Transcript Invest in New Bulgaria

THE ROLE OF THE CASPIAN
REGION FOR EUROPIAN ENERGY
SECURITY
Traycho Traykov
Minister of Economy, Energy and Tourism
VI KAZENERGY Eurasian Forum
4-5 October 2011, Astana
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Security of gas supply – how do we define the relevant drivers?
EU Perspective
• Alternative pipeline corridors
and wider access to global
LNG supply
• Improved level of
interconnections between
Member States
• Security and reliability of gas
supply through route and
source diversification
• Infrastructure adequacy to
ensure smooth market
functioning in crisis situations
(N-1 rule under EC
Regulation 994/2010)
National Strategic
Interests
• Alternative external suppliers
and avoidance of
overdependence on a single
source or route
• Multiple infrastructure import
points
• Long-term security of supply
and import price
competitiveness
• Ability to withstand supply
crises without severe
demand curtailment and
economic loss
Corporate Interests
• Secured sourcing of
competitively priced gas
• Secured midstream positions
and clarity on downstream
positions i.e. level of demand
in a mid to long-term horizon
• Mutually beneficial
relationships with upstream
producers
• Long-term security of access
to midstream and downstream supply infrastructure
(investment in infrastructure
and fair TPA)
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Security of supply can function through synchronizing the objectives
of the participants along the value chain
• Reliable investment in production is
related to existence of accessible outlet
infrastructure, security of demand,
maximization of net-back value
Suppliers
• Investors in gas supply infrastructure
expect return through guaranteed longterm commitment to utilizing
transmission capacity
Security
Of
Supply
Infrastructure
Operators
Shippers
• Shippers expect a guaranteed supply
base, secured access to midstream and
downstream infrastructure, clarity on
downstream market needs and
commercial benefits
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The Asia-Europe gas map can be designed to guarantee security of
gas supply, but also reliability of demand
• Proven global gas reserves- ~ 187 trillion cm ; ~ 47 %
located in the Caspian Region, Central Asia & the
Middle East1)
• Gas reserves of the Russian Federation: ~ 44 trillion
cm , ~23% of proven global gas reserves1)
• Forecasted EU27 gas consumption taking into
account impact of economic cycles: ~ 600 bcm/y in
2025-20302)
• The EU gas market has potential for growth even with
the impact of the economic and financial situation
taken into account
• Eurasian gas reserves and European market form a
perfect match
• However, a reliable supply system having alternative
infrastructure corridors between producers and
consumers is still under development.
1) BP 2010
2) Eurogas 2010
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The role of Bulgaria – an important partner in the development of the
new Eurasian supply system
• Capacity of the national GTN – up to 10 bcm/y
• Capacity of transit network ~19 bcm/y
• High pressure gas pipelines > 2 700 km
• National gas high pressure network with length of
more than 1 700 km (3 CS with total capacity 49 MW)
• Transit gas network with length 945 km (6 CS with
total capacity 214 МW)
• Bulgaria`s GTN has spare transport capacity, the
national UGS “Chiren” is being upgraded
• The national transmission system can reliably function
as a transit system for gas imports into South-Eastern
and Central Europe
• Regional Interconnectors under development – shall
provide access to alternative supply sources by 2014 Southern Gas Corridor pipe gas and LNG
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Bulgaria takes part in key regional interconnector projects in order to
provide early access to Southern Gas Corridor
• Bulgaria and SEE shall have access to an alternative
supply route already in 2012 - 2014 at a relatively
limited cost
• Completion of interconnector projects shall impact
regional security of supply and import price
competitiveness
IBR
IBS
ITB
IGB
• SEE shall be in a position to source gas through the
supply corridor from the Caspian region, Middle East
via Turkey and Greece and indirectly through LNG
terminals in the two countries
• Investment in the regional interconnectors does not
depend on a large supply base - comparatively small
capacities to cater for incremental regional demand
Interconnector GR-BG:
EIA & Technical Design
Interconnector BG-RO:
Technical Design
Interconnector TR-BG :
Start of FS phase
Interconnector BG-SER:
Start of FS phase
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IGB and IBR – the most advanced Southern Gas Corridor SEE
projects in Bulgaria
Key facts IGB (Greece – Bulgaria)
• Length – approx. 170km (140km in BG, 30 in
Greece), between Komotini in Greece and Stara
Zagora in Bulgaria
• Capacity – up to 3 bcm/y, with an option for capacity
increase to 5 bcm/y
• Targeted in service – 2013/2014
• EU financial contribution through EEPR
Key facts IBR (Bulgaria – Romania)
• Length – approx. 22km (16km in BG, 6km in Romania),
between Ruse in Bulgaria and Giurgevo in Romania
• Capacity – up to 1,5 bcm/y
• Targeted in service – 2012/2013
• EU financial contribution through EEPR
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The development of complementary regional supply infrastructure is
justified by projected aggregate gas demand in SEE
Gas demand per country [bcm]
39,2
3,2 0,4 0.4
11,9
5,7
Base
15.2
2,4
42,5
0.4
0,5 3,4
12,6
6,4
Optimistic
BiH
Bulgaria
45,9
0.5
0,8 4,5
Potential demand drivers
48,9
0.7
0,8 5,2
13,7
14,3
7,4
7,5
15.8
3,2
16.7
3,7
52,5
0.5
5,8
1,2
15,4
58,1
0,9
6.9
1,3
16,6
8,2
8,4
16.7
17.8
19.5
2,5
3,6
4,5
2014
2020
2025
FYROM
Hungary
Greece
Romania
• Access to competitively priced import
sources resulting from commissioning of
new cross-border pipelines
• Enhanced regional use of gas-fired
electricity capacities with higher load
factor:
- to compensate for decommissioned peak
coal-based units
- to comply with CO2 limits and balance
unstable RES generation
- to cover peak demand in the winter
season
• Further development of gas distribution expansion of gas use in households,
small and medium sized enterprises
(depending on price competitiveness)
Serbia
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Source: KANTOR
Conclusion: A reliable gas supply system is a function of balanced
interests along the value chain in politically stable environment
Producers
• Must be assured about
receiving net-back value at
an optimal level over a long
timeline
• Have to be certain about
achieving projected IRRs in
very capital intensive
projects with a significant
level of investment risk
• Would like to be protected
against steep reductions of
gas offtake significantly
affecting their cash flow
Midstream operators
Shippers
• Want guaranteed return
through high capacity
utilization and minimized risk
of infrastructure non-use;
• Do not want political factors
to affect project
implementability
• Do not want to feel impeded
or see their costs increase
due to obstacles in terms of
permitting, heavy approval
procedures or public
opposition
• Have to rely on secure TPA
or be free to invest in supply
infrastructure themselves;
• Downstream market needs
must be more clear thus
reducing commercial risks
• Supply contract conditions
reached with producers must
be sufficiently flexible and
account for potential
downstream demand
uncertainties
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Conclusion: Balance of interests along the value chain is achievable,
zero sum gaming is not an option
• Balance of interests results from fairly
sharing both commercial risks and
value along the chain from gas
production through transportation to
sales in downstream markets
Suppliers
• Example: Large scale supply projects
like NABUCCO or strategic cross
border links like IGB have attracted
companies acting as willing investors
and/or future shippers
Security
Of
Supply
Infrastructure
Operators
Shippers
• Joint participation in the separate
segments of the value chain – an
appropriate approach to synchronizing
mutual interests and benefits while
building the Eurasian supply system to
the European market
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Thank you for your attention!
Ministry of Economy, Energy and Tourism
8 Slavyanska str., 1000 Sofia
tel. +359 2 940 71; fax + 359 2 987 2190
www.mee.government.bg
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