European energy transition презентация

Table of contents
▶ Status of natural gas in Europe
© World Energy Council 2014
▶ Forces for change
▶ Challenges for natural gas suppliers

European Natural Gas Infrastructure
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LNG Terminals
Selected planned
Incoming gas pipeline routes: Existing
(selected)
Planned
(by Russia)
TAP
Trans-
Caspian
Interconnectors
(planned or built)
Planned/Upgraded (bu others)
OPAL
Write
Stream

European Natural Gas Demand/Supply
© World Energy Council 2014

EU sets ambitious targets for 2030
Renewbale Energy
40%
27%
20%
13%
Current
Targets for 2020
Targets for 2030 (proposed, not yet approved)
20%
Carbon Reduction
25%
© World Energy Council 2014
5
Source: EU Commission
18%
20%
Energy Efficiency
• Renewable targets – as % of renewable energy in the EU’s total energy mix
• Carbon reduction targets – % reduction compared to 1990 emission levels
• Energy efficiency targets – % reduction in energy consumption compared to reference levels (varies by member state, usually established based on peak year consumption in 2005-2007

Natural Gas Contract Duration Changes
There is evidence of both an increased overall amount of short/ medium-term natural gas trade.
Source: IGU- World LNG Report – 2015 Edition Source: IGU- World LNG Report – 2015 Edition
►Over the past 10 years there has been a large increase in the in the number of contracts with a duration of less than 5 years. 1
© World Energy Council 2014
Spot and Short-term
Medium-term
Long-term
% Spot and Short-term (right)
MTPA
MTPA
% Share
Non Long-Term Trade
% of Total LNG Trade
(right axis)

Table of contents
▶ Status of natural gas in Europe
© World Energy Council 2014
▶ Forces for change
▶ Challenges for natural gas suppliers

Despite the recent turmoil, the outlook for the world economy in 2020 remains unclear
© World Energy Council 2014
▶ The current recovery continues to lack momentum …
▶ Recent indicators point to tepid economic growth in most advanced economies
Confidence indicators and order books are up
Monetary conditions are still loose, investment is picking up
« Austerity » stances are giving way to more neutral policy stances
Some concerns about possible recession before 2020
▶ Yet, several emerging markets are in difficulty
Overemphasis on commodities, lack of reforms, socio-political mismanagement ?
8

orld Energy Council 2014
Will national regulation become more predictable in a European framework?
© W
In Europe, national energy regulation more important for investment mood than overall growth
Question 2: Which factors are contributing most to the energy infrastructure investment mood?
(please select maximum two that apply best)
National energy regulation (i.e. taxes, subsidies)
Overall economic growth prospects
Profit outlook
Private consumption (of energy efficient goods etc.)
Multilateral energy regulation
Others, please specify
National energy regulation more important in Europe than in rest of world, while outside
Europe, overall economic growth prospects more important than regulation
Higher influence of multilateral energy regulation reflects special European situation
Europe
Rest of World

10
Energy transition is happening in a weak market and challenging regulatory environment
GDP-forecast EU1
2.2%
Forecast Nov 2013
1.2%
0.0%
-0.3%
Forecast May 2013
0.7%
Forecast Oct 2012
1.0%
0.0%
Forecast Oct 2011
1.7%
2013
2014
Weak macroeconomics Regulatory challenges – Examples
30
40
50
60
70
7/11
1/11
7/13
1/13
7/12
1/12
Power Price Germany Base (y+1, €/MWh)2
<60
<50
<40
Further decreasing power prices
Jun 2010 Nuclear fuel tax
Sep 2010
Preferential treatment Spanish coal
Nov 2010
Retroactive tax on solar power
Feb 2011
Reduction of solar subsidies
Mar 2011
“Retail Market Review”
Mar 2011
Tax increase North Sea oil and gas
May 2011
Withdrawal of nuc. lifetime extension
Aug 2011
Increase “Robin Hood” tax
Nov 2011
Doubling of nuclear tax
Mar 2012
1. tax package to finance tariff deficit
Apr 2012
Coal tax increase
Jul 2012
Adjustments of RES promotion
Feb 2013
Energy tax
Apr 2013
Tariff cut for grid business
Jun 2013
Robin-Hood Tax on PV
Nov 2013
Change in promotion scheme for RES
1. Source: IHS Global Insight
2. Price for delivery next year
© World Energy Council 2014

EU places high priority on improving energy security
© World Energy Council 2014
▶ Increasing energy efficiency and reaching the proposed 2030 energy and climate goals.
▶ Increasing energy production in the EU and diversifying supplier countries and routes. This includes further deployment of renewables, sustainable production of fossil fuels, and safe nuclear where the option is chosen. It also entails working effectively with current major energy partners, as well as developing new partners such as countries in the Caspian Basin region.
▶ Completing the internal energy market and building missing infrastructure links to quickly respond to supply disruptions
▶ Strengthening emergency and solidarity mechanisms and protecting critical infrastructure.
▶ Speaking with one voice in external energy policy
11

Dynamic innovation and technology are driving changes on energy markets
Examples
US Gas
2040
Net exporter with 165 bcm
2012
Net importer with 42 bcm
Price decreased by 20%
each time the installed capacity doubled
139 GW
Europe 2014: 72% of new installations (22% in 2000)
Renewable energy: substantial size
2000 2013
global wind
318 GW
2000 2013
global PV
Module price
1980
1990
2000
2010
Cumulative production
Shale gas: technology „Hydraulic fracturing”
Increasing gas resources change global macro economics
PV: cost decrease beyond expectations
© World Energy Council 2014

Table of contents
▶ Status of natural gas in Europe
▶ Forces for change
© World Energy Council 2014
▶ Challenges for natural gas suppliers

The Economics of Unconventionals are Preferred in times of Uncertainty
Conoco Phillips: Flexibility vs. Returns by Asset Type
EOG Eagle Ford Operations
Completed Well Costs (MM USD)
6.1
5.7
5.5
5.3
-13%
2014 2015 Current Target Plan
Average Drilling Days Spud to TD
14.2
10.9
8.9
7.4
4.3
2012 2013 2014 Current Record
Source: EOG Investor Presentation, May 2015
© World Energy Council 2014
Source: Conoco Phillips Investor Presentation, May 2015