Download - Russian LNG Geopolitical focus

National Energy Security FundNational Energy Security Fund

Russian LNG: Geopolitical Focus

Konstantin SimonovKonstantin SimonovLondonLondon

2277thth of September of September20120111


SwingSwings of Es of Expectationxpectationss

•2002006-08: expectation of 6-08: expectation of increasing of prices and gas increasing of prices and gas deficit deficit

•2009-20102009-2010: expectation of cheap : expectation of cheap gas and gas and long-term long-term gas to gas gas to gas competition competition

•2011: 2011: carefulcareful return to old agenda return to old agenda


Russia: Expectations Russia: Expectations of Consumers of Consumers

•2005-20082005-2008: level of production?: level of production?•2009-2010 – 2009-2010 – level of prices?level of prices?•2011 – 2011 – level of cheap gas level of cheap gas

productionproduction? ?

Quantity or PriceQuantity or Price? ?


CCase forase for Russia Russia

•Qatar Qatar moratoriummoratorium•Fukushima and the end of Fukushima and the end of

“nuclear renaissance” “nuclear renaissance” •““Arabian spring” Arabian spring” •Budget crises in EU and future Budget crises in EU and future

of renewablesof renewables


CCase againstase against Russia Russia

•Shale gas Shale gas •Possibility of Possibility of second wave of second wave of

economic economic crisiscrisis•LNGLNG??


Russian Attitude to LNGRussian Attitude to LNG

DDual relationual relation •OOn the n the one handone hand: new markets for : new markets for

Russian gas, Russian gas, additionaladditional flexibility of flexibility of supplysupply

•OOn the other handn the other hand: : competitorcompetitors, s, possible destruction of existing possible destruction of existing pricing system (long-term contracts) pricing system (long-term contracts)

Pipes for Europe, LNG for Asia and Pipes for Europe, LNG for Asia and Atlantic marketAtlantic market


Russian Market Strategy Russian Market Strategy

Source: General Scheme for Gas Industry Source: General Scheme for Gas Industry Development to 2030Development to 2030


Today’s CompetitorsToday’s Competitors

Main LNG Producers (2010, bcm)

75,75

31,36 30,5425,36 23,90 20,38 19,31

11,49 9,71 8,83 7,90 13,40

-10,0020,0030,0040,0050,0060,0070,0080,00

Source: Source: BP World Energy Outlook 2011


Today’s Competitors Today’s Competitors

Source: Source: BP World Energy Outlook 2011

Production of LNG (2010, bcm)

100,5 96

58,5

2213,5

0

20

40

60

80

100

120

Middle East Asian Pacific Africa Latin America Russia


Short-Term Forecast Short-Term Forecast

LNG Liquefaction Plants under Construction (Summer, 2011)

Country Plant Capacity

(bcm) Capacity (Mtpa)

Start Date

Skikda (rebuild) 6,1 4,5 2013

Algeria Gassi Touil 6,4 4,7 2013

Angola Angola 7,1 5,2 2012 Pluto 6,5 4,8 2011

Gorgon 20,4 15,0 2014 Gladstone LNG 10,6 7,8 2014

Queensland Curtis

11,6 8,5 2015 Australia

Prelude 4,8 3,6 2016 Indonesia Donggi Senoro 2,7 2,0 2014

Papua New Guinea

PNG LNG 9,0 6,6 2014

Source: IEA, NESF


Forecast from Russia Forecast from Russia

Forecast for LNG Production in 2030 (Bcm)

245225

190

45

95

0

50

100

150

200

250

300

Africa Asian Pacific Middle East Latin America Russia

Source: General Scheme for Gas Industry Development to Source: General Scheme for Gas Industry Development to 20302030


Who is the Main Threat? Who is the Main Threat?

Source: Source: BP World Energy Outlook 2011,General Scheme for Gas Industry General Scheme for Gas Industry

Development to 2030Development to 2030

Forecast for LNG Production in 2030 (Bcm)

58,5

96 100,5

22 13,5

245225

190

45

95

0

50

100

150

200

250

300

Africa Asian Pacific Middle East Latin America Russia

2010y

2030y


List of Compatitors List of Compatitors

• Iran – political Iran – political uncertaintyuncertainty•Nigeria - political iNigeria - political innstability stability •North of Africa – “Arabian spring”North of Africa – “Arabian spring”•Malaysia and Indonesia – problems Malaysia and Indonesia – problems

with reserves and increasing of with reserves and increasing of domestic consumption domestic consumption

•Norway – lack of proved reservesNorway – lack of proved reserves

•Main Russian problems era Qatar and Main Russian problems era Qatar and Australia Australia


LNG Capacity and Import LNG Capacity and Import to Europe (bcm)to Europe (bcm)

Number of LNG

Terminals

Planned Capacity (2010)

Import in 2009

Import in 2010

Production in 2009 (Rated

capacity)

Europe 19 163 68,9 98,5 53 (74) Europe +Africa

Belgium 1 9 6,5 France 3 25,2 13,1

Italy 2 11,3 2,9 Spain 6 50 27

Greece 1 5 0,7 Portugal 1 5,2 2,8

U.K. 3 45,1 10,2 Turkey 2 12,2 5,7

North America 17 190 17,7 20 (19,6)

USA 10 153,8 12,8 12,2

South America 4 14,1 2 -

Middle East 1 7 0,9 68,5 (94,5)

Asia 39 415,7 153,4 178 95,2 (119) China 4 12,6 7,6 12,6 India 2 15,9 12,6 13

Japan 27 249,7 90,2 98 R. of Korea 4 104,3 34,3 43,6

Taiwan 2 34 11,8 11,6 ALL 80 790 242,9 298* 240 (320)

Source: LNG Report


IIn search ofn search of Geopolitical Geopolitical CompromiseCompromise

•China for Australia, Japan for China for Australia, Japan for SakhalinSakhalin??

•Denial from nuclear energy in Denial from nuclear energy in Japan?Japan?

•What to do with Qatar?What to do with Qatar?


Yamal vs AustraliaYamal vs Australia

Gorgon LNG Yamal LNG Capital

expenditure $38 billion $28 billion

Capacity 15 million tones 15-16 million

tones First

delivery 2014 2016

Peculiar obstacles

Carbon sequestration

Delivery of LNG through ice-

fields


RRestorationestoration of Russian Gas of Russian Gas ExportExport??

Source: GazpromSource: Gazprom


Export PlansExport Plans

Source: Economic Development MinistrySource: Economic Development Ministry


Thank you! Thank you!

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