Engie

Caspienne : un enjeu pour les perspectives gazières de GDF SUEZ The Caspian Sea – geopolitical and geostrategic stakes for the wider region Agathe Thomas ENGIE representative in Azerbaijan 21.10.2015

Summary General Context: significant gas reserves in the Caspian Basin

 Azerbaijan: oil producer with gas export ambitions  Kazakhstan  Turkmenistan: a significant gas exporter  Russia: world’s first oil and gas producer  Iran: future major partner?

Turkey: large market and key transit country ENGIE: What opportunities in the Caspian Bassin?

 Azerbaijan : Absheron and Shah Deniz 2  Russia: Nord Stream I and II, Yamal LNG Conclusions

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Caspian Sea Region Map

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Caspian Region Natural Gas Pipelines

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Considerable gas reserves in the Caspian Basin 

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Russia possesses 17% of proven world reserves and is a major gas producer and export country Azerbaijan, Turkmenistan and Kazakhstan possess 13% of the world gas reserves

Norway 2 070 Denmark UK 46 202 Netherlands 1 101 Germany

Poland 121

62

Ukraine 935

Kazakhstan 1 881

Romania 109

Italy 87

With about 18% of the world gas reserves (expected lifting of sanctions), Iran is a potential major export country These reserves are located at a distance of 3000 to 4000 km from the European market

Russia 44 598

Azerbaidjan 1 271

Uzbekistan 1 600 Turkmenistan 24 319

Syria 285 Iraq 3 588 Algeria 4 504

Libya 1 495

Egypt 2 190

Iran 33 090

Koweit 1 784 Qatar 25 047 Saudi Arabia 8 150

Technical challenges

UAE 6 090 Oman 950

Yemen 479

Source: BP Statistical Review 6/2012

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Azerbaidjan : oil producer with big ambitions for gas

Azerbaijan expected to become a

major gas player, as it has already become in the field of oil Gas reserves 3.5 tcm, production 16.9 bcm/year

ď ą Abundant

gas

field,

Shah

Deniz

(>1000 bcm)

ď ą Considerable reserves to be developed in major gas fields: Absheron (200 to

350 bcm), ACG Deep (~300 bcm), Umid (~200 bcm) Export strategy aiming at customer diversification with less dependency on Russia

and

Iran

and

deeper

partnership with UE, US and Turkey Ambitious,

but

accessible

export

targets with 30 bcm by 2030

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Turkmenistan : a considerable gas potential with a development and sales strategy not yet fully defined  Gas reserves: 17.5 tcm  Gas Production 69.3 bcm/year, exporting mainly to China and Iran  Plan to export more natural gas  West via the TCP (Trans-Caspian Pipeline), not likely to materialize  South via the TAPI (Turkmenistan Afghanistan Pakistan India) pipeline,  Maximum capacity of 27 bcm/yr 

2 bcm/yr will be delivered to Afghanistan, 12.5 bcm/yr to Pakistan and 12,5 bcm/yr to India.

 First gas 2020.

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Kazakhstan •Third-largest

non-OPEC

supplier of energy to the EU, behind Russia and Norway.

•Gas reserves 1.5 tcm.

• The

hydrocarbon

sector

represents about 1/3rd of the Kazakh GDP and more than

75% of the foreign direct investments.

• Gas production 19.3 bcm in 2014.

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Russia: world’s first oil and gas producer

 Russia holds one of the largest natural gas reserves in the world, being the largest producer and exporter of dry natural gas. Proven reserves 32.6 tcm. Production 578.7 bcm. Exports 201.9 bcm. Consumption 409.2 bcm in 2014 In 2014, Gazprom Export supplied 146.6 bcm of gas to European countries. Western European countries accounted for approximately 80% of the company’s exports from Russia, while Central European states took 20%.

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Iran : future major partner? Revealing its potential with possible lifting of the embargo.

•

1st gas reserves in the world, 34 tcm

•

By 2016, major natural gas exporter

Iranian production could increase

•

by 1/5th of its current production within 3 years •

Seeking new export routes

•

1st priority : exporting gas to the neighboring countries, especially to the Persian Gulf

•

Given political tensions surrounding TANAP, LNG appears to be the best option for Iran’s exports to Europe •

No LNG terminal has been built in the country yet.

•

SOCAR has invited Iran to join TANAP •

No clear decision made for the moment

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Turkey : large market and key transit country Turkey imports most of the gas that it consumes (48.6 bcm in 2014) Due to the fast development of its market,

Turkey’s energy

needs

are

increasing.

Turkey is an key transit country for any diversification pipeline projects, should the gas come from: -

 Azerbaijan,  Iran,  Iraq,  Turkmenistan,  Middle East.

Strategic location for gas transit: more energy tariffs leverage

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Caspian Basin: What opportunities for ENGIE?

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Gas consumption needs in the Central, Eastern and Southern Europe.

ď Ž

ENGIE has an outstanding position in both markets of Central & Eastern Europe and Southern Europe

ď Ž

ENGIE has secured gas supply from Shah Deniz

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Azerbaijan: Absheron, ENGIE’s Benchmark Project in the Region



Absheron is located offshore Azerbaijan, 123 km of the Sangachal terminal, between the two giant fields of Shah Deniz and ACG.



GDF SUEZ EPI entered the license (PSA) in February 2009 and holds 20% beside the operator Total (40%) and the NOC SOCAR (40%).

Proven Reserves 350 bcm gas

Prod. bcm/yr 5

Timeline Notice of Discovery (NoD) June 2012 Pre-project launched summer 2014 FID end 2017 First gas expected end 2021

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Russia: exclusive partner of ENGIE

 ENGIE has had a strong relationship with Russia for over 40 years through long term gas purchase contracts of about 12 bcm/year that should expire by 2030.  In 2009, ENGIE acquired a 9% participation in the North Stream I pipeline.

In 2015 ENGIE reinforced this partnership with Gazprom and will also take a 9% participation in North Stream II pipeline.  On June 5th 2015, ENGIE and NOVATEK signed a 23-year Sale and Purchase Agreement for LNG from the Yamal LNG project.

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Conclusions



Large natural gas reserves in the Caspian basin



Finding consumption markets and export routes for

hydrocarbon producing countries is one of the main challenges 

Game changing environment



Barrel price drop ($46 today)

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Iran’s exports potentially impacting the energy trade balance of the Caspian Basin



ENGIE is highly involved in the region

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THANK YOU!

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Alternative routes for Russian Gas ď Ž

Source Roberts 2015

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