Pipeline Technology Conference 2011, Hannover 04.+05. April 2011Planned and Ongoing Pipeline Projects for Caspian Oil and Gas

- A Race between Europe and China?

Christian Heinz

Planned and Ongoing Pipeline Projects for Caspian Oil and GasTable of Contents

1. Introduction

2 Gas Demand in Europe2. Gas Demand in Europe

3. Gas Import Routes to EU

4. Sources of China´s Natural Gas Importsp

5. Turkmenistan Gas Exports

6. Resources and Expected Production in the Caspian (excl. Russia)

7. China´s Oil Production and Consumption

8. Crude Oil Pipeline Projects out of the Caspian

9. Crude Oil Exports via Black Sea

10.Summary and Conclusions

page 2

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 1. Introduction

Gas Deliveries to Europe and ChinaGas Deliveries to Europe and China

• Demand in Europe and China

• Pipeline Projects out of the Caspian Area

Oil Export out of the Caspian to the West Direction and East Direction

• Production in the Caspian Area

• Pipeline Projects in East and West Direction

• Bosphorus as a Bottle Neck

• Pipeline Projects out of the Black Sea

Are Europe and China competing about Oil and Gas Reserves in the Caspian?

page 3

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 1. Introduction

3700 km

2700 km

lengths are generalized distances, not pipeline route lengths

Seite 4

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 2. Gas Demand in Europe

700

600

700 Bcm

Power Generation

400

500

Industrial

200

300

Residential and Commercial

0

100

02000 2005 2010 2015 2020 2025 2030 2035

page 5

Source: IEA

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 2. Gas Demand in Europe

Growth by Region 2009 – 2035y g

• Incremental Gas Demand (Bcm)

80Power Generation

32

30

Residential /C i l

Industrial

32Commercial

page 6

Source: IEA

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 3. Gas Import Routes to EU(rounded figures, simplified)

[figures in Bcm] 2010 2020 2035[figures in Bcm] 2010 2020 2035

Existing RussiaPipeline capacity 250 250 250

utilization 125 / 50 % 100 / 40 % 125 / 50 %

NPipeline capacity 150 150 150

Norwayp p y

utilization 100 / 66 % 100 / 66 % 100 / 66 %

North AfricaPipeline capacity 60 70 70

utilization 40 / 66 % 60 / 85 % 60 / 85 %

North StreamPipeline capacity - 55 55

utilization - 50 / 90 % 50 / 90 %Indigernous Production 175 75 25

Pipeline capacity 180 180 180LNG

Pipeline capacity 180 180 180utilization 90 / 50 % 90 / 50 % 90 / 50 %

Demand 530 620 700

Grelated to Pipeline capacity - 285 - 80 - 80

Gapp p y

related to assumed utilization 0 145 250Nabucco - 30 30Southstream - 63 63

page 7

(Sources IEA, CERA, EU)

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 3. Gas Import Routes to EU

page 8

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 4. Sources of China´s Natural Gas Imports

Region (Bcm) 2009 By 2014 2020

Caspian Pipe 0 30 +Caspian Pipe 0 30

Middle East LNG 0.64 7 +

Africa LNG 0.24 ?

SE Asia LNG 1 60 7 +SE Asia LNG 1.60 7 +

Australia LNG 4.75 15 +

Russia LNG / Pipe 0.25 ??

Total 7 5 60+ ? 100Total 7.5 60+ ? 100

page 9

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 5. Turkmenistan Gas Exports

1990 to 2030 in Bcm

80Exports to China Exports to RussiaExports to Iran Exports to Other FSU

/ Ukraine

50

60

70p p

Exports to Ukraine

30

40

50

10

20

01990 1995 1998 2000 2005 2008 2009 2010 2015 2020 2025 2030

page 10Source: IHS CERA

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 5. Turkmenistan Gas Exports

Turkmenistan´s Gas Pipeline to China Onstream in 2010

page 11

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 5. Turkmenistan Gas Exports

Expansion of Trans – Asian – Gas Pipeline System to China

Samara

Omsk

Trans-Asia-Gas-PipelineBeyneu-ChimkentConcept under preparation

PavlodarOral

pCompleted 2009, 6 Bcm in 2010, 17 Bcm in 2011, 30 Bcm in 2013Presently 7 new compressor stations under design & construction3rd pipeline planned

Concept under preparationDesign work to start in 2011First phase completion 2013

AtyrauKenkiyak

B

Atasu

Karamay

Shihezi

Karakain

KumkolTengiz

Kashagan Eskene

Beyneu

Kuryk

Chimkent

DaulatabadExisting

Planned

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 6. Resources and Expected Production in the Caspian (excl. Russia)

Caspian Oil Production Expected to Nearly Double by 2020:

Main driver Kazakhstan

page 13Source: CERA (November 2009)

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 7. China’s Oil Production and Consumption

450

350

400

450

250

300

nes Consumption

150

200

mill

ion

tonn

50

100

m

Production

Refinery throughput0

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Refinery throughput

page 14

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 8. Crude Oil Pipeline Projects out of the Caspian

Expansion of Trans-Asian-Gas Pipeline System to China

Samara

Omsk

KCP PipelineOperating since 2006 (first phase)Expansion (Kenkiyak-Kumkol) operating since 2009, 10 MtaExpansion to 20 Mta in progress (+8 pump stations)

PavlodarOral

Tengiz

Kashagan Eskene

AtyrauKenkiyak

Beyneu

Atasu

Karamay

Shihezi

Karakain

Kumkol

Beyneu

Kuryk

Chimkent

Daulatabad page 15Existing

Planned

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 8. Crude Oil Pipeline Projects out of the Caspian

page 16

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas

Ust-Luga St. Petersburg

Ventspils

8. Crude Oil Pipeline Projects out of the Caspian

Gdansk

Butinge

Ventspils

RostockWilhelmshaven Samara

UnechaMozyr

Leuna

LitvonovKenkiyak

Schwedt

Plock

Eskene – KurykRoute permits completedCommissioning not before 2019 (postponed), 56 Mta

KashaganBratislava

Schwechat

y

BrodyAtyrau

Ingolstadt

CPC ExpansionConstruction contracts awarded Commissioning 2014 Approx +40 Mta

Omisalj Sisak

Százhalombatta

KashaganTengiz

C t

Trieste

Beyneu

Kuryk

Odessa

Novorossiysk

pp o 0 ta

Constanza

Varna

Burgas

BakuSupsa

Trans Caspian

Baku - SupsaNo actual plans

ErzurumAlexan-droupolisVlore

Istanbul

Ankara

SamsunBaku

BTC - Expansion+10 Mta with DRA

Ceyhan page 17ExistingPlanned

no actual plans on implementation

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 9. Crude Oil Exports via Black Sea

Distribution of Black Sea Crude Oil Exports by Company/Country in 2009Distribution of Black Sea Crude Oil Exports by Company/Country in 2009

page 18

Source: IHS CERA.

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 9. Crude Oil Exports via Black Sea

Monthly Eurasian Crude Evacuation versus Hypothetical CapacityMonthly Eurasian Crude Evacuation versus Hypothetical Capacity

via Bosphorus, 2003–10

• Hypothetical Annual Capacity of Bosphorus for Large Tankers = 132 4 mt *• Hypothetical Annual Capacity of Bosphorus for Large Tankers = 132.4 mt

14.0

16.0

8 0

10.0

12.0

4.0

6.0

8.0mt

0.0

2.0Crude Evacuation from the Black Sea Hypothetical Bosphorus Capacity*

page 19Source: IHS CERA.*Calculated from maximum possible number of large tankers given number of daylight hours and spacing requirements; based upon typical use of Suezmax tankers from ports that can handle them; the use of one slot per day by a bulk carrier; and “average” weather conditions.

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 9. Crude Oil Exports via Black SeaOutlook for Bosphorus Congestion to 2020

(Base Russia Base Caspian Scenario for November 2010)(Base Russia-Base Caspian Scenario for November 2010)

• Projected Total Extra Demurrage Charges Incurred 2012-2020: $3.16 billion.Hypothetical Maximum Passage CapacityB h C d Shi t (A t l)

14 0

16.0

Bosphorus Crude Shipments (Actual)Bosphorus Crude Shipments Needed (Projected)Excess Shipments Unable to Pass (in Queue)Bosphorus Crude Shipments Needed (with 2 mt of Seasonal BPS-2 Shipments)

10.0

12.0

14.0

Million

4.0

6.0

8.0Million

Tons

0.0

2.0

page 20Source: IHS CERA.*Calculated from maximum possible number of tankers given number of daylight hours and spacing requirements in current transit rules; based upon maximum use of Suezmax tankers for ports that can handle them and “average” weather conditions; assumes similar monthly distribution of annual exports as in 2008.

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas

Ust-Luga St. Petersburg

Ventspils

BPS2Under construction Commissioning 2012Phase 1: 30 MtaPhase 2: 50 Mta

Sarmatia(Odessa-Brody-Plock)O 1. Introduction

Gdansk

Butinge

Ventspils

RostockWilhelmshaven Samara

ase 50 taOdessa-Brody reversed in north directionBrody-Plock: Preparation of permitsToday's plan: commissioning 2015, 30 Mta

UnechaMozyr

Leuna

LitvonovKenkiyak

Schwedt

Plock

KashaganBratislava

Schwechat

y

BrodyAtyrau

Ingolstadt

Omisalj Sisak

Százhalombatta

KashaganTengiz

C t

Trieste

Beyneu

Kuryk

Odessa

Novorossiysk

Constanza

Varna

Burgas

BakuSupsa

PEOPConstanza-TriesteStudies completedNo substantial Progress60 Mta

ErzurumAlexan-droupolisVlore

Istanbul

Ankara

SamsunBaku

Samsun-CeyhanStudies ongoingTBP

B Al d li

60 Mta

Ceyhan page 21

Existing

Under ConstructionPlanned

g g75 MtaBurgas-Alexandroupolis

Environmental permits appliedFEED design finalizedPlanned commissioning 2015 50 Mta

Planned and Ongoing Pipeline Projects for Caspian Oil and Gas 10. Summary and Conclusions

The importance of the Caspian region for oil and gas supply willThe importance of the Caspian region for oil and gas supply will

grow for the next few years.

Russia, Kazakhstan and Turkmenistan seek for developing both

export directions, west and east

China is launching projects with very aggressive schedules

Pipeline projects to the west are facing often difficulties in terms

of political support, throughput guarantees, permits and finance

page 22

Source: IHS CERA.

Planned and Ongoing Pipeline Projects for Caspian Oil and GasThank you for your attention!