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The energy factor in sino russian relations
- 1. National Energy Security Fund The Energy Factor in Sino-Russian Relations Konstantin Simonov London November 29 201 2
- 2. Choice Point • Choice between Europe and Asia is traditional for Russia • Export of energy resources is part of this choice. But it is also a political question • Asia is only China? • Possible diversification among Asian consumers as minimization of Chinese threat National Energy Security Fund
- 3. Evolution of Pro-Western Party • It is much more difficult to ignore Asia as possible consumer of Russia gas and oil • But China is not the whole of Asia • Idea of cooperation not with China but with others Asian consumers • Idea of three possible balancer s National Energy Security Fund
- 4. Ja n Fe uar 1000 1200 1400 1600 1800 200 400 600 800 0 br y 2 ua 01 r M y2 1 ar 0 ch 11 A 201 pr il 1 M 201 ay 1 Ju 2 0 ne 11 2 Ju 01 A ly 1 Se ug 20 p t us 11 em t 2 0 O ber 11 ct N ob 201 ov e 1 em r 2 D 01 ec be 1 National Energy Security Fund em r 2 b 01 Ja er 1 n 2 Fe uar 011 br y 2 ua 0 r 1 M y2 2 ar 0 ch 12 A 201 pr il 2 M 201 ay 2 Siberia ? Ju 20 ne 12 Ju 201 A ly 2 ug 2 0 us 12 t2 01 2 Oil Production in Eastern Siberia (thousand tonnes) Enough Oil in Eastern Vankor Talakan Dulsimskoe Verhnechonskoe
- 5. Enough Oil in Eastern Siberia ? Oil Production in Russia (January-September 2012, million tonnes) 4,84 5,20 13,15 Vankor 10,50 Talakan Verhnechonskoe 354,91 Sakhalin Projects Other fields National Energy Security Fund
- 6. Diversification or U-turn? Dynamics of Oil Production and Export (January-September) 2,00% 1,40% 1,50% 1,00% 0,50% 0,00% -0,50% Production Export -1,00% -0,80% National Energy Security Fund
- 7. Difficult Consumer • Oil contract with China • B ench mark price was price of Urals in Primorsk and Novorossiysk (50%-50%) • Now b ench mark price is price of ESPO in Kozmino • Discount was 1,5$ per barrel • But new b ench mark price generated 6$ premium National Energy Security Fund
- 8. To sell or not to sell? National Energy Security Fund
- 9. Question of Price • 2011 - average price for Russian gas in Europe was $400 • Net back price was $180-200 • CAPEX of Altai pipeline is $13 billion • It means that China will have the same price than in Europe National Energy Security Fund
- 10. Asia instead of Europe • The potential (and in reality quite likely indeed) shortage of funds for carrying out all its production projects that Gazprom uses to its benefit. The corporation which has found itself under pressure from European users and EU governing bodies is trying to make it clear to the Europeans that it will shift its main investment efforts specifically to eastern projects • And this is not only about China or even not about China at all, but about Japan and Korea where LNG from Vladivostok can be supplied. At a meeting with Putin on 19 October 2012, Miller made only a passing reference to contracts being discussed with China, whereas the subject of the LNG plant in Vladivostok received much more attention National Energy Security Fund
- 11. Asia instead of Europe • Gazprom seeks to bring a simple thought home to the Europeans: that they are threatened not only with the Altai gas pipeline (by which gas meant for Europe may go to China), but also with a thing as banal as underfunding by Gazprom of those production projects that are intended to become new sources of supplies to Europe • Simply because Gazprom will spend the money on East Siberian and Far Eastern projects. The same logic, by the way, can fully explain the postponement of the final investment decision on the Shtokmanskoye project for an indefinite period of time National Energy Security Fund
- 12. Asia instead of Europe • Miller did not miss the opportunity of dropping a strong hint that even some eastern production projects in Russia may benefit Europe if the European Union alters its position. The Gazprom chief executive actually recalled the old project of supplying gas from Kovykta to the west through Proskokovo • At the same meeting with Putin on the Eastern Gas Programme, the Gazprom head said that the corporation “provides for the possibility of supplying gas in the future from the Irkutsk gas production centre to the west, to Krasnoyarsk, Novosibirsk, and Omsk (it is more than 2,000 kilometres there), so we plan thus to connect the eastern part of this country, Eastern Siberia with Western Siberia, the main consumption centre” National Energy Security Fund
- 13. Two Big Dilemmas • Europe or Asia? • China or Japan and Korea? National Energy Security Fund
- 14. Thank you! www.energystate.ru National Energy Security Fund