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National Energy Security Fund
Russia and Europe:
Battle or Cooperation?
Konstantin Simonov
Athens March 28
2012
National Energy Security Fund
Choice Point
• Сhoice point for Europe: to preserve Russia as the main supplier of gas or to continue the process of diversification and liberalization of market
• Choice point for Russia: struggle for European market or reorientation to new consumers in Asia
• Europe wants to implement American model of market. But in USA gas market is self-sufficient
• Main question for Russia: to invest money to greenfields or to wait
National Energy Security Fund
Situation is Returned to 2007
Gazprom Supplies to Europe, Turkey,
Billion Cubic Metres
150,5
158,8
140,6138,6
150
125
130
135
140
145
150
155
160
165
2007y 2008 y 2009 y 2010y 2011y
Source: Gazprom
National Energy Security Fund
Situation is Returned to 2007
Gazprom supplies to Europe and Turkey, bcm
2007 2008 2009 2010 2011
Germany 39 34.7 31.4 34 34
Italy 21 22.3 19 13 17.1
Turkey 23.4 23.8 20 18 26
France 9.8 10.4 10.1 9.8 9.5
Finland 4.7 4.8 4.4 4.8 4.2
Austria 5.4 5.8 5.4 5.6 5.4
Greece 3.1 2.8 2.1 2.1 2.9
Netherlands 4.4 4.4 4.3 4.3 4.4
Switzerland 0.3 0.3 0.3 0.3 0.3
Belgium 0.1 0 0 0 0
Great Britain 1.2 7.5 7.3 6.8 8.2
Hungary 6.4 8.9 7.6 6.9 6.3
Poland 7 7.9 9 9.9 10.3
Slovakia 6.2 6.2 5.4 5.8 5.9
Czech Republic
7 7.6 6.4 8.6 7.6
Romania 3.9 3.6 2 2.3 2.8
Bulgaria 3.4 3.5 2.6 2.7 2.8
Serbia 2.1 2.2 1.5 1.8 1.4
Croatia 1 1.1 1.1 1.1 0
Bosnia and Herzegovina
0.3 0.3 0.2 0.3 0.3
Macedonia 0.1 0.1 0.1 0.1 0.1
Slovenia 0.6 0.6 0.5 0.5 0.5
Total 150.5 158.8 140.6 138.6 150
Source: Gazprom
National Energy Security Fund
What will be the Rules after 2022-2026?
Gazprom's Contract Quantities Exclusive of Renewal
0
20
40
60
80
100
120
140
160
180
200
2011y 2015y 2020y 2030y
Source: Gazprom
Greece is an exception:
contract will be finished at 2016 (3bcm)
National Energy Security Fund
Old or New Partners?
•Turkmenistan!
• Iran!!
•Qatar!!!
•LNG from North America!!!!
•Shale gas!!!!!
•Mozambique!!!!!!
•Whose else?
National Energy Security Fund
Main Problems
•Price war for Azeri gas
• Increasing of the role of Turkey
•Political price of development of South Corridor
•Consequence of War in Iran for Caspian Region
National Energy Security Fund
More Talks than Gas
• 16 bcm – 6 bcm for Turkey = just 10 bcm
TAP
ITGI
Nabucco
SEEP
TAP
10 bcm!!!
Shakh Deniz Cup
National Energy Security Fund
Caspian Gas is not Cheap
Estimate Price for European Consumers
380 397 415373
0
50
100
150
200
250
300
350
400
450
Price for European
consumers for Azeri
gas transporting
through Nabucco
Price for European
consumers for Azeri
gas transporting
through ITGI
Price for European
consumers for Azeri
gas transporting
through TAP
Average price for
Russian gas (nine
months ended
September 30, 2011)
Source: RWE, Gazprom, NESF Price of Azeri Gas (2011)
280250
0
50
100
150
200
250
300
Price for Russia Price for Rturkey
Source: Neft Rossii
National Energy Security Fund
Сonsequences of Soon War?
National Energy Security Fund
Сonsequences of Soon War?
Source: The University of Texas
Ethnic structure of Iran Population
(million people)
4512
5
13
Persians
Azerbaijanians
Kurds
Others
National Energy Security Fund
Сonsequences of Soon War?
Shares in Shakh Deniz Field
25,5%
25,5%10,0%
10,0%
10,0%
10,0%
9,0%
BP (operator)
Statoil
Total
NICO
Lukoil
SOCAR
TPAO
National Energy Security Fund
South Corridor vs. South Corridor
Source: Gazprom
