Roberto Pirani, Chairman, White Stream Pipeline Company

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Roberto Pirani, Chairman, White Stream Pipeline Company White Stream™ A Priority Project of the EU and integral component of the Southern Gas Corridor Roberto Pirani – Chairman of the Board November 2010 Project development by the White Stream Consortium White Stream Pipeline Company Ltd – London, UK www.gueu-whitestream.com © 2010 -White Stream Pipeline Company Limited, The White Stream gas transportation project in the context of the Southern Gas Corridor A factor important for Caspian region governments and for potential upstream investors is the security and continuity of demand The concurrent development of White Stream with Nabucco and other Turkish loop projects offers producers and exporters such security of demand and security of export. White Stream The EU’s Southern Corridor projects are mutually reinforcing The important result is not only 60 Bcm/y+ of capacity, but also dramatic reduction of perceived transportation risks © 2010 -White Stream Pipeline Company Limited, the White Stream Consortium 2 East-West Energy Corridor pipelines paved the way for Caspian Gas to Europe The three success stories from the East- Supsa west corridor prove that Kazakh market-transforming Sangachal pipelines can be Erzurum realised Picture from CB&I John Brown Limited Ceyhan 3 © 2010 -White Stream Pipeline Company Limited, the White Stream Consortium The EU needs to replace declining production and meet new demand growth IAE: Volume Bcm IEA 2007 700 2020 import gap yet to be contracted IEA 2008 Demand for gas in Europe 600 IEA 2009 White Stream: 32 Bcm will increase from 526 bcm/y 500 IEA 2009 in 2010 to 622 bcm/y in 2030 400 EU27 consumption 300 Europe gas imports will 200 IEA 2009 North Sea production 3% increase from current 232 100 6% Continental European production bcm/y to 476 bcm/y 0 (+244 bcm/y) 1960 1970 1980 1990 2000 2010 2020 2030 2040 Data from: IEA WEO 2007-09, BP Statistical Review of World Energy, 2002-09 and other sources http://wap.trend.az/en/page8/1722459/ There is a growing need for additional gas from new supply routes to the EU © 2010 -White Stream Pipeline Company Limited, the White Stream Consortium 4 Reserves and resources to supply EU‟s Southern Corridor are huge 45 3.0 Change of PARADIGM: Caspian basin – the third „major league‟ gas supply centre in the world. Gaffney Cline REPORT confirms many 1.3 companies‟ long-held view – the gas is there 1.9+ 8.1.. 20+ 1.6 2.5+ 3.2 4.5 2.1 28 Main data: BP Statistical Review of World Energy, 2009 (Tcm) © 2010 GUEU-White- StreamWhite Stream Pipeline Pipeline Company Company Limited, Limited, the White the StreamWhite Stream Consortium Consortium 5 The EU Southern Corridor vision will STRENGTHEN Europe’s single gas market 3.0 45 1.3 1.9+ 8.1.. 20+ 1.6 2.5+ 3.2 4.5 2.1 28 Main data: BP Statistical Review of World Energy, 2009 (Tcm) © 2010 GUEU-White- StreamWhite Stream Pipeline Pipeline Company Company Limited, Limited, the White the StreamWhite Stream Consortium Consortium 6 Without Southern Corridor 3.0 45 1.3 1.9+ 8.1.. 20+ 1.6 2.5+ 3.2 4.5 2.1 28 Main data: BP Statistical Review of World Energy, 2009 (Tcm) © 2010 GUEU-White- StreamWhite Stream Pipeline Pipeline Company Company Limited, Limited, the White the StreamWhite Stream Consortium Consortium 7 EU support the development of the Southern Corridor The EU Energy Commissioner Günther Oettinger told the energy forum in Ashgabat on the 14th of April 2010: “The Commission will continue to strongly support the development of the Southern Corridor” “Several projects make up the southern corridor, including Nabucco, the ITGI and White Stream. The importance of the southern corridor was explicitly recognized by all 27 Head of States of the European Union at the European Council in March 2009” © 2010 -White Stream Pipeline Company Limited, The European Parliament Resolution on the need for an EU strategy for the South Caucasus The European Parliament … “ Recognises the significance of the region for the EU's energy cooperation and energy security, especially in the context of the development of the Southern Corridor (Nabucco and White Stream) “ European Parliament resolution of 20 May 2010 on the need for an EU strategy for the South Caucasus (2009/2216(INI)) para.29 www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P7-TA-2010-0193&language=EN&ring=A7-2010-0123 A successful Caspian gas strategy: BIG GAS offer If Caspian countries are expected to decide on allowing western companies for E&P and support westbound projects, they will need to see that potential exports to Europe are sufficiently high and capable of providing a significant part of their future revenues. … otherwise it will be difficult for them to get engaged in the complex process not favored by some of the established partners CDC – conceived by the Commission as a component of the Southern Gas Corridor will be able to provide such expanded opportunity. Two key strategies The Southern Corridor plan includes two key strategies needed to open up Caspian gas to western investments and direct export to the European gas market 1 BIG GAS strategy – by stressing its aim to buy large import volume from Caspian (90 Bcm/y or more) EU reduces barriers hindering the development. 2 Effective CORRIDOR strategy - by stressing its aim to develop all key projects of the Southern Corridor the EU reduces the perceived transportation risks for the Caspian producers and enables decisions on trans-Caspian crossing and new PSAs with western companies. Upstream investments are huge and risky. Caspian producers will want to have a secure gas export infrastructure to Europe © 2010 -White Stream Pipeline Company Limited, the White Stream Consortium 11 White Stream is feasible Our work up to date co- White Stream‟s development funded by the European schedule aims to deliver first Commission has proven: gas shortly after Nabucco • Market feasibility • White Stream is already • Demand for gas economical with 8 bcm/y • Supply of gas • Capacity can be increased to • Economic and meet need by adding offshore commercial feasibility strings • Technical feasibility • The volume of gas will proven ultra-deep water build-up gradually to 32 Bcm/y pipeline technology • The build-up schedule is flexible • Legal feasibility and can be ACCELERATED! 12 © 2010 -White Stream Pipeline Company Limited, the White Stream Consortium The White Stream project is commercially viable and offers flexibility in capacity build-up • The volume of gas will Bcm Stage 3:Volumes build-up gradually to 32 Bcm/y 32 4th string:32 Bcm/y 8 Bcm/y • Capacity can be increased to 24 Stage2nd 2: string:16 Bcm/y 8 Bcm/y meet need by adding offshore 3rd string: 8 Bcm/y strings 16 Stage1st2nd 1: string: string:8 Bcm/y 8 8 Bcm/y Bcm/y • The build-up schedule is 8 flexible and can be 1st string: 8 Bcm/y ACCELERATED! - 2011 2016 2021 2026 2031 2036 2041 2046 2051 • White Stream is already economical with 8 bcm/y © 2010 -White Stream Pipeline Company Limited, the White Stream Consortium 13 White Stream aligns multiple interests There are three broad sets of interests in play with respect to the Southern Corridor: • The EU needs diversity of routes as well as of sources. • Caspian need a sufficiently large, guaranteed revenue stream to warrant large, new direct gas trade deals and investment in upstream exploration and production. • Turkey‟s „land bridge to Europe‟ is in many ways the natural or obvious gas pipeline route, but the prospect of a transport monopoly slows progress on agreements, while the existence of a range of joint interests with Russia further complicates Turkey’s decisions. © 2010 -White Stream Pipeline Company Limited, the White Stream Consortium 14 How to align these interests? (1/2) • The Southern Corridor can align the interests of the EU, Caspian gas producers and Turkey with much higher certainty and in much shorter time frame if it has White Stream as an integral component. • For Turkey, the development of White Stream concurrently with Nabucco will neutralise concerns about a future transport monopoly. • The three-way alignment of interests outlined above will catalyse earlier and larger scale investment in exploration and production of Caspian gas. • The transported gas volumes will be larger and the timing of developments will be sooner, leading to outcomes with greater overall economic attractiveness and energy security for Turkey. © 2010 -White Stream Pipeline Company Limited, the White Stream Consortium 15 How to align these interests? (2/2) • The limited production capacity that investors have developed and the volumes of Caspian gas produced at present are a reflection of the current lack of westward export infrastructure, and not a reflection of the lack of reserves or the limitations of the resource base • Development of White Stream concurrently with Nabucco will accelerate the development of Nabucco. • White Stream and Nabucco together will catalyse TCGP and the huge Caspian gas potential. • Beyond this initial catalysing effect, the mutually reinforcing effect of the two projects will increase as increments of capacity in each project dove-tail with each other. © 2010 -White Stream Pipeline Company Limited, the White Stream Consortium 16 First string - Georgia to Constanta White Stream • Length: 1100 km (subsea to Romania) • Depth: 2150 m • Diameter: 28 inch • Volume: 8 © 2010 -White Stream Pipeline Company Limited, the White Stream Consortium The “Pipeline Concept” fully meets the project’s requirements Current deep-water proven technology dictates the phased development of the White Stream pipeline project: capacity of each separate string equals to 8bcm/year. The option for the Black Sea crossing using LNG tankers was also examined but the pipeline concept was found to have commercial advantage, particularly for large volumes over this relatively short distance .
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