Energy Geopolitics and Future of Russian Oil and Gas Export

Energy Geopolitics and Future of Russian Oil and Gas Export Konstantin Simonov National Energy Security Fund Dubrovnik June, 18 2009

Economic Crisis : Short Term Respite

Economic Crisis will reduce the consumption of fossil fuel – but only in 2009-2010

Three main reasons of future “energy starvation”

Population growth

Reducing of investment to upstream in turning-point - when there is a special need in its increasing

Toughening of environmental challenges

Expectations of Growing Energy Consumption

Forecast of Energy Consumption (bn tones of oil equivalent) Expectations of Growing Energy Consumption Source: EIA 16,790 15,775 14,745 13,651 12,582 11,693 Total World 0,933 0,871 0,804 0,750 0,700 0,599 Central and South America 0,540 0,510 0,473 0,438 0,401 0,359 Africa 0,933 0,856 0,797 0,750 0,686 0,589 Middle East 5,931 5,332 4,710 4,040 3,446 2,911 Asia 1,567 1,535 1,493 1,426 1,337 1,255 Europe and Eurasia 9,903 9,104 8,277 7,403 6,569 5,713 Non-OECD 1,104 1,087 1,067 1,035 0,978 0,958 Asia 2,272 2,228 2,176 2,099 2,035 2,020 Europe 3,507 3,356 3,225 3,116 2,998 3,002 North America 6,886 6,671 6,468 6,248 6,010 5,983 OECD 2030 2025 2020 2015 2010 2006 Region

Impacts of Crisis on Energy Production

Reducing of investment to greenfields: they are profitable at $ 75 per barrel ( shelf or bituminous sand in Canada ) + d epletion of main world fields

Alternative energy generation is in trouble

(e.g. bankruptcy of some ethanol producers in Brazil)

Possible radical change of the situation on oil and gas market: from market of consumers to market of suppliers. Growing consumption – declining production

Cheap Oil = Lack of Investment 2010? 2011? Demand for oil and gas will recurs At the same time we will face the depletion of old fields while new ones are undeveloped

Structure of Primary Energy Production (2006) Source: Russian Academy of Sciense

Realistic Forecast ? Structure of Primary Energy Production (2030) Source: EIA

The World will Still Belong to Oil and Gas    Nuclear ?  Solar, wind and other renewables   Coal  ? Biofuel Availability for Europe Environ-ment Terrorism Price

Myths about Nuclear Source: BP energy Outlook 2009

World of Upstream and World of Downstream 0,6% Azerbaijan 0,6% Norway 0.9% Mexico 1% Algeria 1% Brasil 1.1% Angola 1.2% China 2.2% Qatar 2,3% Canada 2,4% US 2.9% Nigeria 3.2% Kazakhstan 3.5% Libya 6.3% Russian Federation 7.8% United Arab Emirates 7.9% Venezuela 8,1% Kuwait 9,0% Iraq 10.9% Iran 21% Saudi Arabia Oil: Consumption Top-20 Oil: Proved Reserves. Top-20 1,1% 0,4% Belgium & Luxembourg 20 1,2% 0,8% Netherlands 19 1,3% 5,0% Singapore 18 1,3% -4,8% Taiwan 17 2,0% -2,5% Spain 16 2,0% -1,0% United Kingdom 15 2,1% -3,9% Italy 14 2,1% 2,1% Iran 13 2,3% 0,5% Mexico 12 2,3% 0,7% France 11 2,6% -1,0% Canada 10 2,6% -4,9% South Korea 9 2,7% 8,1% Saudi Arabia 8 2,7% 5,3% Brazil 7 3,0% 4,9% Germany 6 3,3% 3,1% Russian Federation 5 3,4% 4,8% India 4 5,6% -3,5% Japan 3 9,6% 3,3% China 2 22,5% -6,4% US 1 Source: BP energy Outlook 2009

World of Upstream and World of Downstream 0.9% Canada 20 1% Kuwait 19 1% Kazakhstan 18 1.2% Egypt 17 1.3% Indonesia 16 1.3% China 15 1.4% Australia 14 1.6% Norway 13 1.7% Iraq 12 1.7% Indonesia 11 2.4% Algeria 10 2.6% Venezuela 9 2.8% Nigeria 8 3.5% United Arab Emirates 7 3.5% US 6 4.1% Saudi Arabia 5 4.3% Turkmenistan 4 13.8% Qatar 3 16% Iran 2 23.4% Russian Federation 1 Natural gas: Consumption. Top-20 Natural gas: Proved Reserves. Top-20 1,3% 11,5% Indonesia 20 1,3% 3,9% Netherlands 19 1,3% 10,7% Spain 18 1,3% 2,8% South Korea 17 1,4% 3,0% India 16 1,5% 3,7% France 15 1,5% 1,0% Argentina 14 1,6% 5,9% Uzbekistan 13 2,0% -5,0% Ukraine 12 2,2% 6,2% Mexico 11 2,6% -0,4% Italy 10 2,6% 4,7% Saudi Arabia 9 2,7% 15,8% China 8 2,7% -1,3% Germany 7 3,1% 3,6% Japan 6 3,1% 3,0% United Kingdom 5 3,3% 3,2% Canada 4 3,9% 3,8% Iran 3 13,9% -1,6% Russian Federation 2 22,0% 0,6% US 1

Asia as a Driver of Energy Consumption