SE Europe s Overdependence on Oil & Gas Imports and Prospects for Increasing Indigenous Production Romania Oil & Gas 2012 Bucharest, December 4 5, 2012 A Presentation by Costis Stambolis, A.A. Dip. Grad., MIE, Executive Director Institute of Energy for S.E. Europe (IENE), Athens INSTITUTE OF ENERGY FOR SOUTH EAST EUROPE
Presentation Outline S.E. European Energy Area Basic Indicators Oil and gas import dependence and prices SE Europe s Hydrocarbon Outlook Investment in oil and gas upstream & downstream New gas supply routes Conclusions
The South East Region Defined
Some Observations The SE European region is overdependent on oil and gas imports On the strength of 2011 figures the region s 12 countries consumed 1.761,47 barrels per day (bpd) and imported 1.543,67 bpd which means that there are 88% dependent on oil imports In the case of gas these countries consumed 69 bcm in 2011 and imported 55.0 bcm, i.e. they were dependent to the tune of 74% on gas imports The 12 SE European countries paid some 55 billion Euro (US$ 69 billion) gross, to import oil and some 28 billion Euros to import gas which corresponds to approx 6.0% of their GDP (net imports are lower at 49 billion Euros for oil and 22 billion Euros for gas)
SE Europe Basic Economic & Energy Parameters (2011) Population GDP Installed Electricity Capacity Oil Consumption Oil Production Gas Consumption Gas Production 137.02 million 1.531,1 USD billion 120.926 MW 1.761,47 bbl/day 223.80 bbl/day 69.03 BCMs 13.55 BCMs
SE Europe Basic Economic & Energy Information (2010-2011) Country GDP (US$ Billion - 2010) GDP (US$ Billion - 2011) Primary Energy Production (Quatrillion btu- 2010) Albania 19.9 20.1 0.070 Bosnia & Herzegovina 28.2 29.9 0.24 Bulgaria 47.837 53.5 0.38 Croatia 76.5 79.2 0.17 Cyprus 23.0 24.7 s FYROM 9.1 9.7 0.06 Greece 301.62 299.27 0.4 Montenegro 6.6 7.4 0.03 Romania 164.63 189.77 1.13 Serbia & Kosovo 36.67 43.31 0.46 Turkey 731.29 774.33 1.23
Oil and Gas Production and Consumption in SE Europe (2011 oil statistics, 2011 gas statistics) COUNTRY GAS PRODUCTION (bcm/year) [2011] GAS CONSUMPTION (bcm/year) [2011] OIL PRODUCTION (thousand b/d) [2011] OIL CONSUMPTION (thousand b/d) [2011] ALBANIA 0.05 0.03 15.6 44 BOSNIA & HERZEGOVINA 0 0.2 0 35 BULGARIA 0.2 2.5 2.9 134 CROATIA 2.0 3.0 21.3 113 CYPRUS 0 0 0 65 F.Y.R.O.M. 0 0.1 0 19 GREECE 0 4.4 2.5 343.41 MONTENEGRO 0 0 0 4 ROMANIA 10.0 12.9 105.1 217 SERBIA & KOSOVO 0.5 2.4 19.9 81 TURKEY 0.8 43.5 56.5 706.06 TOTAL 13.55 69.03 223,8 1761,47
Some Basic Facts The average price of oil for the Brent European benchmark for 2011 was $111.26 bbl and so far in 2012 it stands at $112 bbl The average OPEC Reference Basket Price for 2011 was $107.46 p/bbl while for 2012, until last week, it stood at $109.73 p/bbl The above are considered all time historical high prices. Never before have we witnessed such high average oil prices over such a prolonged period According to latest CGES forecasts oil prices are not likely to collapse next year or move to substantially lower levels (in spite of weaker global economic growth), which means that SE European economies will continue to face a high financing burden for oil and gas imports
Market Crude Prices (IEA)
OPEC Basket Price
WTI and Brent Forward Price Curves
CGES Price Scenarios (period average Brent price - $/bbl)
Raison d Etre for Higher Local Oil & Gas Production The relatively high amounts of money spend to import oil and gas in SE Europe justify the effort and resources for maximizing indigenous hydrocarbon production Total oil production by all 12 SE European countries reached 223,800 bpd in 2011 and 13,55 bcm for gas which means that there is scope and available industry resources for increasing this production Latest geological, geophysical and seismic analysis indicate that there is good potential in several parts of the region for achieving much higher oil and gas production
SE Europe has a Promising Oil and Gas Potential Based on current knowledge we have five distinct hydrocarbon plays: (a) Black Sea (b) Adriatic (onshore in Albania and Greece and offshore in the Adriatic and Ionian Seas) (c) Aegean Sea (North and South East) (d) Herodotus basin (South of Crete) (e) East Med, also known as the Leviathan basin
The Promise of the Black Sea The region remains largely unexplored with less than 100 exploration wells drilled (as compared with 7,000 wells drilled in the North Sea) Black Sea Deep Water remains one of the world s last frontier areas Only one major discovery so far for in the Neptun Block in Romania Shallow and deep water formations present USGS Study of 2000 estimates > 7.0 Bill BOE in offshore areas
Eastern and Southern Black Sea Shallow water-moderately explored Deep water - frontier region From Block Varna Engagement in All Other Directions Romania Ukraine Russia Galata Field Domino-1 Georgia Bulgaria Polshkov Ridge Turkey
Romania - Black Sea New major offshore gas finds promise significant production opportunities Ana, Doina and Domino fields are vital for opening up Black Sea exploration in Romania sector Estimates for a 600 Bcm offshore natural gas resource base Anticipated capital investment of $ 30.0 billion over next 15 years for developing full offshore oil & gas capacity Romania could thus become net gas exporter to EU by 2025
Domino-1 Well in the Neptun Block
Ana and Doina Development
Strategic Location of Ana and Doina
Turkey More than 3,000 exploration wells since 1935 (mainly onshore) Most of the reserves and major production is in the Hakkari basin (SE Turkey) Oil reserves stand at 270 million bbl In 2009, oil production: 46,000 bbl/d In 2010, gas production: 23.9 bcf or 0.67 tcm
Map Showing Exploration and Production Licenses in Turkey
Albania A producer since early 20 th century Patos-Marinza discovered in 1928, production commenced in 1939 Production peaked in 1974 (2.25 million tons/year) Following new investment oil production increased in 2010: 11,000 bbl/d The outlook is for even higher production at 20.000 bbl/d Current gas production: 500 Mcf/d
Oil Geology and hydrocarbons events in Albania 25 The location of main oil and gas field in Albania
Oil Geology and hydrocarbons events in Albania 26 First Offshore Bidding Round In the offshore bidding round, the Albanian offshore was divided in 5 blocks with a total surface area of 11763 km 2 which were offered to the international oil companies. At the end of the round, 5 Petroleum Sharing Agreements were signed for 5 blocks offered, respectively. Block Rodoni-1 to DEMINEX Co. (German) and OMW Co. (Austrian) Block Adriatiku-2 Block Adriatiku-3 (American) to AGIP Co. (Italian) to Occidental Co. Block Adrialtiku-4 to CHEVRON Co. (American) Block Joni-5 (Australiane) to HAMILTON OIL Co. The Albanian offshore was completely unexplored with a total absence of data. Totol investment 147 Milion USD The A4-1x well drilled (1993 by AGIP and Chevron in offshore Albania (Adriatiku-4) proved to be as a light oil (condensate) and gas bearing in Messinian clastic reservoir.
Croatia Production peaked in 1980s Production has faced major decline 1994 Oil production in 2009: 15,000 bbl/d Gas production in 2010: 67 Bcf/d
Croatia, Cumulative Production Offshore & Onshore 1941-2011 boe (rounded fig.) Oil + Condensate 742.086.000 Gas 404.482.000
NORTH ADRIATIC PRODUCING AREA Total No. off shore producing gas fields: 9 GAS FIELDS in 2 CONTRACT AREAS: 1. North Adriatic Contract Area - Ivana, Ida, Ika, Ana, Annamaria, Vesna, Irina 2. Aiza Laura Contract Area Katarina, Marica
Croatia, Adriatic offshore, lessons learned from past 40 years exploration period 85% success ratio for N. Adriatic offshore for the 10 year period (2000-2009) shallow, biogenic gas play Recently new possibilities opened for thin gas layers exploration Central & South Adriatic under-explored, no capital investment in the area since late 80-ies untill 2011/2012 2D&3D high resolution seismic in South Adriatic New oil plays are proposed for these areas since drilling top of carbonate platform structures was not particularly successfull Deeper portion of S. Adriatic offshore undrilled (sea depth>300m) Possibilities for gas exploration in Central and South Adriatic not nearly exhausted most of the wells targeted oil in carbonates, in course of drilling both biogenic and thermogenic gas shows observed in the clastics from Oligocene to Pleistocene age
Montenegro Activity started after World War II 1949-1966, 16 wells onshore (900-4,600 m) 5 offshore wells, 1970s-mid 1990s Total length of 6,500 km 2D seismic 311 km 2 of 3D seismic 1 st Licensing round in 2012
Geological Promise Blok3 32
Data Room covers large amount of exploration data: 2D seismic exploration lines with total length of 6.500 km 3D seismic data at the surface of 311 km 2 3D GeoQube data on the surface of 138 km 2 4 deep drilling off-shore holes and 10 on land (up to 5.300 m depth) 3D seismic 2D seismic lines
Regional Hydrocarbon System Potential
East Med Areas of Interest
The main geotectonic features in the East Mediterranean Sea
Israel Exploration drilling began in 1947 In January 2009, Noble Energy Inc. discovered the Tamar field(gross mean resources 5 Tcf) In March 2009, Noble Energy Inc. discovered the Dalit field (gross mean resources 500 Bcf) in June 2010, Noble Energy Inc. discovered Leviathan (gross mean resources 17 Tcf) Total estimated reserves (1tcm)
Cyprus First exploration activity before World War II First seismic, in 1970-1974 (shallow, 200 m) Mid-1980s, geological/geophysical by the Soviet Academy of Scientists, offshore In 2011 Noble Energy Inc. discovers natural gas in Block 12 (estimated resources 5-8 Tcf) 2 nd Licensing round completed in 2012
Cyprus Israel Natural Gas Deposits Major New Natural Gas Discoveries: Cyprus, Block 12 ~ 7.0 9.0 TCF, (gross mean estimated) Israel, Tamar deposit ~ 9.0 TCF Israel, Dalit deposit ~ 3.0 TCF Israel, Leviathan deposit ~ 15.0 TCF 2 nd Cyprus Round just completed
East Med Hydrocarbon System: Israel
East Med Hydrocarbon System: Egypt
Offshore Cyprus: A New Frontier & Emerging Area
OIL Upstream Sector Exploration and Drilling
South Corridor Map
South Stream Pipeline
Offshore Section of South Stream Gas Pipeline
Total Energy Infrastructure Investments per Country (in million Euros) Albania 8.800 Bosnia & Herzegovina (Republic of Sroksa only) 3.855 Bulgaria 17.150 Croatia 7.000 Cyprus 19.000 FYROM 1.850 Greece 35.300 Kosovo 4.620 Montenegro 3.960 Romania 36.500 Serbia 10.665 Turkey 70.500 TOTAL 219.200
Anticipated Total Energy Infrastructure Investment Per Sector in SE Europe by 2020
Concluding Remarks The SE European region faces a high oil and gas import bill but has the prospect and ability to reduce it by increasing its indigenous output The region has favourable geological and geophysical conditions but is fragmented in widely differing oil and gas promising zones (and pockets) Romania s role is crucial as it is already leading efforts for increased oil and gas production in the Black Sea zone and could become the first gas exporting country to Central and SE Europe The East Med is also emerging as a potentially large oil and gas producing region with real export potential and capable of supporting an East Med energy corridor There is sustained strong investment interest in the region by international oil and gas companies in spite of political tensions and red tape. This is most encouraging
Thank you for your attention cstambolis@iene.gr www.iene.gr