Vladimir Shlyomin

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s predicted by the Institute of oil and gas geology with the Siberian Division of the Russian Academy of Sciences, by 2020 the total share of natural gas in power consumption of Belgium, the U.K., Germany, the Netherlands and France will increase up to almost 35 % (it was 23 % in 1995). The growth in Denmark will be even bigger reaching 43 % (19 % in 1995). The relative increment will not be so apparent in Finland and Sweden. However, the physical volumes of gas consumption there will rise more than twice.
As of today, over 30 % of the European countries’ needs in natural gas are covered by import shipments. At present, its main suppliers are Russia (32 % of all import supplies) and Algeria (20 %).
It is expected that Europe’s demand for imported gas will be quickly rising. By 2010 even the Great Britain, which today is capable of meeting its own needs, will become a net importer. According to some estimates, by 2010 this country will import up to 40 billion cubic meters (by pessimistic forecasts, the figure might come to as much as 80 billion cubic meters). After 2020 up to 90 % of gas consumed in the Great Britain will be shipped from abroad and it will account for 70 % of electric power generated in the country.
Among countries of Northern Europe only Denmark (except Norway) is producing natural gas on the shelf of the North Sea. These reserves are being exhausted and already in 2006 Denmark will have to have additional resources of gas of no less than about 1 billion cubic meters a year. By 2015 its gas reserves will be completely depleted.
The Great Britain can rely on two European countries, Norway and Russia, which will remain gas exporters in the foreseeable future. Until recently London regarded them as potential suppliers precisely in this sequence. There was a joint project to construct a gas pipeline from the Norwegian shelf field with the annual capacity of 20 billion cubic meters of gas, which was worked out by Norsk Hydro, BP, Shell and Statoil. However, it has already become clear that this capacity will not be enough for long. Besides, the disagreement on prices between the British and Norwegian sides popped up.
In this situation the Russian proposal to construct the North European gas pipeline (NEG) was made just at the right time. It is planned that the pipeline will be laid on the bottom of the Baltic Sea and, then, through territories of Germany and the Netherlands it will reach the coast of the Great Britain.
The gas pipeline, which is to be constructed by Gazprom, will cost $5.7 billion. This project is more expensive than the Norwegian one but, on the other hand, its future operation is more promising. Russia possesses much more reserves of gas than Norway does. Gas fields in the Nadym-Pur-Tazovsk region will serve as NEG’s raw material base at the first stage and later gas will be coming from fields of Yamal, Obsko-Tazovsk inlet as well as from the enormous Shtokman field. The start of supplying gas through NEG is planned for 2007 and the pipeline is expected to reach the design capacity in 2009. Initially, it was assumed that the amount of gas to be pumped through the pipeline will equal 19.7 billion cubic meters but, after its branch line to the Great Britain was taken into account, the decision was made to raise NEG’s design capacity up to 30 billion cubic meters.
But, still, one important question remains: how much Russia’s gas reserves are and how long they will last?
According to the official data, the Russian subsoil contains over 210 trillion cubic meters of natural gas. The explored fields account for 22 % or approximately one third of all world reserves. So, 40 trillion cubic meters of gas can, in fact, be supplied. Russia’s gas production in the coming years is thought to reach the annual volume of 600 billion cubic meters. That is why it is not difficult to figure out that the available resources will be enough for 50 years at the most.
At the same time rates of exploring new fields are falling down and this will inevitably have its impact in the immediate future.
Nikolai Krylov, the leading specialist in this area and doctor of geological and mineralogical sciences, insists that only every third drilled site happens to be an actual field. "This is, of course, the averaging-out of the available data. In fact, the coefficient of discovering actual fields in every region varies from 1 to 0.1 or even less", he says. "Before the gigantic Astrakhan gas-condensate field was discovered, 16 nonproductive prospecting holes were drilled. After that 14 more deep nonproductive prospecting holes were also drilled till discovering the Elenovskoye gas-condensate field, next to the Astrakhan field by the amount of reserves", Krylov adds.
By keeping such rates Russia is running the risk to necessarily limit the gas production and start reducing its supplies, above all, to the domestic market.
Speaking at hearings on Russia’s Energy program held by the State Duma Vladimir Rezunenko, the member of Gazprom’s board of managers, stated that the share of gas in Russia’s domestic power consumption still remained too high. In the opinion of Gazprom’s specialists, it should be lowered back to the level of 40 % to 42 % that existed before 1998. In the words of deputy chairman of Gazprom’s board of managers Alexander Ananenkov, this corporation is interested in raising domestic prices for gas because its sales inside Russia are unprofitable.

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"The serious attention in the cooperation between the Great Britain and Russia is being paid to developing the energy infrastructure, to deliberating new routes to transport energy supplies. In this connection I would like to mention in particular the project of constructing the North European gas pipeline. I am sure that the implementation of this project will provide stability and reliability of Russian gas’ supplies to the Great Britain as well as to the market of Continental Europe. It may create favorable prerequisites for an effective and competitive development of the European economy as a whole". Vladimir Putin, President of Russia. From the address to the Energy Conference, London, June 26, 2003

Experts estimated: if prices for gas increased up to the level of the world ones (between $130 and $150 per 1,000 cubic meters), the use of this fuel would become ineffective practically at all electric power stations in the European part of Russia. In this case the gas consumption in this part of the country might decrease between 2010 and 2020 by approximately 30 to 65 billion cubic meters. Then, the released resources could be used for export shipments.
Finally, it should be noted that experts are basing their estimates, mainly, on the present-day state of the economy. However, the dynamic economic growth may seriously correct such estimates.