Presentation 'Natural gas for Ukraine, Russia and Europe: where next?' by Simon Pirani, Oxford Institute for Energy Studies, at Lviv International Security Forum, 15-16 April, 2010

1. Natural gas for Ukraine, Russia and Europe: where next? Simon Pirani Senior Research Fellow Oxford Institute for Energy Studies International Security Forum, Lviv, 16 April 2010

3. Observed gas demand, OECD Europe (bcm) It may return to pre-crisis levels only in 2013-14 Source: IEA

4. Changes in the European market Oil-linked prices may not be with us forever Source: Howard Rogers (OIES), Atlantic Basin LNG / Argus, Gas Matters

5. Natural gas imports to OECD Europe first nine months of the year, Bcm Russia lost market share

6. A very different outlook for Russia and Gazprom Worries about a ‘supply squeeze’ have gone. Now there are questions about long-term demand. Gazprom’s big projects are being delayed ... Gazprom will face competition in Europe from LNG... Russia’s dominance in central Asia has been undermined by the Turkmenistan-China pipeline ... In Russia, Gazprom is under pressure from the oil companies and Novatek ...

7. Main sources of supply to Russia’s gas balance, 2008-2009 (bcm)

8. Turkmen gas exports, 2008-2011 (bcm)

10. Russian gas export capacity to Europe up to 2015: transit via Ukraine could be reduced

11. Ukraine’s demand collapse, 2009 monthly consumption, as % of same month in 2008 Demand destruction concentrated in industry, but slowly recovering since the spring

12. Ukraine’s 2009 gas imports problem was converted into a cash problem ... the IMF counted $3bn Naftogaz operating deficit as part of Ukraine’s fiscal shortfall * Source: energy ministry, Naftogaz. ** Assuming oil at $70/bbl But what will happen in 2010? Volume of imports Price Import bill 2009 (est) 28.51 Bcm $231.12 (average) $6.59 billion 2010 (proj’n)** 32.5 Bcm $290-300 (average) $9.42-9.75 billion