Natural gas supplies to Europe Expectations and challenges with regard to global competition for natural gas

Transcription

1 UNECE: Forum on Fostering Investment in Cleaner Electricity Production from Fossil Fuels Session I Natural gas supplies to Europe Expectations and challenges with regard to global competition for natural gas Dr. Dominik Halstrup Head of Strategic Analyses & Concepts Section Gas Supply & Spot Trading E.ON Ruhrgas AG UNECE Committee on Sustainable Energy Geneva, November 27 th 2007

2 Gas in Europe a story of growth and success Share of natural gas in total primary energy consumption Consumption of natural gas in 2005/06 and by % 35% 30% bcm 1, USA EU 25% 20% USA 25% 22% % 10% 5% EU Japan 14% J, SK, T China India 0% /06 Growth by 2020 Rapid growth between 1965 and 1975 and continued increase of market share in Europe (EU27). Largest growth by 2020 expected in the US followed by Europe and China. Quelle: E.ON Ruhrgas, Wood Mackenzie -2-

3 EU gas supply is currently well diversified, but import dependency grows need for new projects depending on future demand bcm 495 9% 11% 24% 18% 6% 9% 23% % 10% 9% 25% 16% 4% 8% 19% % 7% 11% 8% 26% 15% 5% 16% % 7% 10% 7% 26% 12% 15% % 15% 17% 18% future projects advanced projects other non-eu imports *) Algeria Russia Norway Other internal EU trade Netherlands Indigenous production for domestic use LNG-share in supplies provisional data for 2006; 1 m³ kwh *) of which: Nigeria 3%, Egypt 2%, Qatar 1% (2006) Basis for EU imports: Contracted volumes, prospective contract prolongations and further volumes dedicated to EU markets Remark: Malta and Cyprus are not supplied with natural gas Due to a decline in indigenous production and a projected market growth approximately 240 bcm of additional imports need to be realised until LNG is projected to increase its share in supplies until Source : E.ON Ruhrgas -3-

4 Import needs are set to grow in all major gas-consuming regions and will fuel global competition for gas supplies bcm Import needs in major gas-consuming regions Europe USA Japan, S. Korea, Taiwan 100 China India Due to growing demand and stagnating or declining indigenous production, the need for more imports into the main gas-consuming regions/countries is set to grow considerably. The competition for natural gas supplies is becoming more global. Source: E.ON Ruhrgas, Wood Mackenzie, BP Statistical Review of World Energy

5 Gas potential for Europe abundant powerful gas producers Major gas reserves for Europe in bcm (approx. 70% of world gas reserves) Big 6 produce approx. 66% of the gas supplies needed in the EU27 in 2010 Thereof: Norway 44% Netherlands 26% UK 10% Russia bcm Natural gas consumption EU27 in 2010: bcm Europe Caspian Region North Africa Qatar Iran Nigeria Production for EU (27) in 2010 (expected) * Thereof: Algeria 58% Egypt 24% Libya 18% Source: BP, E.ON Ruhrgas Top-Three are state-owned companies Additional state-owned producers ante portas : National Iranian Oil Company Nigerian National Petroleum Corporation Source: Company Reports; estimated figures based on general business information -5-

6 Due to increasing gas import needs new infrastructure is essential to secure supplies for European market LNG will be part of it LNG to USA Existing and future infrastructure (Pipes and LNG) Algeria LNG from Nigeria Quelle: Wood Mackenzie 2005 et.al. Norway Shtokman Libya Egypt Yamal gas fields existing pipelines under construction or planned possible pipeline projects existing and future LNG routes Turkmenistan Azerbaijan LNG from Qatar/ Iran Kazakhstan Katar Iran Examples for infrastructure investments Russia until 2020 new Russian pipes: ~ $55 bn. upgrade existing pipes: ~ $67 bn. pipes to Europe: ~ $15 bn. Shtokman Offshore Field (Russia) approx. $14 bn. (approx bn. m³/a possible) Nord Stream (Russia) > 5 bn (approx. 55 bn. m 3 /a) Ormen Lange + Langeled Pipeline (Norwegian Sea) approx. $7 bn. + $ 3 bn. (approx. 20 bn. m³/a) Nabucco Pipeline (Iran via Turkey and Central Europe to Austria) approx. $5,5 bn. (approx. 25 bn. m³/a) Qatargas II LNG integrated project (Upstream, Liquefaction and Regasification) approx. $13 bn. (approx. 20 bn. m³/a) -6-

7 Various liquefaction and regas projects underway France, UK and Spain with strong regas position in Europe Liquefaction terminals and projects in major LNG supply regions Regas terminals and projects in Europe Regas terminals and projects in Europe Regas existing Regas under construction Regas planned Oxelösund Shannon GATE Terminal Anglesey Canvey Wilhelmshaven South Hook Dragon Liongas Isle of Grain Zeebrugge El Ferrol Sines Huelva Montoir El Musel Bilbao Sagunto Bordeaux Le Havre Trieste Rovigo La Spezia Monfalcone Krk Fos Cavaou Barcelona Livorno Rosignano Taranto Cartagena San Ferdinando Gioia Tauro Porto Priolo Gdansk Brindisi Taranto Black Se Constanta Mar Ere Izmir Revytho Quelle: Poten & Partners Source: E.ON Ruhrgas, CERA -7-

8 The US, Europe and SE Asia could already be competing for LNG volumes by Atlantic Basin LNG 2006: 76 bcm 2015: 200 bcm Pacific Basin LNG 2006: 135 bcm 2015: 200 bcm bcm India USA Chile Dom. Rep. Puerto Rico Mexico Iberian Peninsula UK France Belgium Italy Turkey Greece Trinidad&Tobago Alaska Angola Peru Norway Nigeria Algeria Libya Eq. Guinea Egypt U.A.E Oman Qatar Yemen Malaysia Indonesia Brunei Australia Russia Japan Soth Korea Taiwan China Mrd. m 3 Source: Wood Mackenzie, E.ON Ruhrgas Middle East with position to supply LNG markets all over the world. In 2015 LNG demand will probably exceed LNG supply Importing countries Exporting countries -8-

9 LNG business is influenced by heterogeneous price-levels and price-setting mechanisms USA Gas indexation at Henry Hub Continental Europe Oil products (Pipeline) Crude oil (LNG) UK Gas indexation at NBP South East Asia Crude oil (JCC) Future LNG Supply Business in Europe must take into account, that interaction of oil-indexed LTC s and short-term gas trading will further persist ( Cohabitation des régimes ). -9-

10 Thank you for listening.

11 Disclaimer This document may contain forward-looking statements based on current assumptions and forecasts made by E.ON Group management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in our public reports filed with the Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission (including our Annual Report on Form 20-F, in particular to the discussion included in the sections entitled "Item 3. Key Information: Risk Factors", "Item 5. Operating and Financial Review and Prospects", "Item 11. Quantitative and Qualitative Disclosures about Market Risk"). The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments. page 11

12 UNECE: Forum on Fostering Investment in Cleaner Electricity Production from Fossil Fuels Session I Natural gas supplies to Europe Expectations and challenges with regard to global competition for natural gas Dr. Dominik Halstrup Head of Strategic Analyses & Concepts Section Gas Supply & Spot Trading E.ON Ruhrgas AG UNECE Committee on Sustainable Energy Geneva, November 27 th 2007