FUEL ÝÊÑÏÎÐÒ BLUE Gazprom Export Global Newsletter IN THIS ISSUE Natural Gas: the Fuel of the 21st Century TO OUR READERS: Pg. 2 Nord Stream: Offshore Highway Natural Gas: Leading the Way Launched Silhouettes of wind turbines stretching successful in lobbying for the production Pg. 3 to the horizon have become an integral of these substitutes. As a result, many part of the landscape in many European countries have worked to expand the Long‑term Consequences countries. These turbines, along with production of corn, canola, soy and of German/EU Energy and solar panels, are visible proof of the palm oil at the expense of wheat and Environmental Policy boom that alternative energy sources other grains that are in greater demand. Pg. 4 have experienced in recent years. Few Developing countries, in particular, have doubt that renewables have a future, but begun to cut down tropical rain forests Shale Gas Impact Assessment: will they be able to replace traditional and raze pastures to free up acreage A View from Moscow energy sources in the next 20-30 years? for generously subsidized crops that Pg. 6 are increasingly needed. The problem To that end, let us briefly consider the is particularly acute in the third world, properties and prospects of some of the Why Yamal? Technological where hunger remains a pervasive issue. main alternative energy sources. Advancements in Gas Exploration Moreover, according to experts, the and Commitment to Employees Nuclear energy ecological damage inflicted today can Pg. 7 only be repaired after many decades, and Nuclear power does not pollute the at a considerable cost. Shaping the Profile of Russian earth’s atmosphere, but most Western Gas Exports: A Hungarian View countries express mixed feelings toward Pg. 8 the “peaceful atom,” especially after The most appropriate the Chernobyl accident in 1986 and the energy for the 21st century First Gas Shipment Along Nord Three Mile Island incident in 1979. Along is natural gas. Not only is Stream Route with the obvious security risk, there Pg. 9 are other concerns about the storage it the most environmentally of nuclear waste. Currently, operating friendly fossil fuel, but it WINGAS Contributes to stations in many EU countries are Post‑War Reconciliation nearing the end of their operations and is also a reliable substitute Pg. 10 could be closed. However, in some major for wind and solar energy European countries like Britain, Germany during periods of calm and VEMEX Reaches Major Gas Delivery and Italy, there are discussions about Milestone in the Czech Republic returning to the use of atomic energy. cloudy weather. Pg. 10 Whatever decision is ultimately taken, we must remember that the construction French Connection of nuclear power plants is not only Pg. 11 costly, but also quite time intensive. For Wind and solar power example, from the investment decision to Tackling Energy Efficiency Today, all working wind turbines the launch of a new station takes about produce less than two percent of the Pg. 13 15 years on average. world’s total electricity. Meanwhile, KHL: Second Season Success according to experts, by 2030, world Pg. 14 Biofuels consumption of electricity is expected to Proponents of the use of vegetable grow by 77 percent. Gazprom Export Sponsors Two fuels, mainly ethanol and biodiesel, Symphony Concerts in Istanbul instead of hydrocarbons have been Pg. 15 Continues on page 12 www.gazpromexport.com | [email protected] | +7 (499) 503-61-61 June 2010 | Vol. 3 | Issue 2 1 BLUE FUEL Gazprom Export Global Newsletter ÝÊÑÏÎÐÒ Natural Gas: the Fuel of the 21st Century Excerpts from Alexander Medvedev’s lecture delivered at the University of Warsaw on 19 May 2010 Alexander Medvedev, Deputy Chairman of OAO Gazprom Management Committee, Director General of Gazprom Export Just as the 20th century was the age of oil, many experts agree that the 21st century will prove to be the century of natural gas. Russia is the leading source of natural gas and fields continue to be discovered every year. As officials in Europe, North America and Asia are increasingly calling for higher environmental standards, it is important to highlight that natural gas is the cleanest fossil fuel-based energy source. Burning gas instead of oil reduces CO2 emissions by 20 percent and, if used as a replacement for coal, by 50-60 percent. Additionally, gas is the most economical choice. Though wind and solar energy are touted as the cheapest fuel sources, the technology required to harness such power is relatively costly. Without the use of gas, it is impossible to have environmentally clean energy that also serves as a reliable substitute for wind in Europe. This foundation wasn’t Therefore, it can be argued that and solar energy. shaken by the Cold War, the collapse suppliers and consumers are in the of the Soviet Union, Russia’s turbulent same boat. Gazprom’s relationship with A recent study by the International Gas transition from a planned to market its customers is one of interdependence Union forecasts that by 2030, global economy or the enlargement of the and mutual understanding. demand for gas will increase from the European Union. current three trillion cubic meters to The correct answer is more than four trillion cubic meters a Gazprom works to consistently and year, while its share in global energy will responsibly deliver the contracted volumes “interdependence” increase from 21 percent to 28 percent. of natural gas, even stepping in when Some unresolved issues in the field of buyers require an increased supply. For However, the gas sector requires major energy policies remain, hindering the example, Gazprom ensured an increased long-term investment. This is necessary development of constructive and equal supply to Turkey when gas supplies from not only for its further development and dialogue and hurting the trust between Iran were temporarily halted. to meet growing demand, but also to Russia and our partners in Europe. protect the environment and prevent A question that I am frequently asked Among those issues are the continued harmful climate changes to our planet. is why has Gazprom made such great concerns of energy dependence We are confident that “blue fuel” is the efforts to ensure the security and on Russia. The energy strategy for way of the future. flexibility of supply? The answer is Europe 2011-2020 names reducing simple — we are as interested in the dependence on Russia as a top goal, Energy security as top priority uninterrupted export of products as without taking into consideration the our partners in countries like Poland, fact that the Gazprom Group depends For more than four decades, the Soviet Slovakia and Germany are in their Union, and then Russia, have laid continuous import. the groundwork for energy security Continues on page 8 www.gazpromexport.com | [email protected] | +7 (499) 503-61-61 June 2010 | Vol. 3 | Issue 2 2 BLUE FUEL Gazprom Export Global Newsletter ÝÊÑÏÎÐÒ Nord Stream: Offshore Highway Launched Ulrich Lissek, Nord Stream’s Communications Director business leaders, including Russian The German-based company President Dmitry Medvedev, EU EUROPIPE will manufacture, coat Commissioner for Energy Günther and deliver 75 percent of the 12-meter Oettinger, the Chairman of Nord Stream steel pipes for the first pipeline. The Shareholders’ Committee Gerhard remaining 25 percent will be supplied Schröder, representatives of the by OMK, a Russian steel maker. Italy’s shareholders, as well as Nord Stream’s Saipem is undertaking the pipelaying, partners and contractors. while EUPEC, based in France, is responsible for overseeing major The participants noted the benefits logistical operations, constructing and that Nord Stream will bring to operating the specialized concrete Russia and Europe, as well as Nord coating plants and organizing the Stream’s contribution to the sustained transport of the ready-coated pipes to collaboration of the many countries The Nord Stream Pipeline is a the pipelaying vessels. involved in the project. By creating a major European infrastructure secure link between the vast reserves of One of the most essential project project aimed at delivering Russian gas and millions of European milestones of all was the successful natural gas from Russia’s vast consumers, Nord Stream strengthens completion of Phase I financing, which reserves to Europe’s ever-growing the political, economic and cultural took 30 percent of the investment funds energy market via the European relations among the countries and brings needed for the project provided by Nord gas network. In April 2010, the nations closer together. Stream shareholders, the balance of the international consortium of some 70 percent is due to be financed Gazprom, BASF Wintershall, E.ON This new stage of project development through commercial loans. This March, Ruhrgas and Gasunie started is a great success and is the result Nord Stream raised funds totaling 3.9 construction on the first of two of the joint efforts of companies from billion euros from 26 banks, which natural gas pipelines across the 11 countries, which worked on the demonstrates strong support for the Baltic Sea. ecological surveys, environmental project from financial markets. and risk assessments, technical Nord Stream’s Communications design, logistical challenges and many Although it was a challenging task Director Ulrich Lissek provides an other important aspects that must be to approach lenders in such tough update on the latest achievements considered when planning such a market conditions, the project was 60 of the project and the opening complex transnational project. Before percent oversubscribed for Phase I ceremony, which took place on 9 the start of construction, Nord Stream financing, which is a testament to its April in Portovaya Bay near the finalized all major contracts covering financial transparency, sustainability and Russian city of Vyborg.