1. The future of European gas bne.eu

2. The Russian gas business

3. Russia has only 3 customers Europe Former Soviet Union Domestic consumers

4. Rise of the independents Indies will become commercial, not political, counter parties. Indies currently 100% focused on domestic market for now, being set in competition with Gazprom Russia‘s gas production declined 4% year-on-year in 2014 to 640bcm. Gazprom the biggest loser. Novatek and Rosneft to increase gas output by 4% and 22% YoY respectively in 2014. Novotek has been given right to export LNG. First competition in export business More recently LUKoil now getting into gas (4.9% growth via Nakhodka) Novatek Rosneft BP Gazprom

5. Gas diversification

6. China deal

7. Note lots of pipelines Note no pipelines

8. Europe business Turkish Stream proposed 63bcm capacity = x2 China deal Note all the LNG ports already in existence

9. Russian gas exports to Europe markedly recovered in 2013, with Gazprom’s reported deliveries of 162.7bcm from the very low base of 138bcm in 2012 forecast Gazprom to export 155bcm to Europe and 60bcm to FSU in 2014

10. Russian gas dependency

12. Who’s in danger from Russian bear?

13. Look to the future

15. Asia rising Global natural gas demand 2% a year Global LNG consumption rising by 5% Global natural gas consumption will rise to 4.6 trillion cubic meters by 2030 from 3.6 trillion cubic meters in 2012 Asian natural gas consumption to rise to 1.15 trillion cubic meters by 2030 from 684bn cubic meters in 2012 China to increase gas consumption to 420bn cubic meters by 2020 from 167bn cubic meters currently China to increase imports of LNG to 67m tonnes by 2025 from the current 18m tonnes by buying more from Russia

16. Alternatives? Can the USA help? Can LNG help? Can shale help? Can Central Asia help?

17. Ukraine special role A decade ago Ukraine was buying 52bcm of gas a year from Russia, and last year this was down to 28bcm - the take or pay agreement signed in 2009 was for 42bcm, ie more than the China deal. Ukraine has been importing around 28-30bcm in recent years from Russia, but this could easily drop to 20-22bcm over the next year with disputes over pricing, a recession and hence reduced consumption in Ukraine, and diversification away from Russia. Ukraine produces about 20bcm of its own domestic gas and could be totally self sufficient in gas over the next decade as rational energy pricing reduces very inefficient consumption, while Ukraine has lot of opportunities to hike production. If Russia and Ukraine can make friends again then that would greatly improve energy security in Europe. Tim Ash, Standard Bank

18. European energy pact Polish PM Donald Tusk's Energy Union plan is gaining some traction in Brussels But no unity: EU's Energy Commissioner Gunther Oettinger: "Gas is a product, not a policy weapon for the EU.” Nuclear power and coal are growing competition (Poland, Turkey, Hungary, Belarus, France, Germany…) via EuroAtom

19. Thank you. Ben Aris editor@bne.eu bne.eu