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

2

Caspian Sea Region Map

3

Caspian Region Natural Gas Pipelines

4

Considerable gas reserves in the Caspian Basin

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Russia

44 598

Iran

33 090

Saudi Arabia

8 150

UAE

6 090

Algeria

4 504

Iraq

3 588

Norway

2 070

Turkmenistan

24 319

Koweit

1 784

Kazakhstan

1 881

Egypt

2 190

Libya

1 495

Uzbekistan

1 600

Ukraine

935

Netherlands

1 101 Germany

62

Denmark

46 UK

202

Oman

950 Yemen

479

Romania

109

Qatar

25 047

Azerbaidjan

1 271

Syria

285

Poland

121

Italy

87

Source: BP Statistical Review 6/2012

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

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

Technical challenges

Azerbaidjan : oil producer with big ambitions for gas

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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

Abundant gas field, Shah Deniz

(>1000 bcm)

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

Turkmenistan : a considerable gas potential with a development and sales strategy not yet fully defined

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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%.

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

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• 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

Turkey : large market and key transit country

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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

-

Caspian Basin:

What opportunities for ENGIE?

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

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

ENGIE has secured gas supply from Shah Deniz

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%).

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

Proven Reserves Prod. bcm/yr

Timeline

350 bcm gas 5 Notice of Discovery (NoD) June 2012 Pre-project launched summer 2014 FID end 2017 First gas expected end 2021

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)

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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Source Roberts 2015

Alternative routes for Russian Gas