Russian Energy Strategy up to Period 2030: Questions, Troubles, Risks

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Russian Energy Strategy up to Period 2030
Questions, Troubles, Risks
Dr. Alexey Gromov Deputy General Director
Institute for Energy Strategy Moscow, Russia
10th Annual Aleksanteri Conference Helsinki 27
October, 2010
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ENERGY STRATEGY 2030 and its PREDECESSORS
Conception of the state energy policy in new
economic conditions (Ratified by the Government
?26 of 10.09.92)
1992
Decree of the President ?472 of 07.08.95 About
the basic directions of the state energy policy
1995
Fundamentals of the ES - 2010 (Ratified by the
Government ?1006 of 13.10.95)
ES 2020 (approved be decree ? 1234-r of the
Government of the Russian Federation of 28.08.03)
2003
ES 2030 approved by decree N 1715-r of the
Government of the Russian Federation of
13.11.2009
2009
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Energy Strategy 2030 in the System of Documents
of the Strategic Development
Long-term forecast of the development of Russian
economy for the years 2009-2030
Conception of the long-term development of the
Russian Federation for the year 2020
ES-2030
General scheme of allocation of power generating
facilities for the year 2020
General scheme of development of the oil industry
for the year 2030
General scheme of development of the gas industry
for the year 2030
State program of energy saving
Program of long-term development of the fuel and
energy complex of the Russian Far East
Strategy of development of the power generation
in the Russian Far East
Eastern Gas Program
Conception of the state program for exploration
and exploitation of the continental shelf of the
Russian Federation
Investment programs of energy companies
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ES-2030 from FORECAST to TARGET MODELING
ES-2020
ES-2030
Target Modeling
Forecasts and Scenarios
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ENERGY STRATEGY 2030 approved by decree N 1715-r
of the Government of the Russian Federation of
13.11.2009
2030
2009
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State Energy Policy in Russia
Key priorities' realization
Rational market environment
Advanced standards and regulations
Prospective state of Russian FEC
Strategic initiatives
Energy security
Management of state property
Energy efficiency of economy
Development of home energy markets
Formation of rational energy balance
Subsoil resources management
Economic efficiency of FEC
Regional energy policy
External energy policy
Social policy in the energy sector
Ecological security of FEC
Scientific, technical and innovative policy
KEY PRIORITIES
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Aim and Goals of the ES-2030
Innovative and efficient energy development
Aim
Stable institutional environment in the energy
sector
Modernization and construction of new energy
infrastructure
Energy and ecological efficiency of the national
economy and energy sector
Goals
Efficiency of reproduction, extraction and
processing of energy resources
Further integration of the Russian energy sector
into the global energy system
Aim of the ES-2030 remains stable despite
consequences of the global economic crisis
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Forecasted Change of the Fuel and Energy
Complexs Role in the Russian economy
2030
2005
Energy sector in GDP
Energy sectors export in GDP
Energy resources in export
Investment in energy sector in total investment
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Expected Dynamics of Specific Energy Intensity of
GDP and Domestic Demand for Primary Energy
Resources
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Foreign energy policy and ES-2030
targetsEastern and Western vectors
Western Vector (European Market)
Eastern Vector (Asian-Pacific Market)
Russian Gas Export, 2009
Russian Gas Export, 2030 (projected)

• EU market is essential for Russian gas export
  (75)
• Western Vector accounts for 96 of Russian gas
  export (EU other Europe)
• Russia seeks for export diversification
• Russia promotes eastern vector of energy export

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• Eastern Vector for Russian Energy Policy

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EASTERN VECTOR IN ES-2030 NEW SIDES OF OLD
TASK
Road Map of implementation of ES-2030 Eastern
vector
task ?19 Increase in the share of the
Asia-Pacific countries in the structure of the
Russian energy export to 1617 task ?10
Implementation of a complex of program measures
for petrochemistry and gas-chemistry development
in the Eastern Siberia and Far East task ? 17
Extended reproduction and attraction of human
resources for development of new areas of the
Eastern Siberia and Far East
Eastern vector
Key initiatives in the Russian energy sector
Eastern vector
Energy infrastructure development and
diversification
ESPO pipeline, Eastern Gas Program, petro- and
gas-chemistry development
Development of oil and gas complexes in Eastern
regions of Russia
Sakalin, Yakutia, Magadan, Irkutsk and
Krasnoyarsk regions
Shelf of the East Arctic, reanimation of the
Northern Sea Way
Exploitation of the oil and gas potential of the
Northern regions of Russia and Arctic shelf
Large-scale development of hydro energy and
renewables
Non-fuel energy
Modernization of electric power and heat supply
systems in the Region
Energy saving
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THE EAST IS A KEY DIRECTION OF DIVERSIFICATION
OF THE RUSSIAN EXPORT
Forecast of gas export
Forecast of oil and oil products export
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KEY PROJECTS IN THE EASTERN SIBERIA AND THE FAR
EAST

• Eastern Gas Program

• Natural gas Export to China

• Sakhalin development

• LNG Projects in Sakhalin

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FIRST RESULTS OF ES-2030 CAREFUL OPTIMISM
2008 2009 Strategic Indicator for the first stage of ES-2030 (2013-2015)
Share of Eastern Siberia and the Far East in gas production 2 3,7 7-8
LNG share in gas export 0 3,5 4-5
Share of the countries of the Asia-Pacific Region in the structure of gas export 0 3,5 11-12
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• Western Vector for Russian Energy Policy

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WESTERN VECTOR IN ES-2030 KEY PROJECTS GOALS
task ?19 Increase the Russian gas export to
European market 160 bcm in 2008 120 bcm in
2009 2030 target - 200 bcm task ?21 Promote the
gas pricing system in Europe, including both
long-term and spot contracts task ? 22-23
Bilateral investment in gas projects

• Nord Stream (started in April 2010)

• South Stream (projected)

• Shtokman (projected)

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DISTURBING RESULTS OF 2009 ON EUROPEAN GAS MARKET
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Export to Europe
Export (total)
Gas production (Russia)
Gas production (GAZPROM)
Gas production has fallen to level of 2000
Gas export to Europe was reduced to a quarter
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Long-term export dynamics reasons
Composition of EU gas import
Source EEGA
Price situation in 2009
Factors of decrease in export expectations
Price, USD/bcm
Russian gas (long-term contracts, Europe) 288
LNG (US, Henry Hub) 147
LNG (Great Britain, NBP) 142
LNG (Japan, Korea) 260
LNG (Chine) 160

• Europe
• Competition growth (LNG, new pipelines)
• Pricing change (spot market vs. long-term
  contracts)
• Renewables energy efficiency
• Geopolitics (Nabucco, anti-Gazprom rules in 3rd
  Gas Directive etc.)

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• Conclusions

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Export Expectations vs. Reality
Russian Gas Export forecast up to period 2030
Factors of decrease in export expectations

• Europe
• Competition growth
• US
• refuse of future Russian LNG (the boom of shale
  gas production)
• Asia-Pacific
• competition growth (Central Asia)

15-20
Russian gas export forecast (high level from
ES-2030) Russian gas export forecast (low level
from ES-2030) Russian gas export forecast (IES
expectations)
Risk of decrease in export on 15-20
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Balancing Eastern and Western VectorsTasks for
Russian Energy Policy

• From export orientation to the domestic market
• Cost reduction in Russian natural gas industry
• Revision of investment projects
• - Selection of priority projects among declared
  in ES-2030
• - Refusal of a number of ineffective
  projects-giants (the Southern stream, etc.)
• Flexibility of gas export policy
• - Revision of pricing system in long-term
  contracts of Gazprom
• - Flexibility increase in mutual relations with
  Ukraine and Central Asia

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Issues for Russia EU relationships

• - EU gas market forecast
• - EU secure demand for Russian natural gas
• - The real need for new pipeline project
  in relation to future
• demand
• - The transit problem politics toward
  Ukraine Belarus
• - 3rg Gas Directive Regulative issues
• - Bilateral investment in gas fields,
  pipelines, and marketing

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• Thank you
• for your attention!

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