energy security dialogue: strategic alliances for energy security - … · 2011-02-07 · unece –...
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United Nations Economic Commission for Europe, Committee on Sustainable Energy
Energy Security Dialogue:Strategic alliances for energy security
- The E.ON – Gazprom Case
Uwe H. FipSenior Vice PresidentE.ON Ruhrgas AG, Essen
Geneva, 19th November 2008
2UNECE – Committee on Sustainable Energy – 17th Annual Session, 19th November 2008
22%
15%
24%
Japan
USA
EU
Following the first oil crises in the early 1970s, natural gas managed to substantially increase its market share in Europe within a few years. Since then, it has taken about a quarter of the market.According to the IEA, global demand for natural gas will increase by 1,925 bcm until 2030.
Natural gas share in primary energy consumption
Expected natural gas demand worldwide
Source: E.ON Ruhrgas 2008
Natural gas – a story of ongoing growth and success
0%
5%
10%
15%
20%
25%
30%
35%
40%
1960 1965 1970 1975 1980 1985 1990 1995 2000 2006 2005 2015 2030
2,854
3,689
4,779bcm
Average annual growth rate 2005 to 2030: 2.1%
Source: World Energy Outlook 2007, reference scenario
Demand and Supply Developmen
+ 835
+ 1,090
3UNECE – Committee on Sustainable Energy – 17th Annual Session, 19th November 2008
Natural gas demand growth is expected to continue in all regions of the world
Source: IEA World Energy Outlook 2007
2005 2015 2030
0
200
400
600
800
1000
1200
bcm
+30%
+59%
+40%
+36%
+367%+220%
+103%+156%
+148%
+145%
Global demand growth from 2005 to 2030: +1,925 bcm
Middle East
AfricaLatin America
OtherAsia
IndiaChinaRussiaOECD Europe
OECD Pacific
OECD North
America
The largest percentage increase in gas demand until 2030 will come from China and India. The highest absolute increase in demand is expected to come from the Middle East.
Demand and Supply Developmen
4UNECE – Committee on Sustainable Energy – 17th Annual Session, 19th November 2008
Import dependency is expected to increase in all large consumer regions
Source: E.ON Ruhrgas, Wood Mackenzie, BP Statistical Review of World Energy, 04/2008
70%201084%2020
61%2007
Import dependency of
EU27
Year
0
100
200
300
400
500
600bcm
USA
ChinaIndia
Japan, S. Korea,Taiwan
Europe
2007
2010
2015
2020
2007
2010
2015
2020
2007
2010
2015
2020
2007
2010
2015
2020
2007
2010
2015
2020
Gas imports by large consumercountries and regions
Demand and Supply Developmen
5UNECE – Committee on Sustainable Energy – 17th Annual Session, 19th November 2008
Major gas reserves are in reach of Europe
Projects and necessary investments
47,800
Russia
5,500
Europe
26,700
Iran
25,800
Qatar8,000
North Africa
5,200
Nigeria
9,100
Caspian Region
Of which:Algeria 58%Egypt 24%Libya 18%
Of which:Norway 44%Netherlands 26%UK 10%
Gas potential for Europe abundant, but supplies require huge and timely investments along the value chain
Ormen Lange + Langeled pipelineApprox. $13 bn + $3 bn (~20 bcm/a)In operation since 2007
Russia until 2020New Russian pipes: ~$55 bnUpgrade existing pipes: ~$67 bnPipes to Europe: ~$15 bn
Shtokman Offshore Field (Russia)Approx. $14 bn (first project phase,~23 bcm/a)70 – 90 bcm/a possible
Nord Stream (Russia)Approx. $11 bn (~55 bcm/a)
Nabucco Pipeline (Caspian region)Approx. $11 bn (~ 30 bcm/a)
Qatargas II LNG integrated projectApprox. $13 bn (~ 20 bcm/a)all figures: bcm
Demand and Supply Developmen
6UNECE – Committee on Sustainable Energy – 17th Annual Session, 19th November 2008
Markets as well as the investment environment in the gas industry have become more complex in recent years
Market and Investment Environment
„Old Gas World Order“ „New Gas World Order“
Shift in paradigm
EU Regulation and Unbundling
New players
Gas producers and importers active along whole value chain
Natural gas increasingly perceived as political tool
Increasing market complexityGrowing concerns about security of supply
Relatively stable market conditionsHigh perceived security of supply
Stable political framework
Established players along the value chain
Stable investment and growth
Balanced risk sharing between producers and importers
7UNECE – Committee on Sustainable Energy – 17th Annual Session, 19th November 2008
Cooperation and strategic partnerships are essential to secure infrastructure investments and diversification of supplies Different levels of
cooperation between producers and importers
StrategicPartnershipProducers
Energy dialogue between EU und producing countries
Importers
Cooperation in researchand development
Cross-border cultural exchange
Common framework for long-term investments (e.g. Energy Charter)
Promotion of energy efficiency
Cooperation and Strategic Partnership
8UNECE – Committee on Sustainable Energy – 17th Annual Session, 19th November 2008
Yuzhno-Russkoye
Partnerships in upstream projects significantly contribute to the necessary investments in the development of new gas fields E.ON acquires a stake in Yuzhno Russkoye and contributes to gas production in
Russia
Reserves: 600 billion m3Expected Plateau Production: 25 bn. m3/aStart of production: 2007Expected lifespan of production: > 25 years
Joint development of Yuzhno Russkoyevia OAO Severneftegazprom (SGNP)Shareholders of SGNP:Gazprom (50% + 2 shares), E.ON and BASF Wintershall (25% - 1 share each)
Cooperation and Strategic Partnership
9UNECE – Committee on Sustainable Energy – 17th Annual Session, 19th November 2008
Length (offshore): 1.220 kmCapacity:55 BCM (2 lines with 27,5 BCM each)Completion of the first line:According to plan - in 2011Completion of the second line:According to plan – in 2012Shareholders:OAO Gazprom (51%), WintershallHolding AG (20%), E.ON Ruhrgas (20%), Gasunie (9%) Estimated investment:~7.4 bn €
Drohne
AchimGreifswal
d
Olbernhau
St. Petersburg
Strategic partnerships enable the realisation of projects such as Nord Stream and enhance security of supply in Europe
Nord Stream is the largest infrastructure project in the European gas business
Cooperation and Strategic Partnership
10UNECE – Committee on Sustainable Energy – 17th Annual Session, 19th November 2008
Common projects in new fields of business deepen the relationship between producers and importers
Location:Lubmin (Germany)Type of power plant:CCGTPlanned Capacity:1200 MWCompletion of the second line:According to plan – in 2012Possible start of operations:2012Shareholders:OAO Gazprom (50%), E.ON (50%)
In February 2008 E.ON and Gazprom signed a Memorandum of understanding about the joint construction and operation of a gas fired power plant in Lubmin,
Germany
Cooperation and Strategic Partnership
11UNECE – Committee on Sustainable Energy – 17th Annual Session, 19th November 2008
„Big 6“ produce approx. 70% of thegas volumes needed in the EU27 in 2010
In addition to a close relationship with traditional suppliers strategic alliances with future supply regions are indispensable
0
Gas consumption of the EU27 in 2010: 550-585 bcm
Source: Company Reports, own research
BCM
150
100
50
34
61
148
83
Expected production for the EU27 in 2010
3724
Potential future supply regions
Cooperation and Strategic Partnership
12UNECE – Committee on Sustainable Energy – 17th Annual Session, 19th November 2008
Joint UNECE-EBC project on sustainable energy policies develops a common understanding of the term “security of supply”
Objectives Method and time horizon Current activities
In-depth research on energy security risks, their mitigation and financial marketsSurvey of energy security risk perceptionsEstablish a group of experts on energy security risks
Delphi study based on scenariosLarge sample of UNECE member-states, energy companies and financial institutions (to include OPEC, China, India and Japan if possible)Phased study with a total time horizon of three years time
Design and verification of methodologyIdentification of energy security risksFirst phase of the has been completed
13UNECE – Committee on Sustainable Energy – 17th Annual Session, 19th November 2008
Summary / Conclusion
Worldwide natural gas demand is projected to increase significantly until 2030
Supply for Europe is abundant but huge investments are required to mobilise supplies
Current situation:
Cooperation and strategic partnerships become even more important than in the past
Markets have become more complex and today’s investment climate is more challenging
1
2
3
Deepening existing and establishing new partnerships along the whole value chain fundamentally contributes to long-term security of supply
Summary and Conclusion
United Nations Economic Commission for Europe, Committee on Sustainable Energy
Energy Security Dialogue:Strategic alliances for energy security
- The E.ON – Gazprom Case
Uwe H. FipSenior Vice PresidentE.ON Ruhrgas AG, Essen
Geneva, 19th November 2008