1. Energy Security – need for diversification Arild Moe Energy security and energy efficiency: Possibilities for Slovak-Norwegian cooperation Bratislava, 4 October, 2007

2. Traditional concept - Energy Security  Security of supply –Post 1973 concept – oil focus –”Reliable supplies at reasonable prices” –A seller-buyer relationship  Gas as alternative energy –diversification away from oil and coal  Now: Concern over gas supplies –little flexibility –Russia most important supplier to Europe

3. Energy security - a broader concept  Security of investment –Free or at least predictable market conditions upstream not in place in all main gas supplying nations  Security of demand –Market conditions downstream that justify long term investments Long term contracts vs. spot sales 1990s: Buyers strengthened After 2000 – Resource owners again gaining strength

4.  Proper balance between producer and consumer interests not found  Interdependence between East and West not fully acknowledged  Political dialogue wanting –US-Russian energy dialogue dead –Russia-EU dialogue stalled

5. Has energy security deteriorated?  New EU-members: Increased dependence on Russian energy supplies for the EU as a whole – 25% of gas consumption  Russian gas supplies: Still reliable?

6. Russian gas diplomacy  The Baltic pipeline – Nordstream: –Increasing security of supply – or splitting EU?  The conflict with Ukraine –Unintended consequences?  Demand for better downstream access and threats to redirect exports –Not so seriously meant?  The Shtokman project –Too much back and forth  Russian ’energy superpower’ rhetoric overblown –but makes buyers want to diversify away from Russian energy  Russian down-stream integration not wellcomed

7. The real problem  Russia needs gas investments upstream  Discrepancy between projected deliveries and firm production plans by 2010-15 some 100 BCM –Independents important balancer, + 100-200 BCM? But independence more and more curtailed –Central Asian gas: 100 BCM – how reliable is it?  Serious rationalisation of domestic consumption required  Pipeline refurbishment – looming technical problems?  Decision paralysis?  Time is getting short

8. Norway and Russia in European gas markets 2006 (BCM)

9. The Norwegian potential Source: Ministry of Petroleum and energy/NPD

10. Norwegian gas export infrastructure Source: Ministry of Petroleum and energy/NPD

11. Outlook for energy security in Europe  Direct Norwegian supplies cannot replace Russian gas – but is very important in some markets and as part of integrated European market  Bilateral deals between importing countries and Russia understandable – but a common European policy would be more effective  More integration of the European markets will enhance energy security if short term supply problems arise  A broader approach to diversification needed to increase long term energy security

12. Thank you for your attention! arild.moe@fni.no