010-2015 or until new large scale Yamal
    Peninsula gas becomes available
  • Main impact will be on the Russian and possibly
    on the CIS export market
  • European markets will be less affected because
    of legally binding long term contracts with
    severe financial penalties for non-delivery BUT..
  • Short term gas supplies may disappear

This is likely to mean no new long term contracts
for Europe Russian gas supplies will be limited
to 180-200 Bcm/year
21
European Gas a case study
22
Europes Future Gas Supplies a problematic
landscape?
  • Plentiful reserves exist but.
  • what matters are the intentions and capabilities
    of suppliers
  • European
  • Existing pipeline and LNG suppliers
  • Possible new suppliers

Future gas security is about motivations of,
and relationships with, Europes suppliers
23
Projected Decline in European Gas Production
2005-17 (Bcm)
24
Availability of African Gas Supplies
  • ALGERIA major exporter, no major growth beyond
    currently contracted volumes
  • EGYPT sold out minor growth potential
  • LIBYA major LNG growth potential but could take
    10 years
  • NIGERIA NLNG Trains 1-6 achieved
  • NLNG 7/8 Brass River OK LNG delayed
  • domestic (power) demand will take priority over
    additional exports
  • EQUATORIAL GUINEA minor growth potential
  • ANGOLA some growth potential

25
Middle East/Caspian/Central Asian Pipeline Gas
Availability
  • Iran highly unreliable gas exporter, major
    domestic demand requirementspolitical
    instabilityconflicts with the international
    community create major problems any significant
    gas pipeline exports will be to Pakistan (India?)
  • Azerbaijan around 15 Bcm of Shah Deniz gas from
    2015(?)
  • Turkmenistan reserves uncertain, offshore
    prospects considerable but not before late 2010s?
  • Kazakhstan dependent on availability of Kashagan
    gas, and probably not until late 2010s

26
Gas Pipelines From the Caspian Region
27
Nabucco a Caspian Pipeline to Europe
Source OMV
A key part of the 4th Corridor to Europe
28
Problems for the 4th Corridor events of December
2007- April 2008
  • December 29th 2007 Turkmenistan cut off gas
    exports to Iran (supplies not yet recommenced)
    and as a result.
  • Iran cut off gas to Turkey (citing cold weather)
    and as a result
  • Turkey cut gas supplies to Greece and as a
    result
  • Gazprom supplied more gas to Turkey and Greece to
    make up for the shortfall

Diversity does not always security
29
Geopolitics of Central Asian gas is not (yet) a
European game
  • China has already started developing Turkmen gas
    reserves under a PSA
  • China already has agreements to import (at least)
    30 Bcm/year from a combination of 3 Central Asian
    countries (but mostly Turkmenistan)
  • China is willing to spend staggering sums of
    money developing gas fields and pipelines without
    any risk guarantees

The great gas game in Central Asia is between
Russia and China Europe (and the US) are
possible future players
30
European LNG Terminals
New regas capacity increasingly competes with
North America and Asia for LNG
31
Emerging Policies of Producers/Exporters
  • Increased exports are no longer urgent and may
    not be possible due to
  • increasing domestic demand
  • higher export prices which means reduced need for
    revenues
  • LNG exports will be preferable to dedicated
    pipeline gas to Europe because of
  • Greater arbitrage possibilities in higher value
    markets
  • Less political exposure to US/Europe

These issues are much more important than the
(real or imagined) threat of a Gas-OPEC
32
The key question facing European gas markets is
from where will substantial additional gas
post-2015 and especially post-2020 be available?
  • At present the answer looks like not from Russia
    or many other current major suppliers
  • CONCLUSION Europe faces longer term gas supply
    uncertainty

33
THIS IS NOT A DISASTER BUT IT RAISES IMPORTANT
QUESTIONS FOR THE FUTURE OF POWER GENERATION AND
CARBON EMISSIONS
  • WITHOUT SUBSTANTIAL INCREMENTAL GAS SUPPLIES,
    MOST COUNTRIES WILL NEED TO RETAIN/DEVELOP COAL
    WITH DISASTROUS CONSEQUENCES FOR CARBON TARGETS
    THE BEST HOPE FOR CARBON REDUCTION BEFORE 2020 IS
    A RENEWABLES/GAS COMBINATION

34
CONCLUSIONS European Energy Security
  • ISSUES RECEIVING A LOT OF FOCUS
  • Can Europe trust the Russians (and other
    exporters)?
  • Should Europe limit future Russian gas supplies?
  • ISSUES NEEDING MORE FOCUS
  • From where will Europe get substantial additional
    gas post-2015?
  • How should Europe develop successful
    relationships with Russia and other suppliers
  • What will be the consequences for European energy
    and carbon balances if we dont find answers to
    these questions?
Write a Comment
User Comments (0)
About PowerShow.com