Gas Demand and Supply in Europe

Third International Workshop on Oil and Gas DepletionBerlin, 25 to 26 May 2004

Professor Christian BeckervordersandforthSenior Vice-President of Ruhrgas AG

2 2004

Trends in Natural Gas Consumption from 2002 to 2010

Portugal

Belgium

Netherlands

Germany

United Kingdom

15.5

18%

17%

6.0 12.5

17%

18%

28%

2.5

10.517.5

30%

17.594%

86%

2.5

5.5

290%

Spain

France

Italy

Greece

S 6209

total

percentageincrease

powergeneration

in Several West European Countriesmtoe

3 2004

EuropePotential Gas Demand by Market Sectors

billion m³

0

200

400

600

800

2000 2010 2030

Residential andcommercial(incl. district heating)

Industry(incl. chem. feedstock)

Electricitygeneration

Other uses

4.2%24.5%

29.3%

42.0%

3%

31%

27%

39%

3%

37%

26%

34%

Source: WOC9 Report: "Gas Prospects, Strategies and Economics"; June 2003

4 2004

Literature Research:Direct and Indirect GHG Emissions

Direct and indirect GHG emissions based on different assumptions

0

20

40

60

80

100

120

140

oil hard coal lignite natural gasGemis

standarddata set(Germanmix)

natural gasFichtner

(Germanmix)

natural gasGemis

standarddata set

(100% CIS)

natural gasFichtner

(100% CIS)

t CO

2eq

uiva

lent

/TJ

fuel

direct emissions indirect emissions max.range

5 2004

Measurement:Geographical Places

Gazprom & Ruhrgas:1. Campaign 1996/97• 2 Compressor Stations• 1 Pipeline District• Production & Processing

in Yamburg

Main Export Pipelines

Gazprom & TransCanada PipeLines Ltd. 2001

• 2 Compressor Stations

2. Campaign05 + 06 + 10/2003

• 5 Compressor Stationsincl. > 4000 km Pipelines

6 2004

Measurement:Compressor Station

Kurskaja compressor station, Mostransgaz

Filter station

16 MW gas turbines and compressors

7 2004

Measurement:Equipment for Pipelines

Aeropoisk 3 M (Russian laserdetector) mounted in a helicopter

Detector indication on paper strip

Laser detector

8 2004

Measurement:Pipeline Routes

Peaks measured in sump and river areas

No detection of leakages along pipeline route

9 2004

Study Results:CH4 Emissions from Various Studies

CH4 emissions in % of gas produced

12

6

1.870.95 1 0.8

5

0.2

RangeEmissions

Firstestimate

1110

987

56

43210

Fichtner Eco institutes ETH Zurich 1996 Gazprom/ 2003 Gazprom/Ruhrgas

measurements measurementsRuhrgas

10 2004

Results

Preliminary measurement results:

Overall emissions found are comparable to or even lower than the 1996/97 campaign results.

Natural gas emissions from Russian export network are in the lower range of what is assumed in existing life cycle analyses.

The number and size of leakages have been reduced* thanks to technical and organisational measures.

The results obtained from a measurement campaign of Gazprom with TransCanada PipeLine Ltd. in 2001 are on a similar level.

The measured data are currently being extrapolated for the exportsystem.

*Compared with 1996/97 measurements

11 2004

Fuel Cells – Development Targets for Economic Use

Pf/kWh

DM/kWh

P A FC

electricity price

PAFC today:→ electricity costs approx. 30 Pf/kWh→ investment approx. 6,000 DM/kW

economic use

12 2004

Fuel Cell TechnologyRuhrgas Activities at a Glance

PAFC

MCFC

PEM

SOFC

19951990 2000

13 2004

Fuel Cell Initiative

14 2004

Application TechnologyAral CNG Refueling Station in Augsburg

15 2004

Wuppertal Institute

Key statementsCNG makes a contribution to

– reducing global emissions,– diversifying fuel mix,– reducing CO2 emissions.

Increased NGV efficiencies requiredHigher equivalent CO2 emissions from GTLNo benefits from forced H2 introduction (100% coverage in 2035)

16 2004

Natural Gas Applications/Appliance TechnologyNatural Gas Applications in a Single-Family Home

sink

bathtub

cooker dishwasher

sauna stove

showerwashing machine

tumble dryer

sink

fireplace

hot waterstorage tank

condensing appliance

patio heater

barbeque

gas connections

hot water supply

17 2004

Natural Gas – The Bridge to Hydrogen

CH4

C 4H

18 2004

Future Gas Supply Structure

hydrogenfrom- wind- sun- biomass- hydropower

methanefrombiomass

conventional- offshore- onshore

non-conventional- hydrate reservoirs- coal-bed methane

rene

wab

le

ener

gy s

ourc

es

foss

il fu

els

power generationcombined cycle/cogeneration

refuelingstation

home

- heat pump- boiler

- micro-cogenerator

industry

storage

solar

energ

y

19 2004

Natural Gas in a Sustainable Energy System

Impact on the environmentNatural gas has the lowest impact on the ecological systemcompared with all other fossil fuels, both in production,transportation, storage and application.

Conservation of energy resourcesNatural gas is used in an optimum manner thanks to highlyefficient transportation and application technologies.

Long-term availabilityResources are adequate to cover demand far into the next centuries. They are well located in strategic terms and make it possible to open up new routes to future energy systems, for example, to a hydrogen economy.

Flexible design to benefit from new technologyThe existing supply structure (transportation, storage andapplications) is flexible and can be improved on an ongoing basis through new production and application technologies.

20 2004

Natural Gas procurement in Europe today

ArzewSkikda

Cordoba

Lyon

St. Petersburg

Rom

Helsinki

Ljubljana

Oslo

Stavanger

Kårsto

Kollsnes

Algier

Madrid

London

Kopenhagen

Prag

Berlin

BratislavaWien

Stockholm

Athen

Paris

Essen

Emden

Lissabon

Huelva

Sines

Cartagena

Barcelona

Fos-sur-Mer

Bilbao

Krk

Istanbul

La Spezia

Montoir

Zeebrügge

Tyra

Ekofisk

TrollGullfaks

Statfjord

Heimdal

Frigg

Sleipner

Budapest

Tunis

Brüssel

Sofia

Bern

Belgrad

Dublin

Belfast

Warschau

Minsk

Bukarest

Oseberg

W'haven

ZagrebRovigo

El Ferrol

Valencia

1 m³=11.5 kWh

RussiaAlgeriaOthers 3%

24%11%

Productionin Europe

62%

Imports

Gas supplies 2003(485 billion m³)

planned/ under constr.existing

Gas pipelines/LNG terminals

- -

21 2004

Prospects of international gasprocurement

Markets due to change: growing import needs in Europe in medium and long term

Russia, Norway and Algeria stay main suppliers

In the longer run new sources androutes, growing importance of LNG

Growing Import Dependency

Increased demands on new gasprocurement projects

Growing transmission distances

Long lead times

Substantial risks

High capital expenditures on exploration, production and infrastructure required

NLUK

Frankfurt/OderBERLIN

Waidhaus

Baumgarten

Emden

Tarifa

NORWAY

RUSSIA

ALGERIAMazzara/Sizilia

Zeebrügge

22 2004

Gas Investments in OECD Europe to 2030

Total amount: 474 billion USD

LNG6%

Distribution23%

Transmission & Storage

23%

Exploration & Development

48%

23 2004

Long-term contracts remain vital tosecure European Gas Supplies

Prerequisite for ability and willingness to invest Long-term contracts are key to secure investments as equity financing of projects is hardly possible and the capital market requires long-term sales guarantees

Element of stability and calculability - Balanced risk sharing model

Foundation of supply securityEndangering long-term contracts = Endangering future supplies

Accepted by EU Commission

Adaptation to changed markets and business environment

Short-term and spot business as adjunct and for flexibility

24 2004

Security of Supply (8)

• Increasing importance in view of• Growing dependence on imports in

liberalised markets

• More complex geopolitical situation

• A good record so far for the European gas industry

• No need for greater regulation

• Greater reliance on companies' own responsibility

• Clear distinction between corporateresponsibility and political support

2003

12

Natural Gas supplies in Europe:Growing Import Share

0

200

400

600

800

2001 2030

Bcm

Source: UN ECE Gas CentreReport of Natural Gas Supply in the European Part of the UN ECE Area

September 2003

Net imports

Productionin Europe

Net imports

Productionin Europe

415

25 2004

Main Challenges for the European GasIndustry

Will the gas industry in Europe be able to procure gas at ever greater distances and at prices that are competitive with other energy sourcesin the market place?

Will the European gas industry be able to ensury the necessary securityof supply against the backdrop of rising imports and growing gas-to-gascompetition?

Will governments create a stable regulatory framework enabling gasindustries and producers supplying Europe to make the necessary investment?