Criteria for securing

gas supplyl through

th h the
th
S th
Southern Corridor
C id

Roberto Potì

18
8th Casp
Caspian
a International
te at o a O Oil & Gas Co
Conference
e e ce
Baku
8th June 2011
A challenging Global Gas Market Environment

•Significant demand 
•Global Economic Crisis
decrease

•New capacity on 
•New LNG liquefaction
stream

•US unconventional gas  •Reduction of further 
production imports

•Large potential 
•China + India
supply/demand

g
Uncertain global economic recoveryy
Slow down of investment in new projects
Price differentials between regions

2
Europe: gas demand growth driven by power generation

700
600
500
Gas
400
demand Increasing
300
in EU 27 dependence on
200
(Bcm) imports
100
0
2010 * 2015 2020 2025 2030
* Provisional data @8250 kcal/cm
Source: IEA, IHS CERA

700
600
Gas 500 Power
Demand 400 Generation
Gas to power
uses 300 driving demand
in EU 27 200 Other growth
100 consumption
(Bcm)
0
2008 2015 2020 2025 2030 @8250 kcal/cm

Source: IEA

3
 Europe: infrastructures need to couple with gas import

Gas import in EU 27 (Bcm)

500 Additional import
400 versus 2010 Additional import:
300 Limited in Medium Term
200 Large in Long Term
100
0
2010 * 2015 2020 2025 2030
* Provisional data
New infrastructures under construction New infrastructures under development**

~ +85 Bcm >300 Bcm

Russia Russia
Russia
+55 Bcm +63 Bcm
+~80 Bcm

LNG LNG
LNG
+~30 Bcm +12-30
+12
+~14030Bcm
Bcm

Existing infrastructures Caspio

Caspian
+20-33 Bcm
~ 440 Bcm North
Nord 60 Bcm
+~60 c
Africa
+8-16
+~20
@ April 2011 Bcm
** Alternative projects considered 4
Source: IEA, IHS CERA (@8250 kcal/cm)
Security of supply: Caspian countries as potential exporters to EU

Caspian Region has significant amount of gas reserves (1/4 of world’s reserves)
but limited capabilities of exporting to EU mainly due to lack of E&P investments
and of interconnections with final markets.

Southern Corridor

RUSSIA Azerbaijan
b
GEORGIA Reserves: 1,310 bcm UZBEKISTAN
Production: 14,8 bcm
TURKEY ARMENIA
TTurkmenistan
k it
Reserves: 8,100 bcm 
Production: 36,4 bcm

Iraq  Iran
SYRIA
Reserves: 3,170 bcm Reserves: 29,610 bcm
Production: na Production: 131,2 bcm
Source: Bp Statistical Review of World Energy 2010 

Matching of gas availability and timing of new gas infrastructures to EU

5
Southern Corridor phased development criteria

Mid Term 
Mid Term Long Term 
Long Term
(<2020) (>2020)
New gas demand scenario 
Demand

Current gas demand scenario
Security of supply and sources 
f l d Development of new major import 
l f j i
diversification routes

Shah Deniz 2 only gas available in the Area Additional Azeri, Iraqi and Turkmen gas 
Supply

SD2 gas supply to EU, opening Southern  Interregional connections/routes linked with 
Corridor bulk infrastructures

▼ ▼

Southern Corridor Phase 1 Southern Corridor Phase 2

Demand‐Supply Scenarios entail a phased approach 
t th S th
to the Southern Corridor
C id

6
ITGI: contribution to the Southern Corridor

UKRAYNE
AUSTRIA
HUNGARY MOLDOVA
RUSSIA
SLOVENIA
CROATIA ROMANIA

BOSNIA SERBIA
AND HERZEGOVNA
ITALY BULGARIA
MONTENEGRO GEORGIA
FYROM
ALBANIA
ARMENIA
AZERBAIJAN
GREECE
TURKEY
IRAN

CYPRUS SYRIA
LEBANON
IRAQ

ITGI project is the only option to secure the swiftest opening of the Southern 
ITGI project is the only option to secure the swiftest opening of the Southern
Corridor, ensuring availability of Azeri gas to Europe

7
Conclusions

• Gas demand growth in Europe is strongly related to the use of gas in

power generation
• Nuclear moratoria, back up for renewables and CO2 target could drive to a
growth in gas consumption
• Gas to power is not competitive unless a review of the traditional structure
of L-T supply contracts (oil-linked)
• Political evolutions in North Africa suggest to diversify gas transportation
routes in order to guarantee security of supply
• Gas from SD2 is a chance for a swift start of Southern Corridor
• Phased development of Southern Corridor is sustainable on economic
basis, compatible with the progressive availability of gas from Caspian
Region and with the demand scenario in Europe

8
THANK YOU