Infrastructure & Energy Security

Transcription

1 eustream, a.s. Votrubova 11/A, Bratislava Infrastructure & Energy Security Three hot topics - European Gas Market 14 th July 215, Brussel

2 Agenda I. What does Nord Stream III and IV mean for EU energy security? II. Truly missing infrastructure in Europe III. Reverse flow to Ukraine from V4 countries 2

3 What does Nord Stream III and IV mean for EU energy security? upon announcement of intent of construction of Nord Stream III and IV by Gazprom, OMV, Shell and E.ON (and announcements of other projects such as Turkish Stream) consequences of realization of such intents on European Energy Security are in due need of investigation 3

4 bcm/year Overview of European Gas Demand Projection to Demand for gas in Europe and Turkey excluding Ukraine EU28 and Switzerland Turkey EU gas export to Ukraine (5% import needs) changes in gas stocks and other In light of the declining demand since 21, most of the projections align at very modest to no growth. This analysis follows an official Eurogas scenario 4

5 bcm/year Overview of Demand Sourcing for Europe Projection to 22 Supply sources for Europe and Turkey Indigenous production Algeria Azerbaijan LNG Minimum supply from Russia for EU and Turkey Norway Lybia Turkmenistan Supply for Turkey except Russia Russian gas will play an inevitable role in European Gas Mix in 22 and onwards 5

6 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 mcm/day bcm/year Real Flow of Russian Gas to Europe Yamal Nord-Stream to DE Nord-Stream to Lanzhot Velke Kapusany The pipelines serving for Russian gas export where Gazprom holds the biggest share are used to its maximum possible capacity preferentially logically organized Ukrainian corridor is last in the in the merit order for Russian gas export 6

7 bcm/year Real Flow of Russian Gas to Europe Routes of Russian gas with Nord Stream III and IV expansion Yamal Nord Stream Finland & Blatics Direct Supply Belarus to Poland Bluestream Turkish Stream Ukrainian Corridor Russian Supply to EU and Turkey If constructed, all Russian gas for Europe flowing via Ukrainian corridor will be redirected to Nord Stream corridor where Gazprom is the majority shareholder Ukraine will be fully bypassed 7

8 Impact I Deterioration of Overall EU Security of Supply 22 Status Quo According to Eurogas predictions, European gas consumption is expected to rise from 46 bcm in 214 to 523 bcm in 22 (according to Eurogas projections). Aggregated technical capacity ca. 244 bcm/year 22 Projects Implemented Bypass of Ukrainian system shall result in Ukrtransgaz annual loss of up to USD 2 billion, which shall effectively result in Ukrtransgaz s inability to maintain its system. This shall lead to overall deterioration of security of supply of the EU by almost 3% (ca. 14 bcm of piped import capacities) and storage capacity loss in total amount of 31 bcm (25%). Aggregated technical capacity ca. 175 bcm/year 8

9 Impact II Transit Countries Shall Turn to Countries of End-consumption 22 Status Quo Loss of transit status may have an extremely negative impact on some countries ability to lead negotiations with Russia (historical balance supply-transit) 22 Projects Implemented Currently their overall transit capacity is over ca. 13 bcm/year which shall lack motivation to be maintained as only capacity for domestic consumption in total amount of ca. 7 bcm (in 214) shall be needed Countries with high proportion of transit on overall gas transmission Countries loosing transit flows after implementation of new infrastructure Countries with reduced transit flows 9

10 Impact III Single Route Dependence and Internal EU Bottlenecks Lanžhot + Veľké Kapušany + Isaccea: 133 bcm/year (technical capacity) Lanžhot: 24.5 bcm/year (technical capacity) Countries dependent on a single route (Nord Stream I IV) Countries potentially supplied via Turkish Stream Europe lacks capacity that would connect the German market and SEE Europe, Capacities to Italy are limited Most of southern and South Eastern Europe is fully dependent on the existing central corridor Only substantial available route from Nord-Stream to South is the route drawn below via Lanžhot. Lanžhot, albeit with plans to expand by 22 shall still have capacity substantially lower than central corridor (planed expansion of 4 bcm vs lost ca. 14 bcm of Central corridor). SEE countries do not have the possibility to import gas from Nord Stream corridor at all Italy and its neighbors who are currently importing both from Northern Route and Central Corridor, shall have only a single major route via Lanžhot available 1

11 Truly missing infrastructure in Europe 11

12 European Gas Hub Prices Are Strongly Correlated TTF 2.7 EUR/MWh Gaspool EUR/MWh POLPX 22.1 EUR/MWh Prices in western Europe are strongly correlated thanks to the fact they are connected to liquid gas markets NCG EUR/MWh CZ VTP 2.9 EUR/MWh SK VTP EUR/MWh VTP EUR/MWh PSV EUR/MWh Source: Argus and ICIS Heren Day Ahead Price Assessment 7 th July

13 However, Eastwards There Are Real Problems to Solve Eustream observes the following issues of the European gas market Status quo eastwards from the Central European Gas Hub (CEGH): I. Real interconnectivity is largely insufficient or missing II. III. IV. Gas supply diversification is very limited countries are depended on a single supply route and source of natural gas (Russian gas) Observable gas price spreads among countries or even non-transparent pricing Lack of Ukraine s access to alternative physical sources of natural gas Current Situation on the European Gas Market Gaspool NCG CEGH Eustream believes these issues can be solved by constructing appropriate infrastructure in the concerned region. PSV Future gas sources (Azerbaijan, Turkmenistan, Iran, Iraq, Cyprus, Russia) 13

14 What Is the Possible Answer? Eastring Connecting Markets There are three main reasons for Eastring I. Provides security of supply by diversification of routes and sources II. Creates a corridor (which does not exist now) between Europe and Turkey III. Offers a valuable advantage in transparent pricing derived from liquid European gas exchanges Option A EASTRING Key Facts Capacity: 2 bcm/y Length: 832 1,15 km Option B Diameter: DN14 Mode: bi-directional flow CAPEX estimated: 2,61 meur Commissioning: 219 EoY Gas source: Western European Hubs or western producers gas (in direction Turkey); Azerbaijan, Turkmenistan, Iran, Iraq, Cyprus, Russia (in direction Europe) IGB ITB 14

15 Reverse flow to Ukraine from V4 countries 15

16 Ukrainian storage level (mcm) V4 Reverse Flow Support to Ukraine Inevitable to Overcome Winter Season Existing Ukrainian Reverse Flow Options: from Poland (Drozdovychi) (capacity 1.6 bcm/y) from Slovakia (Budince) (capacity 14.6 bcm/y) from Hungary (Beregovo) (capacity 6.3 bcm/y) With reverse flows Without reverse flows In case of no reverse flows, Ukraine would not be able to overcome winter. Moreover, as per Naftogaz CEO s statement reverse flows saved Ukraine around USD 3 billion 16

17 mcm/day bcm/year Current Status Eustream Offers Highest Reverse Flow Capacities to Ukraine (Budince/Vojany Uzhgorod) Project's important milestones and capacity development Start of test operation st increase of the technical capacity Start of commercial operation Total Contracted Capacity Real Flow Total Technical Capacity nd increase of the technical capacity 27 mcm/day 31.5 mcm/day 4 mcm/day 1 (9.9 bcm/year) (11.5 bcm/year) (14.6 bcm/year) Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul Eustream understands the Ukrainian needs of energy security and shall continue to cooperate in constructive manner Eustream provides Ukraine with highest reverse flow capacity via its Budince point which is currently not fully utilized Ukraine publicly requests further capacity (what is currently being discussed between counterparties) Same as with Budince, Eustream being responsible for ca. one-third of Russian gas imports to Europe would implement a solution which shall not endanger the European security Eustream would like to bring the attention also to the necessity of increase of capacity on Czech-Slovak border at Lanzhot point (already in Eustream in TYNDP) 17