who is bypassing whom? russian, european and caspian … · who is bypassing whom? russian,...
TRANSCRIPT
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Who is Bypassing Whom?Russian, European and Caspian Gas and Oil
32nd IAEE International ConferenceJune 21 - 24, 2009
Maureen S. Crandall, PhDProfessor of Economics
Industrial College of the Armed ForcesNational Defense University
Washington, DC
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Agenda
• Western interest in “Southern Corridor” natural gas and oil pipelines bypassing Russia and Iran
• GasRussia trying to defeat efforts to bypass itEU interest in Nabucco diminished - not likely for another 10+ years
• OilKazakhstan progress in bypassing
Russia – by ship, to link to BTC
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Countries Affected by Russian Gas Cutoff, 2009
Source: http://news.bbc.co.uk/2/hi/europe/7822694.stm#map, Jan 12, 2009
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“Safety and certainty in oil lie in variety and variety alone.”
Winston Churchill, 1913
Natural Gas – Europe Searching for Diversification
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Aftermath of 2009 Russian Gas Cutoff
• Severe damage to reputation as 40-year reliable gas supplier to Europe
• Europe looking elsewhere for new gas, but progress slow
Europeans torn between concern about over-dependence on Russian gas, and worry that it might not be there when they need itEurope will continue to be heavily dependent on Russian gas
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Uneasy Energy Relationship• Russia-EU energy story primarily one of
gas – a wakeup call post Jan 2006Russia supplies 42% EU gas imports, 32% EU oil imports
• 2008 RU oil exports = ~ $224 billion• 2008 RU gas exports to EU = $66 billion
• In gas, Russia unlikely to be bypassed Mutual interdependence Russia cannot afford not to sell gas to Europe
• In oil, a world market• Russia is building/proposing gas pipelines
to bypass European states
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Gas Strategy: Who is Bypassing Whom?(Gazprom 1, EU/US 0)
• Nabucco/White Stream: bypass Russia, IranRussia acting to undermine – Russian “pipes on the ground” before others move aheadPre-Caspian pipeline agreements
• Nord Stream – bypass Ukraine, Belarus & Poland
• South Stream – bypass Ukraine, Belarus & Turkey
• Blue Stream-II – bypass Ukraine & Belarus; but dependence on Turkey, a (risky) partner?
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European Natural Gas Trade, 1989 - 2008
Source: BP Statistical Review of World Energy, various issues(excludes occasional spot cargoes of Australian LNG)
Bcm/y
0
50
100
150
200
250
300
350
400
450
500
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Total European Gas Trade Pipeline Gas Trade Within OECD EuropePipeline Gas from Russia Pipeline Gas from other Non-OECD
LNG Imports from Non-OECD
Bcm/y
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EU Gas Imports from Russia as Percent Total Natural Gas Imports, 2008
Source: BP Statistical Review of World Energy 2009
0
10
20
30
40
50
60
70
80
90
100
BulgariaEstoniaFinlandLatviaLithuaniaSlovakiaGreeceRomaniaHungaryCzech RepPolandAustriaSloveniaGermanyItalyFranceNeths
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TransCaspian Twin Oil and Gas Lines
Proposed in the 1990s-narrowest Sea width = 210 km
No agreement on Caspian Sea delimitation
No agreement between Azerbaijan and Turkmenistan on price, volumes
Blue Stream-I built to counter – began 2003
Focus on Shah Deniz –SCP bypasses Russia
Private promoters withdraw in 2000 after long stalemate
Source: http://en.wikipedia.org/wiki/File:Baku_pipelines.svg
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Blue Stream I and II
Blue Stream I = 16 bcm/y, 1,213 km, built to preclude a T-C gas pipeline, operational in 2005
Blue Stream II and South Stream competing against Nabucco
Blue Stream II proposes 24-30 bcm/y
Partnership of Italy & Russia
Issue of Turkish control of delivered gas
Source: http://www.gazprom.ru/eng/articles/article8898.shtml; http://www.petroleumiran.com/maps.html
13Source: Richard J. Anderson, “Europe’s Dependence on Russian Natural Gas,”
Marshall Center Occasional Paper No. 19, September 2008
Nabucco – key to the Southern Corridor with possible gas sources
Proposed in 2000
Capacity: 31 bcm/y, 3,300 km
No gas sources, finance, or buyers; Russia not interested
Azerbaijan committed 10 bcm/y, but not enough to make project viable
Target completion date of 2013-2015, if goes ahead
Cost ~ $15 B
EU has reduced its commitment
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Blue Stream-II and Nabucco
Source: Jeffrey White, “EU Bid to Wean Itself Off Russian Gas: Nabucco Pipeline, Christian Science Monitor, May 18, 2007,
http://www.monitorweek.com/2007/0518/p06s02-woeu.html
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Source: Richard J. Anderson, “Europe’s Dependence on Russian Natural Gas,” Marshall Center Occasional Paper No. 19, September 2008
Nord StreamRussian, German, Dutch project, 1,220 km
Seabed pipelines free of transit disputes
Two lines, 55 bcm/y total, fed by new gas from Yamal, Shtokman
Land construction underway; completion 2011 -2012
Cost ~ $10.5 B
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South Stream
Source: http://commons.wikimedia.org/wiki/File:South_Stream_map.png
Russia – Italy project, 902 km under Black Sea; 1,300 km Bulgaria to Austria; >990 km Bulgaria to Greece/Italy
Seabed pipelines don’t have cutoff/threat problems
31– 47 bcm/y (2 lines) –recent target of 63 bcm/y
Competitor to Nabucco
Completion 2015
Cost > 19 – 24 B Euros
Passage through Turkey/Ukraine EEZs unresolved
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South Stream and Nabucco
Source: Steven Eke, “Russia to sign gas pipeline deal,” BBC News, 15 May 2009, http://news.bbc.co.uk/2/hi/europe/8051921.st,
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White Stream
Georgia 2005 proposal: attempt to bypass Russia
Either direct Georgia-Romania, or with stop in Ukraine (1,235-1,355 km)
Capacity 8-32 bcm/y, 3 stages
No buyers, finance, gas sources identified
Issue of Ukraine transit
Cost: ~$15 B and rising
Probability: Long shot
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Pre-Caspian Gas Pipeline(Caspian Littoral Pipeline)
Shamil Midkhatovich Yenikeyeff, “Kazakhstan’s Gas: Export Markets and Export Routes,”http://www.oxfordenergy.org/pdfs/NG25.pdf, Nov 2008 http://eng.gazpromquestions.ru/index.php?id=9
2007 agreement between Russia, Turkmenistan and Kazakhstan
Add 20-40 bcm/y for delivery to Russia
Construction to start 2009; 1,700 km
Does this agreement lock up Central Asian gas and lessen likelihood of Nabucco or other gas pipelines?
Cost ~ $1B (probably understated)
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Azeri Gas to Russia or Iran Rather than to Nabucco?
• Key question:Will Azerbaijan and Russia (or Iran) conclude firm gas sales/purchase agreement from 2010?
• Diversification of sales for Azerbaijan• Advances revenue stream to Baku• Pressures Turkey• Undermines Nabucco if sales to Russia
or Iran agreed
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Wild Cards: Future Turkmenistan and Iraq Gas
• Turkmenistan: great uncertaintyRich in gas; huge Yolotan-Osman field (4 – 14 tcm); world’s 4th/5th largest fieldPetropars (Iran) likely to develop – where will gas go?
• More gas to China, Russia?• Gas for pipelines to the West?
• Iraq: new Kurdish finds, uncertainties and hurdles
Khor Mor and Chemchamal for Nabucco?• Partnership of OMV, MOL, 2 UAE firms (Crescent &
Dana)• Reserves of 100 bcm?• Kurdish-Iraqi politics and law, role of BOTAS and
Shell agreement in Iraq?
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Gazprom’s Production Outlook to 2035
Source: International Energy Agency, 2008 Natural Gas Market Review, p. 157
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Gazprom Projections for Total Russian Gas Production Through 2030
0
100
200
300
400
500
600
700
800
900
1000
2007 2008 2010 2015 2020 2025 2030
Years
Bcm
/Y
West Siberia Gas Production European Russia Gas Production
East Siberia, Far East Gas Production Oil Companies Producing Gas
Source: World Gas Intelligence, October 22, 2008. Note scale of X axis with differing spread of years. The midpoints of ranges for estimates in the years 2015-2030 are used.
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New gas fields on Yamal Peninsula –expensive to develop, but moving ahead, since “bridge strategy” with “Stans” is changing
Old fields Yamburg, Urengoy et. al. in decline
Source: Wood Mackenzie, “Gazprom’s Yamal Project: Why it Matters to Europe,” November 2006
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Gazprom Finances & Investments
• Russian “bridge strategy” seems to be ending
Russia bought cheap Caspian gas, resold it to Europe at western prices, postponing Yamal developmentCaspian states now receiving European pricesFor Russia, may now be relatively cheaper to develop Yamal than to continue buying Caspian gas
• Will European demand for Russian gas recover?
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Gazprom’s Strategy
• Clear strategy to keep and grow European gas market
• But, recession in Europe, together with fall in gas prices, severely constraining Gazprom sales and income
• Recession delays gas demand growth • With declining revenues, will/can Gazprom
invest sufficiently, and in a timely fashion, to develop new Yamal fields?
Recent announcement of cut in capital spendingPossible 1-year postponement of Bovanenko
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EU Response• Energy policy adrift
Members act in accordance with own self-interests, rather than overall EU interestsMembers cut own deals, ignore EU, and stall integration process, resulting in bottlenecks in pipelines and storageNo common regulatory regime within EU; no common regulatory regime applied equally to EU and non-EU participants
• EU dependence on Russian oil and gas imports will remain substantial
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European Oil Imports, 1989 – 2008
Source: BP Statistical Review of World Energy, various years
0
2000
4000
6000
8000
10000
12000
14000
16000
19891990199119921993199419951996199719981999200020012002200320042005200620072008
Total oil imports From Middle East From Russia From N/W Africa
mb/d
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Oil Strategy: Who is Bypassing Whom?(EU/US 1, Gazprom 0)
• Tanker Shuttles v pipelinesKCTS shuttle tanker system – 500-600,000 b/d, ultimately 1.0 mmb/d
• Avoids political impediments to seabed pipelineBypasses the BosporusPrevious TransCaspian oil pipelines proposals went nowhere
• Existing oil pipelines:BTC – avoids RussiaCPC – Kazakhstan through Russia
• Expansion of CPC to lead to Bosporus bypass
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Caspian Oil Transportation Proposals
Source: http://www.sras.org/geopolitics_of_oil_pipelines_in_central_asia
Source: http://eng.gazpromquestions.ru/index.php?id=9
Original T-C proposals failed
Now underway: KZ “shuttle-tanker”system to BTC, 1,200 km
Will there be a future T-C oil pipeline?
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Kazakh Oil Tanker Shuttles – the Future
http://www.lib.utexas.edu/maps/commonwealth/commonwealth_ref01.pdf#search=%22aktau%20baku%20map%22
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Conclusion
• Gas: Gazprom will not be bypassed for gas sales to Europe
Doubling capacity of South Stream Interested in Blue Stream-IIUndermining Nabucco’s prospectsProceeding with Pre-Caspian lineT-C gas pipeline doubtful
• Oil: Russia vulnerable to/experiencing bypassing action from KCTS
T-C oil pipeline doubtful