11th National Energy Conference Energy

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11th National Energy ConferenceEnergy
Development 2005Organised by Institute of Energy
for South East Europe 14-15 November Athens,
Eugenidis Foundation Conference Centre

• BBSPA Presentation
• Valentin Kunev
• Executive Director
• Balkan and Black Sea Petroleum Association (BBSPA)

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• Global Context
• Global energy scene is dominated by high oil
  prices
• Slow down of economic growth and oil demand
  2007 IEA oil demand growth forecast is 1
• On the supply side deficiency of production
  capacities.
• Will high oil prices employ enough investments ?
• in frontier unexplored areas for new
  discoveries
• in rehabilitation of old fields
• in development of discovered fields

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Extensive exploration programmes by TPAO, OMV
BP, Chevron and Petrobras in the deep waters of
the Black Sea. Petrom and Albpetrol oil recovery
programmes. Kashagan oil field in Kazakhstan
development will be postponed because of high
cost of services.
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• Investments in new production capacities will
  probably not be enough, which will keep oil
  prices high.

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• European Perspective
• Shift to LNG supplies because of high oil prices
• Increasing import dependency
• Business Integration
• East-West for GdF
• Within Balkans Bulgaria and Romania OMV Petrom
  for EP and retail

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• East European Countries
• High economic growth
• East and West modes of gas price formation
• High quality standards
• Extensive refinery upgrading to meet higher
  quality standards
• In Ukraine TNK-BP will reduce the retail filling
  stations from 1000 to 300 in order to meet high
  quality standards

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• East European Countries
• Non-Transparent Practices
• International and regional oil companies (Shell,
  BP, OMV, Hellenic Petroleum, LUKoil) stick to
  transparent rules, no tax evasion and invest in
  high quality services.
• Small chains do none of these and with their
  considerable stakes in retail market represent a
  non-fair competition. With EU accession of
  Bulgaria and Romania, national authorities will
  hopefully take measures.

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East European Countries Non-Transparent
Practices Oil and gas production and sales
non-transparent reporting usually comes with
monopolized situations or absence fair
competition. The Eastern Europe situation of
non transparency refers also to Western Europe
where EC recognized that failed in the first move
to bring competition and transparency into the
gas markets of continental Europe.
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Supply Options
Source Petroleum Argus
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• By-Pass Oil Pipeline Projects
• - Constantsa-Omisali
• - Bourgas-Alexandroupolis demonstration of
  strong political will by Russia, Bulgaria and
  Greece. Ownership and throughput quantities to be
  settled by the end of this year rigid connection
  with CPC extension of CPC versus Transneft
  control over Bourgas-Alexandroupolis. 49 or 50
  for Bulgaria and Greece makes difference
• - AMBO long distance supplies revive the
  competitiveness of the project
• - Samsun-Ceyhan Turkish proposal for the
  private ownership of a third oil corridor.

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Gas Production in the Balkans With the
exception of Romania, indigenous gas production
takes less than 50 of Balkan countries demand.
For the majority cases indigenous production is
small to insignificant. - The new Bulgarian
gas discovery is approaching exhaustion with
raising question about possibility for conversion
into gas storage - Turkey new small gas
discovery offshore Black Sea - Romania decreased
gas production decline - Croatia started
production from a new Adriatic gas field - In
general gas production from the Balkan countries
is declining
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Gas Imports Gazprom takes all the imports to
the Balkan countries with the exception of Greece
and Turkey. In Turkey 40 of imports refer to
Iran pipeline supplies and LNG supplies from
Algeria and Nigeria. In Greece considerable
imports refer to LNG supplies.
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Intermediates in Gazprom Supplies Almost in
all Balkan countries, Gazprom supplies its
imports through joint ventures or subsidiaries.
Gazprom recently took Turkmen gas supplies to
Ukraine and Hungary through a chain of
subsidiaries with the major role of RosUkrEnergo.

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• Gas Supply Diversification Prospects
• - New discoveries Turkey and Croatia
• New LNG terminals Croatia and Turkey
• - Georgia-Ukraine - EU Gas Pipeline Project
• 4th gas corridor

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LNG Terminal project in Croatia Partners E.ON
AG, Total SA, OMV AG, RWE Transgas, INA and
Geoplin involved in the study Capacity 10
Bcm Completion by 2011
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Fourth Corridor is Part of Europes Five Gas
Corridors
Existing pipeline
Norway N Sea
LNG
Proposed 4th Corridor
Russia
LNG
Caspian Gulf
N. Africa
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• Azerbaijan developments
• Shah Deniz
• SCP

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The Shah Deniz Perspective

• Stage 1 Sanction February 2003
• First gas October 2006
• Stage 1 gas sales contracts
• Turkey - 6,6 BCM
• Azerbaijan - 1,5 BCM
• Georgia - 0,5 BCM

• Stage 1
• Capacity 8.5 BCM/Y
• Investments 2.3 bill USD

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South Caucasus Pipeline Botas Extension
South Caucasus - Azerbaijan Turkey
(border) Length 690 Cost 1.1 Status Under
Construction
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• Greece-Italy Interconnector (IGI)
• Length 810
• Cost 1bn
• Status Under evaluation
• Botas, Depa, Edison Gas Poseidon Co
• 11-12 bcm to Greece (3.6) and Italy (8) - first
  calculations
• Start with late 2006 to reach plateau capacity
  in 2012

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Nabucco Project
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Transport of Caspian and Middle East gas to the
countries on the Project route and beyond. First
aim is to reach Baumgarten gas hub in Austria
that will connect the Eastern gas to the Middle
and West European markets.
Approximate lengths to reach Baumgarten
Turkey 1935 kms Bulgaria 400 kms Romania 500
kms Hungary 520 kms Austria 45 kms
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Thank you!

• Valentin Kunev
• Executive Director
• Balkan and Black Sea Petroleum Association
• bbspetroleum_at_bbspetroleum.com
• www.bbspetroleum.com