Pipeline Technology Conference 2011 - Perspective on the Development of European Gas Infrastructure Hannover 4th April 2011; Oliver Giese

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Pipeline Technology Conference 2011 - Perspective on the Development of European Gas Infrastructure Hannover 4th April 2011; Oliver Giese
Pipeline Technology Conference 2011

Perspective on the Development of European Gas Infrastructure
Hannover 4th April 2011; Oliver Giese
Pipeline Technology Conference 2011 - Perspective on the Development of European Gas Infrastructure Hannover 4th April 2011; Oliver Giese
Contents

1.   Activities of E.ON
2.   Gas Reserves and Gas Demand
3.   European Natural Gas Transmission System
4.   Nord Stream as an example of a successful Pipeline Project
5.   Perspective on the Development of European Gas Infrastructure -
     Conclusion

                                                                       2
Pipeline Technology Conference 2011 - Perspective on the Development of European Gas Infrastructure Hannover 4th April 2011; Oliver Giese
1. Our Group Units accompany our activities along
the whole value chain
Long term contracts
                      Storage
Exploration &
                                     Trading   Distribution   Retail/Sales
Production
                      Transmission
LNG

                                                                         3
Pipeline Technology Conference 2011 - Perspective on the Development of European Gas Infrastructure Hannover 4th April 2011; Oliver Giese
1. Corporate structure of E.ON Ruhrgas

                                                E.ON AG

                                             Global Gas
                                          E.ON Ruhrgas AG

                                         Central Functions

                                                                     Gas Technology & Energy Systems
                            Portfoliomanagement

                                                                            Competence Centre
              E&P                     LTC                   LNG
           Exploration &                                Liquefied
                                Long Term Contracts
            Production                                 Natural Gas

               ISB
           Infrastructure                                 Sales
           Shareholdings

                     E.ON                       Open Grid
                  Gas Storage                    Europe

                                                                                                       4
Pipeline Technology Conference 2011 - Perspective on the Development of European Gas Infrastructure Hannover 4th April 2011; Oliver Giese
Gas Technology & Energy Systems
                                                                     Competence Centre

                 1. Topics of Competence Centre are settled along the whole Value Chain

         Generation / Supply           Transport           Storage          Distribution            End-use
Gas System

                       E&P                 LNG
                                                               UGS             MP/LP-Grid
                       LTC                 Pipeline

                                             Power Storage                                           Gas Mobility

                                      Gas Metering and Quality Control                       Gas & Renewables
                                   H2 & CO2 Transport

               Carbon Sourcing & Technical Cooperation               Carbon Sourcing        Efficiency & Buildings

                                                Smart Gas Grid / Smart Meter                     Smart Meter
Power System

                                                                                            Distributed Generation

                     RES power
                                           HV-Grid                             MV/LV-Grid
                     conv. power
                                                                                                                     5
Pipeline Technology Conference 2011 - Perspective on the Development of European Gas Infrastructure Hannover 4th April 2011; Oliver Giese
Contents

1.   Activities of E.ON
2.   Gas Reserves and Gas Demand
3.   European Natural Gas Transmission System
4.   Nord Stream as an example of a successful Pipeline Project
5.   Perspective on the Development of European Gas Infrastructure -
     Conclusion

                                                                       6
Pipeline Technology Conference 2011 - Perspective on the Development of European Gas Infrastructure Hannover 4th April 2011; Oliver Giese
2. Perspectives of Gas Supply for Europe (EU-27)

                                                bcm
 Import dependency of Europe remains;                                                                 Projects in the future
  tendency: increasing                                                                            (dependent on trend of demand
                                              500
 Interdependencies between previous
                                                      other*
  regional submarkets all over the world
                                                       ALG
  will further increase
                                                        RUS                                              EU-imports
 Competition regarding resources on the 250
  international markets will grow                      NOR

 Number of important producers outside
  EU will remain limited and their position                                                              EU own production
  will stay strong
                                                      2009          2015          2020        2030

                                                      *) i.e., Egypt, Qatar, Nigeria
                                                      Basis for EU imports: Contracted quantities of gas, expected
                                                      extensions of contracts and additional quantities for EU-market

                                                                                                                        7
Pipeline Technology Conference 2011 - Perspective on the Development of European Gas Infrastructure Hannover 4th April 2011; Oliver Giese
2. World Gas Reserves

         proved recoverable natural gas reserves: 177.0 trillion m³

                                                                         C.I.S./
                                              Europe              56.4   Central
                                                                         Europe
                              8.7                 4.8

          North America                                  73.3
                                                                             Far
                                                  14.0               12.2
                                                         Middle              East
                                                         East
                                        7.6   Africa

                            South America

1 m³ = 11.5 kWh
1 January 2009
Source: Oil & Gas Journal
                                                                                    8
Pipeline Technology Conference 2011 - Perspective on the Development of European Gas Infrastructure Hannover 4th April 2011; Oliver Giese
Contents

1.   Activities of E.ON
2.   Gas Reserves and Gas Demand
3.   European Natural Gas Transmission System
4.   Nord Stream as an example of a successful Pipeline Project
5.   Perspective on the Development of European Gas Infrastructure -
     Conclusion

                                                                       9
Pipeline Technology Conference 2011 - Perspective on the Development of European Gas Infrastructure Hannover 4th April 2011; Oliver Giese
3. Pipeline Gas imports are actually transited via 3 Main
Corridors to the European Market; 4th Corridor is needed
                                    21%

  from Russia                                    23%
  from the North
   Sea (Norway, UK)
  from North Africa         36%
   (Algeria / Libya)
  from Central Asia
   / Middle East

                       20%
                                                        10
3. Connecting Europe with new gas reserves via TAP
 TAP is a commercially & technically viable gas pipeline project linking Europe to new gas sources
 TAP contributes to increased security of energy supply in Europe
 TAP meets the needs of producers, shippers and buyers

                                                                                         Gas reserves in trillion
                                                                                                  m3

                                                                                                         11
3. TAP - the shortest and most cost effective way to Europe
  TAP is a cost effective option (both CAPEX and OPEX)
  Uses existing infrastructure and therefore can flexibly developed in a step by step approval
  SD II gas to fill TAP’s initial capacity of 10 bcm per year
  No other volumes required for the pipeline at this stage

                                                                                                  12
Contents

1.   Activities of E.ON
2.   Gas Reserves and Gas Demand
3.   European Natural Gas Transmission System
4.   Nord Stream as an example of a successful Pipeline Project
5.   Perspective on the Development of European Gas Infrastructure -
     Conclusion

                                                                       13
4. The Nord Stream Project

                                                                                   since 10 June 2008          since 1 July 2010

     51%                     15.5%                   15.5%                           9%                         9%

Nord Stream
 Two parallel offshore pipelines of 1,224 km (transport capacity 55 bcm per year)
 A direct and fixed link between Russia’s vast proven gas reserves and the European Union
 An additional route complementing Existing network and other planned pipelines
 Infrastructure project ‘of European interest’ within the framework of the EU’s TEN-E guidelines

 Feasibility     Pipeline             Applications & Financing       Laying     Commissioning     Laying    Commissioning
   Study         design         EIA     Permitting   Phase I & II    Line 1        Line 1         Line 2       Line 2

 1997-1999     2005 - 2009    2006-2008    2009         2010        2010-2011       2011        2011-2012      2012
                                                                                                                                   14
4. Over 1,100 km of the first pipeline laid until date
                                                                                         2010   April

                                                                                                        Castoro Sei (C6)
                                                                               KP7.5
                                                                                                May

                                                          KP297                                 June
                                                  KP350

                                                                                                                           Castoro Dieci (C10)
                                                                                                July
                                       KP451
                                                                                                Aug.

                                                                                                Sep.

                                                                                                Oct.

                                                                                                                                                 Solitaire
                               KP675
                                                                                                Nov.

                                                                                                Dec.

                          Location Castoro 6: ~KP 800 (125 km open)                      2011   Jan.

                                                                                                Feb.

                                                                                                March
          KP1195
                                                                                                April

 * KP = Kilometre Point                                                                                                                  15
                                                                      As of 29. March 2011
4. Allseas' Pipelay Capabilities under Arctic Conditions

                                                           16
4. Nord Stream’s onshore connections to the European network – OPAL & NEL
enable to distribute new Volumes into the European Gas Market
OPAL (Greifswald – Olbernhau)                                  Greifswal
                                                                   d
 478 km / DN 1400 / PN 100
                                                        NEL
 Compressor Station Radeland                                  OPA
  2 x 33,4 MW                                                   L
  1 x 32,0 MW                                  Rehde
                                               n
 Construction Progress: 99%                                     Radelan
                                                                 d

 Planned Completion: October 2011
                                                                 Olbernha
NEL (Greifswald – Rehden)                                           u

 440 km / DN 1400 / PN 100
 Construction Start: March 2011
 Planned Completion: November
  2012

                                                                     1717
Contents

1.   Activities of E.ON
2.   Gas Reserves and Gas Demand
3.   European Natural Gas Transmission System
4.   Nord Stream as an example of a successful Pipeline Project
5.   Perspective on the Development of European Gas Infrastructure -
     Conclusion

                                                                       18
5. E.ON welcomes and endorses the approaches expressed by the
EU COM on Energy Infrastructure Priorities for 2020
Energy Infrastructure Priorities for 2020 +
 Improving internal market in Europe
  regarding cross-border interconnec-
  tions, integration of isolated regions
  and competitiveness                                            BEMIP Gas

 2020 goals and reduction of
  greenhouse gas emissions until 2050
  can only be achieved with sufficient
  and adequate grid infrastructure
 Security of energy supply is a key
                                            North-South Gas
  element of European Energy policy        Corridor in Western     North-South Gas
  leading to investment obligations in           Europe            Interconnections
  infrastructure
                                                                                Southern Gas
    Completely new infrastructure                                                 Corridor
    policy needed

                                                                                       1919
5. EU COM should support important infrastructure projects
primarily by providing an appropriate regulatory framework
E.ON’s Position on Energy Infrastructure Priorities for 2020 +
               The identification and development of important infrastructure
  Priority     priority areas, especially concerning new import routes for gas should
 corridors     be a joint project of energy companies, Member States and the EU COM.

Selection of   The selection of projects that are to receive preferential treatment
 important     regarding facilitated processes should involve a dynamic selection
  projects     procedure based on transparent criteria and markets’ requirements.

              EU COM could potentially facilitate the sharing of best practice
Authorization between Member States at national and local level and help to ensure a
 procedures framework for co-operation between the relevant authorities.

               Current capital market-based system for financing grid investments
 Financing     should be kept. Existing national regulatory frameworks have to be
               adapted to allow an appropriate return on investment.
                                                                                    20
5. Transportation tariffs have to provide security for investors
taking over risks for major infrastructure investments
E.ON’ s requirements for infrastructure projects
 Project joint ventures of non-TSO project sponsors are
  an efficient concept for the realization of multinational
  import projects parallel to TSO-driven projects
 High investment-costs are necessary for the
  implementation of major transmission systems
 Return on capital employed need to correspond with
  investor objectives
 Project risks need to be considered adequately
 Long-term transportation contracts are backbone for
  investments
 For transmission systems with strong transit character an
  exemption from regulation is important, i.e. tarification
  will be defined by investors

                                                              21   21
Thank you for your attention !

Oliver Giese
Senior Vice President Infrastructure Interests, E.ON
Ruhrgas AG

oliver.giese@eon-ruhrgas.com
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