on cohesion, crisis and creativity common foreign …recent recent eu process eu process two steps...

Geopolitical challenges of European energy policyGeopolitical challenges of European energy policy

OOn cohesion, crisis and creativityn cohesion, crisis and creativity

Common Foreign Economic Relations Common Foreign Economic Relations -- Energy & Climate Energy & Climate

© Clingendael International Energy Programme www.clingendael.nl/ciep

Common Foreign Economic Relations Common Foreign Economic Relations -- Energy & Climate Energy & Climate Policy Policy -- Market Performance & SecurityMarket Performance & Security

ChristofChristof van van AgtAgt

Board OG21Board OG21SAS EU Hotel, Brussels, 1SAS EU Hotel, Brussels, 1stst of July 2009of July 2009

A Challenging Overview A Challenging Overview A Challenging Overview A Challenging Overview A Challenging Overview A Challenging Overview A Challenging Overview A Challenging Overview NNNNNNNNorth Sea energy sector practice, a model for : EUorth Sea energy sector practice, a model for : EU--Russia, EasternRussia, Eastern-- Partnership, Partnership, ArticArtic & Caspian Dimensions, Turkey, Middle& Caspian Dimensions, Turkey, Middle--East China, India, Africa... East China, India, Africa...

EU processEU processEU processEU processEU processEU processEU processEU process

FocusFocusFocusFocus: in or outward?: in or outward?: in or outward?: in or outward?Internal towards external market dynamics: Internal towards external market dynamics: Internal towards external market dynamics: Internal towards external market dynamics: Market deepening and/or Market deepening and/or Market deepening and/or Market deepening and/or shift towards outreach (but not enlargement)shift towards outreach (but not enlargement)shift towards outreach (but not enlargement)shift towards outreach (but not enlargement)

Concern: market structure & energy mixConcern: market structure & energy mixConcern: market structure & energy mixConcern: market structure & energy mix


Concern: market structure & energy mixConcern: market structure & energy mixConcern: market structure & energy mixConcern: market structure & energy mixNot Not Not Not oil but gas import dependency (markets and cartels; then and now)oil but gas import dependency (markets and cartels; then and now)oil but gas import dependency (markets and cartels; then and now)oil but gas import dependency (markets and cartels; then and now)Renewable to the rescue (Renewable to the rescue (Renewable to the rescue (Renewable to the rescue (20/20/20 goals) 20/20/20 goals) 20/20/20 goals) 20/20/20 goals) or nuclear and coal revisited? or nuclear and coal revisited? or nuclear and coal revisited? or nuclear and coal revisited?

Scene settersScene settersScene settersScene setters: sustainable growth : sustainable growth : sustainable growth : sustainable growth Market Performance, Geopolitical Security, Climate ChangeMarket Performance, Geopolitical Security, Climate ChangeMarket Performance, Geopolitical Security, Climate ChangeMarket Performance, Geopolitical Security, Climate Change(Carbon, Credit Crisis, Conflicts and the road to ... Copenhagen)(Carbon, Credit Crisis, Conflicts and the road to ... Copenhagen)(Carbon, Credit Crisis, Conflicts and the road to ... Copenhagen)(Carbon, Credit Crisis, Conflicts and the road to ... Copenhagen)

EU EU ProcessProcess

GeopoliticalGeopolitical challengeschallenges of of EuropeanEuropean

ⒸⒸⒸⒸ Clingendael International Energy Programme www.clingendael.nl/ciep

GeopoliticalGeopolitical challengeschallenges of of EuropeanEuropeanenergyenergy policypolicy; ; internalinternal aspectsaspects

The common position triangleThe common position triangleThe common position triangleThe common position triangleThe common position triangleThe common position triangleThe common position triangleThe common position triangleThree ways to share responsibility and accommodate challenges...Three ways to share responsibility and accommodate challenges...Three ways to share responsibility and accommodate challenges...Three ways to share responsibility and accommodate challenges...Three ways to share responsibility and accommodate challenges...Three ways to share responsibility and accommodate challenges...Three ways to share responsibility and accommodate challenges...Three ways to share responsibility and accommodate challenges...

‘‘‘‘Subsidiarity’Subsidiarity’Subsidiarity’Subsidiarity’Multilateral Instruments (WTO, ECT) & EU ‘Multilateral Instruments (WTO, ECT) & EU ‘Multilateral Instruments (WTO, ECT) & EU ‘Multilateral Instruments (WTO, ECT) & EU ‘AcquisAcquisAcquisAcquis CommunautaireCommunautaireCommunautaireCommunautaire’’’’


‘single ‘single ‘single ‘single ‘single ‘single ‘single ‘single voice’ voice’ voice’ voice’ voice’ voice’ voice’ voice’ & ‘soft & ‘soft & ‘soft & ‘soft & ‘soft & ‘soft & ‘soft & ‘soft power’power’power’power’power’power’power’power’

SovereigntySovereigntySovereigntySovereigntyMember StateMember StateMember StateMember State

BilateralBilateralBilateralBilateral

SolidaritySolidaritySolidaritySolidarityMember StateMember StateMember StateMember StateRegionalRegionalRegionalRegional

Recent Recent Recent Recent Recent Recent Recent Recent EU ProcessEU ProcessEU ProcessEU ProcessEU ProcessEU ProcessEU ProcessEU ProcessTwo steps forward one step backTwo steps forward one step backTwo steps forward one step backTwo steps forward one step backTwo steps forward one step backTwo steps forward one step backTwo steps forward one step backTwo steps forward one step back

• 3333rdrdrdrd internal energy market legislative package (complete internal internal energy market legislative package (complete internal internal energy market legislative package (complete internal internal energy market legislative package (complete internal energy market facilitate cross border infrastructure investment)energy market facilitate cross border infrastructure investment)energy market facilitate cross border infrastructure investment)energy market facilitate cross border infrastructure investment)

• 2222ndndndnd Strategic energy review (priorities on gas: Southern Strategic energy review (priorities on gas: Southern Strategic energy review (priorities on gas: Southern Strategic energy review (priorities on gas: Southern Corridors, LNG, Corridors, LNG, Corridors, LNG, Corridors, LNG, MedringMedringMedringMedring, North, North, North, North----South connectivity)South connectivity)South connectivity)South connectivity)

• Van Van Van Van AartsenAartsenAartsenAartsen report on the natural gas connection with Caspian Sea report on the natural gas connection with Caspian Sea report on the natural gas connection with Caspian Sea report on the natural gas connection with Caspian Sea


• Van Van Van Van AartsenAartsenAartsenAartsen report on the natural gas connection with Caspian Sea report on the natural gas connection with Caspian Sea report on the natural gas connection with Caspian Sea report on the natural gas connection with Caspian Sea countries and the Middle East countries and the Middle East countries and the Middle East countries and the Middle East ((((NabuccoNabuccoNabuccoNabucco –––– ‘Caspian Development Corporation’ ‘Caspian Development Corporation’ ‘Caspian Development Corporation’ ‘Caspian Development Corporation’ Concept CDC) Concept CDC) Concept CDC) Concept CDC)

• EU EU EU EU Council Eastern Partnership, Council Eastern Partnership, Council Eastern Partnership, Council Eastern Partnership, NabuccoNabuccoNabuccoNabucco summitry 7&8 May 2009 summitry 7&8 May 2009 summitry 7&8 May 2009 summitry 7&8 May 2009 • Eastern Partnership DCFTA’s including energy…. Eastern Partnership DCFTA’s including energy…. Eastern Partnership DCFTA’s including energy…. Eastern Partnership DCFTA’s including energy…. CDC?CDC?CDC?CDC?• Partnership Cooperation Agreement with RussiaPartnership Cooperation Agreement with RussiaPartnership Cooperation Agreement with RussiaPartnership Cooperation Agreement with Russia

The importance of being constantThe importance of being constantThe importance of being constantThe importance of being constantThe importance of being constantThe importance of being constantThe importance of being constantThe importance of being constant

‘Innovative thinking’ CDC ‘Innovative thinking’ CDC ‘Innovative thinking’ CDC ‘Innovative thinking’ CDC ‘Innovative thinking’ CDC ‘Innovative thinking’ CDC ‘Innovative thinking’ CDC ‘Innovative thinking’ CDC “...mechanism to be explored in full recognition of EU rules...“...mechanism to be explored in full recognition of EU rules...“...mechanism to be explored in full recognition of EU rules...“...mechanism to be explored in full recognition of EU rules...“...mechanism to be explored in full recognition of EU rules...“...mechanism to be explored in full recognition of EU rules...“...mechanism to be explored in full recognition of EU rules...“...mechanism to be explored in full recognition of EU rules...New generation of energy interdependence provisions...” New generation of energy interdependence provisions...” New generation of energy interdependence provisions...” New generation of energy interdependence provisions...” New generation of energy interdependence provisions...” New generation of energy interdependence provisions...” New generation of energy interdependence provisions...” New generation of energy interdependence provisions...” (com 2008 781)(com 2008 781)(com 2008 781)(com 2008 781)(com 2008 781)(com 2008 781)(com 2008 781)(com 2008 781)

• The ‘missing link’ in EU energy security to be overcome by a The ‘missing link’ in EU energy security to be overcome by a The ‘missing link’ in EU energy security to be overcome by a The ‘missing link’ in EU energy security to be overcome by a mechanism for comechanism for comechanism for comechanism for co----ordinated gas purchasingordinated gas purchasingordinated gas purchasingordinated gas purchasing

• Catalyse gas production and infrastructure development (not Catalyse gas production and infrastructure development (not Catalyse gas production and infrastructure development (not Catalyse gas production and infrastructure development (not involved in production) involved in production) involved in production) involved in production)

• Focus beyond Azerbaijan on Central Asia and Middle East (plus Focus beyond Azerbaijan on Central Asia and Middle East (plus Focus beyond Azerbaijan on Central Asia and Middle East (plus Focus beyond Azerbaijan on Central Asia and Middle East (plus independent Russian gas producers)independent Russian gas producers)independent Russian gas producers)independent Russian gas producers)


independent Russian gas producers)independent Russian gas producers)independent Russian gas producers)independent Russian gas producers)• Present EU gas consumption as a ‘single buyer’ in longPresent EU gas consumption as a ‘single buyer’ in longPresent EU gas consumption as a ‘single buyer’ in longPresent EU gas consumption as a ‘single buyer’ in long----term credit term credit term credit term credit

worthy take or pay contract (50 years plus possible phase out) worthy take or pay contract (50 years plus possible phase out) worthy take or pay contract (50 years plus possible phase out) worthy take or pay contract (50 years plus possible phase out) • To overcome negotiation burden with several, and underpin massive To overcome negotiation burden with several, and underpin massive To overcome negotiation burden with several, and underpin massive To overcome negotiation burden with several, and underpin massive

upstream investment needs upstream investment needs upstream investment needs upstream investment needs • Optionality, nonOptionality, nonOptionality, nonOptionality, non----discrimination, transparency , accountability etc discrimination, transparency , accountability etc discrimination, transparency , accountability etc discrimination, transparency , accountability etc • To be explored and definedTo be explored and definedTo be explored and definedTo be explored and defined

From market failure to market intervention?From market failure to market intervention?From market failure to market intervention?From market failure to market intervention?From market failure to market intervention?From market failure to market intervention?From market failure to market intervention?From market failure to market intervention?

EU EU ExternalExternal relationsrelations

GeopoliticalGeopolitical challengeschallenges of of EuropeanEuropeanenergyenergy policypolicy; ; externalexternal aspectsaspects


Euro Euro AtlanticAtlantic--AsianAsian Pacific relations Pacific relations and ‘and ‘EurasiaEurasia’’

Past & new Russian InitiativesPast & new Russian InitiativesPast & new Russian InitiativesPast & new Russian InitiativesPast & new Russian InitiativesPast & new Russian InitiativesPast & new Russian InitiativesPast & new Russian InitiativesInternational law, legal nihilism , policy turnsInternational law, legal nihilism , policy turnsInternational law, legal nihilism , policy turnsInternational law, legal nihilism , policy turnsInternational law, legal nihilism , policy turnsInternational law, legal nihilism , policy turnsInternational law, legal nihilism , policy turnsInternational law, legal nihilism , policy turns

PastPastPastPast::::Energy Charter Nuclear Protocol Energy Charter Nuclear Protocol Energy Charter Nuclear Protocol Energy Charter Nuclear Protocol Energy Charter CIS Electricity Protocol Energy Charter CIS Electricity Protocol Energy Charter CIS Electricity Protocol Energy Charter CIS Electricity Protocol Energy Charter Major Accidents Protocol Energy Charter Major Accidents Protocol Energy Charter Major Accidents Protocol Energy Charter Major Accidents Protocol

New New New New (‘rebus sic (‘rebus sic (‘rebus sic (‘rebus sic stantibusstantibusstantibusstantibus’ situation change?):’ situation change?):’ situation change?):’ situation change?):Energy Security Treaty to replace Energy Charter TreatyEnergy Security Treaty to replace Energy Charter TreatyEnergy Security Treaty to replace Energy Charter TreatyEnergy Security Treaty to replace Energy Charter TreatyTransit Emergency situations Transit Emergency situations Transit Emergency situations Transit Emergency situations


A sense of belonging or desire to take exemption? A sense of belonging or desire to take exemption? A sense of belonging or desire to take exemption? A sense of belonging or desire to take exemption? A sense of belonging or desire to take exemption? A sense of belonging or desire to take exemption? A sense of belonging or desire to take exemption? A sense of belonging or desire to take exemption?

Transit Emergency situations Transit Emergency situations Transit Emergency situations Transit Emergency situations Code on International Nuclear LawCode on International Nuclear LawCode on International Nuclear LawCode on International Nuclear Law

OutstandingOutstandingOutstandingOutstanding( good faith):( good faith):( good faith):( good faith):WTO, OECD , membership WTO, OECD , membership WTO, OECD , membership WTO, OECD , membership ––––role within G8?role within G8?role within G8?role within G8?EnergyEnergyEnergyEnergy Charter Treaty, Provisional application pending ratification (Charter Treaty, Provisional application pending ratification (Charter Treaty, Provisional application pending ratification (Charter Treaty, Provisional application pending ratification (YukosYukosYukosYukos)?)?)?)?Energy Charter Transit Protocol, Adoption (CaspianEnergy Charter Transit Protocol, Adoption (CaspianEnergy Charter Transit Protocol, Adoption (CaspianEnergy Charter Transit Protocol, Adoption (Caspian CCCCentral Asia entral Asia entral Asia entral Asia GazpromGazpromGazpromGazprom)?)?)?)?

Key issues for European Union relations with PartnersKey issues for European Union relations with PartnersKey issues for European Union relations with PartnersKey issues for European Union relations with PartnersKey issues for European Union relations with PartnersKey issues for European Union relations with PartnersKey issues for European Union relations with PartnersKey issues for European Union relations with Partners

RussiaRussiaRussiaRussia::::Asymmetric Asymmetric Asymmetric Asymmetric market market market market and policy development (‘and policy development (‘and policy development (‘and policy development (‘good faith’ at good faith’ at good faith’ at good faith’ at issue?) issue?) issue?) issue?) Policy initiatives to rebuild confidence fail to meet Policy initiatives to rebuild confidence fail to meet Policy initiatives to rebuild confidence fail to meet Policy initiatives to rebuild confidence fail to meet despite shared interest despite shared interest despite shared interest despite shared interest (recent WTO joint submission (recent WTO joint submission (recent WTO joint submission (recent WTO joint submission in response to Eastern Partnership?)in response to Eastern Partnership?)in response to Eastern Partnership?)in response to Eastern Partnership?)Security, economic integration governanceSecurity, economic integration governanceSecurity, economic integration governanceSecurity, economic integration governance

TurkeyTurkeyTurkeyTurkey, South Caucasus Central Asia China:, South Caucasus Central Asia China:, South Caucasus Central Asia China:, South Caucasus Central Asia China:


TurkeyTurkeyTurkeyTurkey, South Caucasus Central Asia China:, South Caucasus Central Asia China:, South Caucasus Central Asia China:, South Caucasus Central Asia China:Stronger economic engagement with wider region (EP, DCFTA, CDC etc) Stronger economic engagement with wider region (EP, DCFTA, CDC etc) Stronger economic engagement with wider region (EP, DCFTA, CDC etc) Stronger economic engagement with wider region (EP, DCFTA, CDC etc) Upstream investment and transit linksUpstream investment and transit linksUpstream investment and transit linksUpstream investment and transit linksGovernance and notably level playing field for IOC and NOC relationsGovernance and notably level playing field for IOC and NOC relationsGovernance and notably level playing field for IOC and NOC relationsGovernance and notably level playing field for IOC and NOC relations

Ukraine Belarus: Ukraine Belarus: Ukraine Belarus: Ukraine Belarus: Economic reform, investment, Economic reform, investment, Economic reform, investment, Economic reform, investment, ttttransit trade and governanceransit trade and governanceransit trade and governanceransit trade and governance

The The MarketMarket ChallengeChallenge

GeopoliticalGeopolitical challengeschallenges of of EuropeanEuropean


GeopoliticalGeopolitical challengeschallenges of of EuropeanEuropeanenergyenergy policypolicy; ; oiloil & gas + & gas + climateclimate

South East Europe & Black Sea regionSouth East Europe & Black Sea regionSouth East Europe & Black Sea regionSouth East Europe & Black Sea regionSouth East Europe & Black Sea regionSouth East Europe & Black Sea regionSouth East Europe & Black Sea regionSouth East Europe & Black Sea regionRecent events expose network fragility and solidarity issues Recent events expose network fragility and solidarity issues Recent events expose network fragility and solidarity issues Recent events expose network fragility and solidarity issues Recent events expose network fragility and solidarity issues Recent events expose network fragility and solidarity issues Recent events expose network fragility and solidarity issues Recent events expose network fragility and solidarity issues


Caspian key to overall gas market performance including RussiaCaspian key to overall gas market performance including RussiaCaspian key to overall gas market performance including RussiaCaspian key to overall gas market performance including RussiaCaspian key to overall gas market performance including RussiaCaspian key to overall gas market performance including RussiaCaspian key to overall gas market performance including RussiaCaspian key to overall gas market performance including Russia

© OECD/IEA,(2007© OECD/IEA,(2007))

EU Import EU Import DependenciesDependenciesBron: Europese Commissie 2008


Gas imports will have to rely on both pipeline and LNG imports Gas imports will have to rely on both pipeline and LNG imports Gas imports will have to rely on both pipeline and LNG imports Gas imports will have to rely on both pipeline and LNG imports Gas imports will have to rely on both pipeline and LNG imports Gas imports will have to rely on both pipeline and LNG imports Gas imports will have to rely on both pipeline and LNG imports Gas imports will have to rely on both pipeline and LNG imports

PostPost--crisiscrisis projectionsprojectionsGas Gas demanddemand destructiondestruction, , howhow does does RussiaRussia and the and the CaspianCaspian fitfit??

Source: Primes, various Baseline NEP scenario

bcm/a 61 USD/bbl 100 USD/bbl 61 USD/bbl 100 USD/bbl

EU demand 591 518 467 404

EU production 135 132 125 117

Net imports 456 386 340 287

Russia 181 - 250


Norway 110 - 140

Algeria 110 – 115

Total 401 - 505

Call on other sources Strongly dependent on the response of the three largest

suppliers to EU net import prospects

© (Source EU Primes OME Industry© (Source EU Primes OME Industry))

Only robust growth in gas demand ( the transition fuel for climate change ) Only robust growth in gas demand ( the transition fuel for climate change ) Only robust growth in gas demand ( the transition fuel for climate change ) Only robust growth in gas demand ( the transition fuel for climate change ) Only robust growth in gas demand ( the transition fuel for climate change ) Only robust growth in gas demand ( the transition fuel for climate change ) Only robust growth in gas demand ( the transition fuel for climate change ) Only robust growth in gas demand ( the transition fuel for climate change ) avoids displacement of market shareavoids displacement of market shareavoids displacement of market shareavoids displacement of market shareavoids displacement of market shareavoids displacement of market shareavoids displacement of market shareavoids displacement of market share

Europe is encircled by plentiful pipeline supplies Europe is encircled by plentiful pipeline supplies LNG largely an Asian Pacific and transatlantic game?LNG largely an Asian Pacific and transatlantic game?

155

33

55

86

24

41

89

3 tcm

88 bcm†††

Norwegian gas reserves and supply to Europe in 2007

Reserves

Export to Europe

1.3 tcm

Azeri gas reserves and supply to Europe in 2007

Reserves

44.7 tcm

156 bcm†††

Reserves

Export to Europe

Russian gas reserves and supply to Europe in 2007

30

x

x

Existing pipeline export capacity

Committed/planned/ proposed pipeline export

Clingendael International Energy Programme www.clingendael.nl/ciep

12 10

8

8***

155

30

20

16

31

20

27*

9**

1.3 tcm

6.6 bcm†

Reserves

Export to Europe

27.8 tcm

7 bcm

Iranian gas reserves and supply to Europe in 2007

Reserves

Export to Europe1.5 tcm

8 bcm††

Libyan gas reserves and supply to Europe in 2007

Reserves

Export to Europe

4.5 tcm

27 bcm††

Algerian gas reserves and supply to Europe in 2007

Reserves

Export to Europe Sources: GasTerra; OME; BP;

Gazprom; CIEP analysis

* The TransMed will be

extended to 33.5bcm/yr in

2008.

** The South Caucasus

pipeline could be extended

to 16 bcm/yr in 2012.

*** The Greenstream could

be extended to 11 bcm/yr.

† Data from 2006; contract

is not solid.

†† excluding LNG supply to

Europe.

††† Converted to European

bcm.

proposed pipeline export capacity

Routes & SuppliesSouthern Corridors

Urengoy

Other Gazprom fieldsZapolyarnoye

New fields to meet

Gazprom's outlook

300

400

500

600

700

800

Bcm

Gazprom

outlook

Urengoy

Other Gazprom fieldsZapolyarnoye

New fields to meet

Gazprom's outlook

300

400

500

600

700

800

Bcm

Gazprom

outlook

Russia leans on Central Asian gas so does the Russia leans on Central Asian gas so does the Russia leans on Central Asian gas so does the Russia leans on Central Asian gas so does the Russia leans on Central Asian gas so does the Russia leans on Central Asian gas so does the Russia leans on Central Asian gas so does the Russia leans on Central Asian gas so does the EUEUEUEUEUEUEUEUBridge to Bridge to Bridge to Bridge to Bridge to Bridge to Bridge to Bridge to GazpromGazpromGazpromGazpromGazpromGazpromGazpromGazprom, gateway to Europe backdoor to China, gateway to Europe backdoor to China, gateway to Europe backdoor to China, gateway to Europe backdoor to China, gateway to Europe backdoor to China, gateway to Europe backdoor to China, gateway to Europe backdoor to China, gateway to Europe backdoor to China


Southern Corridors

Non-Gazprom production and outlook

(independent producers and Central Asia)

Non-Gazprom

productionMedvezhye

Yamburg

0

100

200

1990 1995 2000 2005 2010 2015 2020

IEA outlook of Gazprom production

New fields to meet

Gazprom’s outlookNon-Gazprom production and outlook

(independent producers and Central Asia)

Non-Gazprom

productionMedvezhye

Yamburg

0

100

200

1990 1995 2000 2005 2010 2015 2020

IEA outlook of Gazprom production

New fields to meet

Gazprom’s outlook

Direct market access and Direct market access and Direct market access and Direct market access and Direct market access and Direct market access and Direct market access and Direct market access and resource diversification resource diversification resource diversification resource diversification resource diversification resource diversification resource diversification resource diversification are keyare keyare keyare keyare keyare keyare keyare key

© OECD/IEA,(2007© OECD/IEA,(2007

Gazprom Gazprom supplysupply outlookoutlook


Pipelines aside Pipelines aside Pipelines aside Pipelines aside Pipelines aside Pipelines aside Pipelines aside Pipelines aside upstream investment is the real issueupstream investment is the real issueupstream investment is the real issueupstream investment is the real issueupstream investment is the real issueupstream investment is the real issueupstream investment is the real issueupstream investment is the real issue


Economic downEconomic downEconomic downEconomic downEconomic downEconomic downEconomic downEconomic down--------turn may help to focus minds turn may help to focus minds turn may help to focus minds turn may help to focus minds turn may help to focus minds turn may help to focus minds turn may help to focus minds turn may help to focus minds to make to make to make to make to make to make to make to make resources and resources and resources and resources and resources and resources and resources and resources and available available available available available available available available in in in in in in in in rationalized routes when economy reboundsrationalized routes when economy reboundsrationalized routes when economy reboundsrationalized routes when economy reboundsrationalized routes when economy reboundsrationalized routes when economy reboundsrationalized routes when economy reboundsrationalized routes when economy rebounds

© OECD/IEA,(2007© OECD/IEA,(2007))© OECD/IEA,(2008© OECD/IEA,(2008))

Azerbaijan Gas Supply ProjectionsAzerbaijan Gas Supply Projections

20

30

40

50

60


0

10

20

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

production moderate case import

production high case domestic demand

highest case ©governments and industry statements,(2007)

Turkmen Gas Supply ProjectionsTurkmen Gas Supply Projections

60

80

100

120

140


0

20

40

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

production moderate case production high case

highest case domestic demand © Industry,(2007)

Close up TurkmenistanClose up Turkmenistan

AREA OF NEXT SLIDE


PETRONAS

ADB

Technology & Capital intensive development needs require Technology & Capital intensive development needs require Technology & Capital intensive development needs require Technology & Capital intensive development needs require Technology & Capital intensive development needs require Technology & Capital intensive development needs require Technology & Capital intensive development needs require Technology & Capital intensive development needs require premiere league playerspremiere league playerspremiere league playerspremiere league playerspremiere league playerspremiere league playerspremiere league playerspremiere league players

The Next SlideThe Next SlideTurkmen Uzbek Turkmen Uzbek codependencycodependency


Convergence of Central Asia Centre IV in UzbekistanConvergence of Central Asia Centre IV in UzbekistanConvergence of Central Asia Centre IV in UzbekistanConvergence of Central Asia Centre IV in UzbekistanConvergence of Central Asia Centre IV in UzbekistanConvergence of Central Asia Centre IV in UzbekistanConvergence of Central Asia Centre IV in UzbekistanConvergence of Central Asia Centre IV in Uzbekistan

Iran Iran Evolving viewsEvolving views

GovernanceGovernanceGovernanceGovernance asideasideasideasidea a a a veryveryveryvery long term gamelong term gamelong term gamelong term game

• CurrentCurrentCurrentCurrent Gas Gas Gas Gas exportsexportsexportsexports potentialpotentialpotentialpotentialHigh High High High domesticdomesticdomesticdomestic demanddemanddemanddemandReinjectionReinjectionReinjectionReinjection requirementsrequirementsrequirementsrequirements


ReinjectionReinjectionReinjectionReinjection requirementsrequirementsrequirementsrequirementsPetrochemichalPetrochemichalPetrochemichalPetrochemichal ambitionsambitionsambitionsambitions

• FutureFutureFutureFuture Gas Export Gas Export Gas Export Gas Export potentialpotentialpotentialpotentialGeopoliticalGeopoliticalGeopoliticalGeopolitical factorsfactorsfactorsfactorsGeographicGeographicGeographicGeographic factorsfactorsfactorsfactors

• RegionalRegionalRegionalRegional interconnectionsinterconnectionsinterconnectionsinterconnections• China India PakistanChina India PakistanChina India PakistanChina India Pakistan

Iran Iran running on vapours?running on vapours?

Nat. Gas

40000

50000

60000

70000

80000

90000


0

10000

20000

30000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Production Imports Exports Total Consumption

Iran currently imports gas from Turkmenistan at close to $300,Iran currently imports gas from Turkmenistan at close to $300,-- tcmtcm

Chinese Chinese marketmarket dynamicsdynamicsEuro Atlantic process and Asian Pacific practiceEuro Atlantic process and Asian Pacific practiceEuro Atlantic process and Asian Pacific practiceEuro Atlantic process and Asian Pacific practiceEuro Atlantic process and Asian Pacific practiceEuro Atlantic process and Asian Pacific practiceEuro Atlantic process and Asian Pacific practiceEuro Atlantic process and Asian Pacific practice


Bron: Geopolitiek spel om energiecorridors, Jan-Hein Chrisstoffels, Susann Handke en Coby van der Linde, in: Geografie januari 2008, januari 2008.

Market diversity Market diversity Market diversity Market diversity Market diversity Market diversity Market diversity Market diversity level playing field with clear & stable trade and investment terms hedge level playing field with clear & stable trade and investment terms hedge level playing field with clear & stable trade and investment terms hedge level playing field with clear & stable trade and investment terms hedge level playing field with clear & stable trade and investment terms hedge level playing field with clear & stable trade and investment terms hedge level playing field with clear & stable trade and investment terms hedge level playing field with clear & stable trade and investment terms hedge

against risk perceptions against risk perceptions against risk perceptions against risk perceptions against risk perceptions against risk perceptions against risk perceptions against risk perceptions

ConclusionsConclusions

• Strategic investment in market needs government Strategic investment in market needs government Strategic investment in market needs government Strategic investment in market needs government support that enables broad market integrationsupport that enables broad market integrationsupport that enables broad market integrationsupport that enables broad market integration

• This will enable a more sustainable gas market This will enable a more sustainable gas market This will enable a more sustainable gas market This will enable a more sustainable gas market configuration in the wider region and avoid fragmentationconfiguration in the wider region and avoid fragmentationconfiguration in the wider region and avoid fragmentationconfiguration in the wider region and avoid fragmentation

• Roadblocks may be cleared by focussing on Turkish Roadblocks may be cleared by focussing on Turkish Roadblocks may be cleared by focussing on Turkish Roadblocks may be cleared by focussing on Turkish transit/accession terms and mutual market accesstransit/accession terms and mutual market accesstransit/accession terms and mutual market accesstransit/accession terms and mutual market access


transit/accession terms and mutual market accesstransit/accession terms and mutual market accesstransit/accession terms and mutual market accesstransit/accession terms and mutual market access• Eastern Partnership may help to calibrate EU Eastern Partnership may help to calibrate EU Eastern Partnership may help to calibrate EU Eastern Partnership may help to calibrate EU

policies, implementation resolve (DCFTA including policies, implementation resolve (DCFTA including policies, implementation resolve (DCFTA including policies, implementation resolve (DCFTA including energy) is keyenergy) is keyenergy) is keyenergy) is key

• Pending major investment smaller incremental steps can Pending major investment smaller incremental steps can Pending major investment smaller incremental steps can Pending major investment smaller incremental steps can be taken to improve reverse flow, interconnectivity etc.be taken to improve reverse flow, interconnectivity etc.be taken to improve reverse flow, interconnectivity etc.be taken to improve reverse flow, interconnectivity etc.

• Can external energy policy tools differ from internal, if Can external energy policy tools differ from internal, if Can external energy policy tools differ from internal, if Can external energy policy tools differ from internal, if prospect of integration/ market reform is not there?prospect of integration/ market reform is not there?prospect of integration/ market reform is not there?prospect of integration/ market reform is not there?

• ...?...?...?...?

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