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Russia and Europe: Time of Strategic Choice
1. National Energy Security Fund
Russia and Europe:
Time of Strategic
Choice
Konstantin Simonov
Athens
May 28
2012
2. 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
3. Problem of Perception
• The decline of export from Russia is
perceiving in EU as a great victory
• The priority of European Energy
Policy is not stability of supply but
diversification and liberalization
National Energy Security Fund
4. Gas Market of EU
Consumption and Production of Gas in EU (bcm)
600 522
471
500
400
2010y
300
2011y
185 165
200
100
0
Consumption Production
Source: Eurogas
National Energy Security Fund
5. Gas Market of EU
Main Exporters of Gas to EU (bcm)
140
120
100
80 2010y
60 2011y
40
20
0
Russia Norway Algeria Qatar
Source: Eurogas
National Energy Security Fund
6. Russian Gas
in the South of Europe
Gazprom supplies to South of Europe and Turkey, bcm
2007 2008 2009 2010 2011
Turkey 23,4 23,8 20,0 18,0 26,0
Italy 21,0 22,3 19,0 13,0 17,1
Greece 3,1 2,8 2,1 2,1 2,9
Bulgaria 3,4 3,5 2,6 2,7 2,8
Serbia 2,2 2,1 1,5 1,8 1,4
Slovenia 0.6 0.6 0.5 0.5 0.5
Slovakia 0,6 0,6 0,5 0,5 0,5
Croatia 1,0 1,1 1,1 1,1 0,0
Bosnia and
Herzegovina 0,3 0,3 0,2 0,3 0,3
Macedonia 0,1 0,1 0,1 0,1 0,1
Source: Gazprom
National Energy Security Fund
7. Model of Cooperation
• Now – Serbia and Bulgaria
• Then Hungary and Greece
• PanRusgas – in 2015 (7 bcm)
• DEPA – in 2016 (3 bcm)
National Energy Security Fund
8. Gazprom is not Flexible?
• A reserve of $6.8 billion to make
retroactive payments was built into
the Gazprom budget for 2012 when it
was approved at the end of 2011. And
reports were published in April 2012
that the estimate of these payments
might increase to $10 billion in 2012
• Gazprom also has to weaken the take
or pay rule
National Energy Security Fund
9. Main Problems
of South Corridor
• Price war for Azeri gas
• Increasing of the role of Turkey
• Very complicated transit corridor
(Turkmenistan (?) + Azerbaijan + Georgia
+ Turkey)
• Political price of development of South
Corridor
• Consequence of War in Iran for Caspian
Region
National Energy Security Fund
10. Competition for Gas
Export of Gas to Russia from CA and Caspian Region (bcm)
18 15,9
16 13,9
14 12,4
12 10,7
9,5
10 2010y
8 6,4 2011y
6
4
1,5
2 0,8
0
Kazakhstan Turkmenistan Uzbekistan Azerbaijan
Source: Gazprom
National Energy Security Fund
11. Caspian Gas is not Cheap
Estimate Price for European Consumers
450 397 415
380 375
400
350
300
250
200
150
100
50
0
Price for European Price for European Price for European Average price for
consumers for Azeri consumers for Azeri consumers for Azeri Russian gas (2011)
gas transporting gas transporting gas transporting
through Nabucco through ITGI through TAP
Source: RWE, Gazprom, NESF
National Energy Security Fund
12. Diversification of Oil Export
Russian Oil Export (millions of tons)
300
250
26,25 29,9
200
Russian oil export to FSU
150
220,7 Russian oil export
100 212,2
overseas
50
0
2010y 2011y
Source: Ministry of Energy of RF, Neftegazovaya Vertical
National Energy Security Fund
13. Diversification of Oil Export
Russian Export of Oil Products (millions of tons)
140 131,34 124,9
120
100
80
60
40
20
0
2010y 2011y
Source: Ministry of Energy of RF, Neftegazovaya Vertical
National Energy Security Fund
14. Diversification of Oil Export
Russian Oil Export to China (millions of tons)
16
14
12
10
8
6
4
2
0
2010y 2011y
Source: Ministry of Energy of RF, Neftegazovaya Vertical
National Energy Security Fund
15. Thank you!
www.energystate.ru
National Energy Security Fund
