European Gas Demand and Sources of Gas Supply Tatiana Zhitenko Deputy Head of Directorate – Head of Division, Gazprom TYDNP 2018 Gas Supply Potential SJWS, 7 th December 2017, Brussels
Global Gas Demand 6000 5750 5500 5250 5000 bcm 4750 4500 4250 4000 3750 3500 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Hereinafter: adjusted to Russian gas (T=20 C, calorific value = 37.053 MJ/cm), unless stated otherwise. Sources: IEA, IHS, Wood Mackenzie 1
European Gas Demand 700 670 640 610 580 bcm 550 520 490 460 430 400 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 ENTSOG: Coal Before Gas ENTSOG: Gas Before Coal ENTSOG: Sustainable Transition ENTSOG: Distributed Generation ENTSOG: Global Climate Action ENTSOG: EUCO 30 Hereinafter: adjusted to Russian gas (T=20 C, calorific value = 37.053 MJ/cm), unless stated otherwise. Sources: IEA, IHS, Wood Mackenzie, BP 2
Indigenous Production in Europe 160 140 120 bcm 100 80 60 40 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 ENTSOG Indigenous production excludes Norway Sources: IHS, Wood Mackenzie 3
Total Gas Imports to Europe 600 550 500 450 400 bcm 350 300 250 200 150 100 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 ENTSOG max ENTSOG min Sources: IHS, Wood Mackenzie 4
LNG Imports to Europe 250 200 150 bcm 100 50 0 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 ENTSOG max ENTSOG min Sources: IHS, Wood Mackenzie 5
Russian Gas Supply to Europe 230 210 190 170 150 bcm 130 110 90 70 50 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 ENTSOG max ENTSOG min Sources: IHS, Wood Mackenzie 6
Asian Price Premium Asian Price Premium, TTF Prices and Asian LNG Prices 700 19.9 Asian premium TTF day-ahead and forwards (23 oct 2017) 600 17,2 17.1 Japanese LNG Import Price S. Korean LNG Import Price 500 14.2 Asian Proxy LNG Price Asian spot prices (actual and forecast) 12,2 400 11.4 $/Mcm $/MBTU 300 8.5 7,2 200 5.7 100 2.8 2,2 0 0.0 -100 -2.8 -2,8 Growing Asian premium is supporting higher attractiveness of Asian market for flexible LNG deliveries versus European market. Sources: Bloomberg, Interfax-GGA, Platts, Ministry of Economy, Trade and Industry of Japan, Customs Statistics of S. Korea and Japan. 7 European Gas Market Review
LNG deliveries from Sabine Pass From Jan to Nov 2017 Sabine Pass has shipped 11,8 mt of LNG. Share of deliveries by region Sabine Pass 9 11 6 27 35% 2 1 36% 13% 27 16% 39 3 20 4 4 Central and South America Middle East and Africa 1 Asia and Oceania Europe 3 7 including Europe – 5 1,8 mt or ≈ 0,5% of European gas demand. - LNG delivery routes from Sabine Pass 1 - number of LNG deliveries over time period Source: IHS Markit. 8
Record High Deliveries of Russian Gas to Europe In 2016 the level of Russian gas deliveries to Europe reached record levels of 179,3 bcm . We expect to have even higher numbers in 2017. 700 50% 602 598 584 583 564 561 600 551 542 540 542 507 485 40% 500 bcm 34% 33% 400 31% 30% 30% 30% 300 27% 27% 26% 26% 26% 25% 23% 200 20% 100 190 190 179 159 161 159 151 151 150 147 141 139 139 0 10% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e Russian Gas Supply European Gas Demand Share of Russian gas in European gas demand 34% 9
Russian Gas Contracted Volumes 180 160 140 120 bcm 100 80 60 40 20 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 MCQ ACQ MCQ under the contract prolongation assumption ACQ under the contract prolongation assumption Source: CEDIGAZ, under assumption that 85% of contacted volumes is Take-or-Pay (MCQ) and the rest is flexible (ACQ). 10
Conclusions • Gas demand grows worldwide. In Europe various scenarios show either stable levels or moderate growth. • Indigenous production decrease. The net imports grow. The niche will be taken by both pipeline gas and LNG. • The efficient infrastructure has to be in place. • Questions to the supply scenarios: • Counterintuitive: demand is not balanced with supply. • The difference between max and min scenarios is too high for imports. • Need to clarify a purpose of supply scenarios. 11
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