vladimir drebentsov - russian gas: challenges ahead 17/10/2013
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Russian Gas: Challenges Ahead
Russia’s New Economic Association, October
17th 2013
Vladimir Drebentsov
Vice President, BP Russia,
Head of Russia and CIS Economics, BP plc
Global natural gas balance
Global growth in 2012
Annual change, Bcm
-20 0 20 40
EU
FSU
Other
Middle East
Asia Pacific
N. America
Consumption
Production
$/mmBtu
International gas prices
0
4
8
12
16
20
24
Jan-10 Jan-11 Jan-12 Jan-13
Average Japanese import price
UK NBP
US Henry Hub
Source: includes data from ICIS Heren Energy and Energy Intelligence Group
BP Statistical Review of World Energy
© BP 2013
0
500
1000
1500
2000
2500
Jan-11 Jul-11 Jan-12 Jul-12 Jan-13
US natural gas production
Source: includes data from Energy Information Administration and Baker Hughes
Production growth
Annual change, Bcm Count
Rig count
Oil
Gas
-60
-30
0
30
60
90
2011 2012
Other
Shale gas
Associated
BP Statistical Review of World Energy
© BP 2013
Shale gas and global supply growth
Bcf/d
Gas production by type and region
0
100
200
300
400
500
1990 2000 2010 2020 2030
Non-OECD other
Non-OECD shale
OECD shale
OECD other
0%
6%
12%
18%
0
20
40
60
80
1990 2000 2010 2020 2030
RoW
China
Europe & Eurasia
Canada & Mexico
US
Shale gas production
Bcf/d
% of total (RHS)
4
Production and domestic consumption
St Bcm
Source: BP Statistical Review of World Energy, BP 2030 Global Energy Outlook, CDUTEK (Central Dispatch Unit of
Ministry of Energy)
0
100
200
300
400
500
600
700
800
2000 2005 2010 2011 2012 2015 2020 2025 2030
Production Consumption
Other producers
Gazprom
Forecast
Novatek
PSA
Oil com
panies
Results of drilling for coal seam gas in
Russia
A – Expected
debit, m3/day
B – Actual
debit, m3/day
1, 3 – Upper
layers
2, 4 – Lower
layers
Taldynsk coal seam gas field
Source: Oil and Gas Geology, N3, 2013
B
Source: CDU TEK
Gas and coal supply to the power sector
Mln toe
0
50
100
150
200
2008 2009 2010 2011 2012
Gas
Coal
Gas net-storage in Russia and abroad
-15
-10
-5
0
5
10
15
20
2008 2009 2010 2011 2012
Storage change, Russia Storage change, abroadSt Bcm
Source: Gazprom
Russia’s CNG Production
0
1
2
3
4
5
6
7
8
9
2010 2011 2012 1H2013
St Bcm
Source: CDU TEK
Small-scale LNG Plants in Russia
Novgorod
Announced:
October, 2012
Launch: 2014
Planned capacity: 0.076 bcm
Perm
Launch: winter, 2013/14
Planned capacity: 0.02 bcm
Petrodvorets
Launch: 1996
Capacity: 0.012 bcm
Kingisepp
Launch: 2008
Capacity: 0.010 bcm
Smolensk
Announced:
April, 2013
Launch: 2014
Planned capacity:
0.2 bcm
Kaliningrad
1) Announced: September,
2012
Launch: 2013/14
Planned capacity: 0.034 bcm
2) In consideration
Planned capacity: 0.2 bcm
Kargal (Tomsk oblast)
Announced: February, 2013
Launch: n/a
Planned capacity: 0.03 bcm
Tambov
Announced:
September, 2012
Launch: 2014
Planned capacity: 0.41 bcm
Yekaterinburg
Launch: 2010
Capacity: 0.035 bcm
Pervouralsk
Launch: 2002
Capacity: 0.006 bcm
St Petersburg
Moscow
Source: IHS CERA
5
10
15
20
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Exports range 06-10 2011 2012 2013
St Bcm
Russian gas flows to Europe
Source: CDU TEK
US coal to gas switching
Source: includes data from Energy Information Administration and Platts
Annual change, %
Power generation
0
3
6
9
-15%
0%
15%
30%
2002-
2007
2007-
2012
2011 2012
$/mmBtu
Gas
Coal
Natural gas consumption growth
Power
Industrial
Residential
Commercial
Annual change, Bcm
Average gas price (RHS)
-30
-15
0
15
30
45
60
10 year average 2012
Power
Industrial
Residential
Commercial
BP Statistical Review of World Energy
© BP 2013
European gas-coal competition
0
20
40
60
Jan-10 Sep-10 May-11 Jan-12 Sep-12
Gas
Coal
€/MWh
EU power generation cost
Annual change, Mtoe
2012 changes in EU imports
-40
-20
0
20
Coal Natural Gas
Source: includes data from Platts, IHS McCloskey and IntercontinentalExchange
Pipeline
US
Russia Other
LNG
N. Africa
Russia
Norway
BP Statistical Review of World Energy
© BP 2013
0
5
10
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
min 06-10 Exports range 06-10 2011 2012 2013
Russian gas flows to CIS
Source: CDU TEK
St Bcm
Gas exports by destination
Source: CDU TEK
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 1H2013
Other CIS
Asia-Pacific
Belorussia
Ukraine
Europe
Launch: 2018
Planned capacity:
6.8 bcm
Sakhalin-2 LNG
Capacity: 13 bcm
Sakhalin-2 LNG
Expansion up to 20.4
bcm
Project is under
consideration
New Gas in Eastern Siberia and Far East
Source: Gazprom
Reserves - 2000 bcm
Max production - 40 bcm
Reserves – 1240 bcm
Max production – 50 bcm
Reserves - 900 bcm
Max production - 35 bcm
Reserves - 870 bcm
Max production – 16.9 bcm
Krasnoyarsk gas
production center
Reserves – 16 bcm
Max production – 7.5 bcm
to
K
rasn
oy
arsk reg
io
n
up to 38 bcm
up to 10 bcm
BP Statistical Review of World Energy
© BP 2013
-5 0 5 10
Qatar
Australia
Nigeria
Yemen
Egypt
Malaysia
Indonesia10 year average
2012
Natural gas trade
LNG exports LNG and pipeline trade
Annual change, Bcm
25%
27%
29%
31%
33%
35%
-10
0
10
20
30
40
10 year
average
2011 2012
Annual change, Bcm
Trade share of
consumption (RHS)
LN
G
Pip
elin
e
Gas trade and market integration
0%
5%
10%
15%
20%
0
20
40
60
80
1990 2000 2010 2020 2030
LNG
Bcf/d
LNG exports
% of total
consumption
(RHS)
LNG diversification
0
2
4
6
8
10
1991 1996 2001 2006 2011
Suppliers per importer
Customers per exporter
1
9
Gas production 2012-2013
59.1
52.1
54.4
50.1
47.2
40.4
41.7
57.2 54.4
55.9
50.4
46.8
41.4
40.5 40.5
45.2
49.0
52.1
59.0
40
50
60
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013 2012
St Bcm
Source: CDU TEK
Gas production per company (incl. APG)
0
50
100
150
200
250 1H2012 1H2013
Below 1 bcm
St Bcm
Source: CDU TEK
Gazprom’s production per fields – no
scarcity of new fields
0
50
100
150
200
250
300
350
400
450
500
2008 2011 2012
Other fields
Other Yamal(Noyabrsk)
Medvezhye andBovanenkovskoye
Urengoy
Yamburg
St Bcm
Source: RPI
Associated petroleum gas production and
flaring: Growth on easing 3rd
party access
0%
20%
40%
60%
80%
100%
2006 2007 2008 2009 2010 2011 2012 1H2013
Flared
Production
Source: CDU TEK
0.00
2.00
4.00
6.00
8.00
10.00
12.00
3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Russia FSU RoW
Russian gas prices still vary a lot by the
market
$/MmBtu
Source: Gazprom
Domestic gas sales and prices – tariffs will
be frozen in 2014
0
0.5
1
1.5
2
2.5
3
3.5
4
2000 2002 2004 2006 2008 2010 2012
Industry
Households
Weighted
Average
28%
7% 7%
21%
15%
22%
Domestic sales structure
Power
Other
Communal
services
Metallurgy
Fertilizers
Households
Source: Gazprom
$/MmBtu
Wholesale gas prices by country, 2012
Source: :Wholesale Gas Price Survey - 2013 Edition , International Gas Union
Gazprom’s gas business is still heavily
dependent on European gas exports
Direct Taxes Paid: $11.4 billion Revenue: $85.5 billion
Gazprom gas sales: 422.4 St Bcm
Europe
32.3% Domestic
53.5%
FSU
14.2%
Europe
54.6%
FSU
18.9%
Domestic
26.5%
FSU
23.1%
Domestic
24% Europe
52.9%
2012
Source: Gazprom, CDUTEK
0
20
40
60
80
100
120
140
160
2008 2009 2010 2011 2012
Other
Transportation of gas
Crude oil andcondensate
Electricity andheating
Oil and gas products
Gas sales
Sources of Gazprom’s revenue
$ billion
Source: Gazprom
Mineral extraction tax rate for gas –
explicit discrimination of Gazprom
0
50
100
150
200
250
300
350
2011 2012 01.01.2013 01.07.2013 2014 2015
Gazprom
Others
2011=100
Source: Tax Code
$0.25/
MmBtu
Gas reserves by company
0
10,000
20,000
30,000
40,000
Slavneft
Russneft
Lukoil
Rosneft
Novatek
Gazprom
St Bcm
Source: companies’ financial statements and annual reports
17%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2012
0
10
20
30
40
50
60
2008 2009 2010 2011 2012
Gazprom
Novatek
-10.9%
+51.6%
+42.9%
-20.8%
+43.2%
-55.9% +23.3% +32.1%
+52.1% +68.9%
Bln USD
Source: Gazprom, Novatek
Gazprom and Novatek CAPEX dynamics
0
10
20
30
40
50
60
2008 2009 2010 2011 2012
Other
Storage
Retail distribution
Power and heating
Production of oil
Gas processing
Gas production
Pipelines
Gazprom’s CAPEX breakdown
Source: Gazprom
$ billion
New export routes for Russian gas in Europe
North Stream
Stage 1, 2 capacity: 55 bcm
Further extension (st 2.3) is
under consideration
South Stream
Distance: 900 km (sea)
Planned capacity: 63
bcm
Blue Stream-2
Distance: 1213 km (sea)
Planned Capacity: 16 bcm
Source: Gazprom, Platts
Yamal-Europe II
Distance: 600 km
Planned capacity: 15 bcm
Feasibility study due in Oct
2013
Yamal-Europe
Distance: over 2000 km
Capacity: 33 bln m3
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