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Pipeline Politics: The Caspian and Global Energy Security By John Roberts,

Pipeline Politics: The Caspian and Global Energy Security By John Roberts, Energy Security Specialist, Platts KAZENERGY Astana, Kazakhstan 4-5 October, 2011 Version 2.0. Pipeline Politics: Back Where We Started?. 20 years of progress, 20 years of change…. …. but transit is still an issue

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Pipeline Politics: The Caspian and Global Energy Security By John Roberts,

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  1. Pipeline Politics: The Caspian and Global Energy Security By John Roberts, Energy Security Specialist, Platts KAZENERGY Astana, Kazakhstan 4-5 October, 2011 Version 2.0

  2. Pipeline Politics: Back Where We Started? 20 years of progress, 20 years of change…. …. but transit is still an issue • The Russian problem with oil • The Turkish problem with gas • The call for dedicated pipelines • The experience of CPC; the consequences for Nabucco

  3. Azerbaijan’s Gas Export Pipeline Decision - 1 The issue for Azerbaijan • The ongoing development of SD 2. • What lies beyond SD2: • Umid • Absheron • Deep Level ACG The twin decisions • Which pipeline? • Which customers?

  4. Azerbaijan’s Gas Export Pipeline Decision - 2 The Issue for Turkmenistan • Diversification & the multiple vector approach • Russia: 9 April 2009 • Iran: 7 November 2010. Javad Oji’s statement. • China: Missing targets and delivery for debt The cash crisis and the need for a fourth option • TAPI and TCGP • Politics VERSUS economics or politics AND economics

  5. Turkmenistan: Fallout from the 9 April 2009 Cutoff Turkmenistan’s gas balance in 2011 - The Classic Fields • Productive capacity: 70–75 bcm • Domestic consumption: 18-20 bcm • Export to Russia: 11-12 bcm • Export to Iran: 12-13 bcm • Export to China: Zero in 2011; 6 in 2014. (See next slide) STRANDED CAPACITY: 25-34 bcm. Precision is impossible. Consequences of 12 hours notice of pipeline shut-in before line shot down, followed by Km-487 explosion. Consequences of abruptly shutting down 195 fields representing 92% of exports to Russia – or c. 40-45 bcm of capacity.

  6. Direct Gains: The Trans-Asia Gas Pipeline

  7. Indirect Gains: The Beineu-Bozoi-Akbulak Main Gas Pipeline

  8. Indirect Gains: The West Kazakhstan-West China Oil Pipeline

  9. The Caspian’s Role in Global Energy Security Producer: Kazakhstan, Azerbaijan, Turkmenistan Transit: Kazakhstan, Uzbekistan & Azerbaijan Exemplar: Kazakhstan, Azerbaijan • Energy Charter Treaty • Extractive Industries Transparency Initiative

  10. Caspian Gas Potential Current and projected export availabilities (in bcm) 2008 2009 2010* Projected • Azerbaijan: 5.6 7.0 8.5 25-30 by 2020. • Kazakhstan: 2.6 8.0 8.3 20 by 2015 • Uzbekistan: 13.5 16.5 13.6 35 by 2018 • Turkmenistan: 45.1 16.5 19.8 140 by 2020 • Caspian Region 66.8 48.0 50.2 220-235 in 2020? * 2008-2010 from BP Statistical Review 2011 Projections by Platts

  11. Energy In The Next Decade ….. Oil • The rise & rise of China • The rise of shale oil Gas • The rise & rise of shale gas • The transformation of Europe • The imponderables of Russia

  12. Unconventional Gas European Conventional Gas Reserves (BP): 14 tcm (Includes Ukraine, excludes Russia and other CIS) Europe-14 (EIA, April 2011) 5.2 tcm Unconventional Gas: Old reserve paradigm: (US NPC 2007) 34.7 tcm (CERA 2007) 3 - 4 tcm New reserve paradigm: (EIA April 2011) Europe-14 17.9 tcm (IHS CERA, March 2011) Up to 173 tcm IHS CERA’s oil price assumptions place the cost of unconventional gas on par with the long-term average price of contract gas. IHS CERA source: Breaking with Convention, March 2011.

  13. European Shale Gas Potential - US EIA 5 April 2011

  14. Shale Gas – European Perceptions OLD: • Little will happen in terms of production by 2015, or even by 2020. Although by 2015 perceptions of the impact of unconventional gas on future European gas perceptions will start to exercise a profound impact on assessments and planning for European gas supplies. NEW: • Scenario planning 1: Prospectively as much as 35 bcm in production by 2020 (Platts unconventional gas conference, September 2011). • Scenario planning 2: 60-200 bcm around 2025 (IHS CERA, March 2011). • UK: Cuadrilla 5.7 tcm of gas resources in place; a 20% recovery factor? And don’t forget conventional challenges: The Eastern Mediterranean

  15. A lesson from the past? Douglas Corrigan 17-18 July 1938

  16. Where Do Central Asia’s Pipelines Lead? Lines to the West (2015-2020) OIL GAS • CPC 1.04 mb/d Direct: • BTC 1.2 mb/d SCP 8 bcm/y • Atyrau-Samara 0.3 mb/d Az-Europe 16-30 bcm/y • KCTS/BTC+ 0.5-1.2 mb/d Indirect: • Baku-Supsa 0.15 mb/d CA-C/Russia c. 40 bcm/y TOTAL 3.2-3.9 mb/d 24-38 or (?) 64-78 Lines to the East (2015-2020) • West Kazakhstan-West China Trans Asia Gas Pipeline 400,000 b/d 55 bcm/y

  17. ….And The Caspian’s Role OIL • The expansion of CPC • The question of Kashagan and the KCTS GAS • Uncertainty over Russia-China gas relations • The rise of Azerbaijan • The doubts about Turkmenistan THE BOTTOM LINE: • The very real prospect of a new gas age in Europe • The challenge for Kazakhstan

  18. Questions? John_Roberts@platts.com Tel: +44-1835-863-725 Mobile: +44-7966-290-354

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