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Russian Gas Project up to period 2030: Myth or Reality ?

Russian Gas Project up to period 2030: Myth or Reality ?. Dr. Alexey Gromov Deputy General Director Institute for Energy Strategy Moscow, Russia. World Independent Energy Network (Baden-Baden Group) Prague April 26-27, 2010.

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Russian Gas Project up to period 2030: Myth or Reality ?

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  1. Russian Gas Project up to period 2030:Myth or Reality? Dr. Alexey Gromov Deputy General Director Institute for Energy Strategy Moscow, Russia World Independent Energy Network (Baden-Baden Group) Prague April 26-27, 2010

  2. Energy Strategy 2030 in the System of Documents of the Strategic Development Long-term forecast of the development of Russian economy for the years 2009-2030 Conception of the long-term development of the Russian Federation for the year 2020 ES-2030 General scheme of development of the gas industry for the year 2030 General scheme of allocation of power generating facilities for the year 2020 General scheme of development of the oil industry for the year 2030 State program of energy saving Eastern Gas Program Conception of the state program for exploration and exploitation of the continental shelf of the Russian Federation Program of long-term development of the fuel and energy complex of the Russian Far East Strategy of development of the power generation in the Russian Far East Investment programs of energy companies 2

  3. IES Key reference marksfor Russian Gas Sector’s Development up to period 2030 3

  4. IES Прогнозная оценка развития газовой промышленности до 2030 года Gas Export Gas Production billion cubic meters billion cubic meters East West CIS Far East Sakhalin Eastern Siberia European regions Shtokman Tomsk region Tyumen region Nadym-Pur-Taz region 1 stage 2 stage 3 stage 2005 2008 1 stage 2 stage 3 stage 2005 2008 4

  5. IES Keyprojectsfor Russian Gas Sector’s Development up to period 2030 5

  6. Disturbing results of 2009… IES 12% 24% Export to Europe Export (total) Gas production (Russia) Gas production (GAZPROM) Gas production has fallen to level of 2000… Gas export to Europe was reduced to a quarter… 6

  7. Monitoring of ES-2030 realization IES 7

  8. Risks (uncertainties) for Russian Gas Sector’s Development IES Risk Degree High Uncertainty for export expectations High Uncertainty for exportprices and contracts Medium Uncertainty for transit Low Uncertainty for technologies 8

  9. Uncertainty for Export Expectations IES Russian Gas Export forecast up to period 2030 15-20% Factors of decrease in export expectations Europe: competition growth (LNG, Nabucco) US: refuse of future Russian LNG (the boom of shale gas production) Asia-Pacific: competition growth (Central Asia) Russian gas export forecast (high level from ES-2030) Russian gas export forecast (low level from ES-2030) Russian gas export forecast (IES expectations) Risk of decrease in export expectations on 15-20 % 9

  10. Uncertainty for export prices and contracts IES Factors of decrease in price expectations Forecast for Russian gas export prices up to period 2030 (The Ministry of Economics of Russia) High volatility of oil prices Rapid development of spot trade trade in natural gas Decrease in the regional prices on LNG USD/1000 cub. m Price situation in 2009 Price expectations are overestimated… 10

  11. Uncertainty for transit Russia-Ukraine - long-term reliability of transit - deterioration of Ukrainian Gas transmission system - Transit price for Russian gas Russia – Central Asia - Sufficiency of gas reserves - Competition for Central Asia’s gas with Chine - Competition for Central Asia’s gas with Europe (Nabucco) - Throughput expansion of Gas transmission system between Russia and Central Asia (Pre-Caspianpipeline) IES 11

  12. Uncertainty for technologies Shale gas production: outlook for Europe and Chine Limits for Renewables in Europe prices, economy, ecology Gas production in Arctic region climate changes LNG production in Arctic region climate changes IES 12

  13. Overcoming ways to uncertaintiesfor Russian Gas Sector’s Development Change Изменение вектора развития газовой отрасли - From export orientation to the domestic market - From deliveries of fuel gas to gas processing - From pipeline to LNG - Change of principles for Arctic development : a support on ecological and economic expediency Revision of investment projects - Selection of priority projects from among declared in ES-2030 - Refusal of a number of ineffective projects-giants (the Southern stream, etc.) Flexibility of gas export policy - Revision of pricing system in long-term contracts of Gazprom - Flexibility increase in mutual relations with Ukraine and Central Asia Technological breakthrough - Decrease in the cost price of extraction of natural gas on the Arctic shelf - Development of LNG infrastructure - Start of projects on extraction of nonconventional gas (shale gas, low-pressure gas, ets) IES 13

  14. Thank you for your attention! IES 14

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