The EU-Russia Energy Dialogue The Roadmap of cooperation between Russia and the European Union in the energy sector until 2050 Institute of Energy Strategy Deputy General Director Alexey Gromov The EU-Russia Energy Dialogue Brussels, 18th February 2011

EU and Russia: energy market interdependence Energy markets are globalizing Russia is a key supplier of energy for EU EU is a key market of energy for Russia Oil market as global factor LNG market is globalizing Russia develops alternative export markets EU develops alternative import sources 2

Russia and EU need common long-term Energy Vision Long-term global social and economic vision Nature – Society – People system Mathematical modeling global energy modeling macroeconomics modeling Technology foresight energy foresight non-energy foresight Energy sector analysis Key trends Key events Fact Reference scenario Stagnation scenario Innovative scenario - Energy-intensive - Energy savings - Energy efficiency 3

Global energy trends: shift to the developing countries Global energy consumption, btoe CO2 emission, billion tonnes Fact OECD Reference scenario, OECD Stagnation scenario, OECD Innovative scenario, OECD Fact non-OECD Reference scenario, non-OECD Stagnation scenario, non-OECD Innovative scenario, non-OECD 4

Global energy trends: shift to the low-carbon energy Reference scenario – carbon-intensive + geopolitics Stagnation scenario – renewables + climate policy Innovative scenario – smart energy + market Uncertainty is very high Renewables are key factor Radical change in energy mix may happen and may not btoe 5

Energy efficiency: €40 bln in 2009 Energy service: €10 bln in 2009 European energy market: shift from commodities to service and to technology Energy efficiency: €40 bln in 2009 Energy service: €10 bln in 2009 Smart grids: €30 bln in 2009 Renewable energy market: €50 bln in 2009 Carbon markets: €70 bln in 2009 EU as the global leader in new low-carbon energy Energy commodities market 2010 Energy service market 2030 Energy technology market 2050 7

Russia in global energy sector Trend Risk for Russia Requirement for Russia Slowing demand for Russian energy Slowing growth of economy & export Optimization of export pipeline projects Shift of demand to Asia Growing competition in Europe New export destinations in Asia End of oil era Economic crisis Reduce dependence on oil exports Climate policy Limited export opportunities New markets New-generation energy sector Irreversible lag for Russia in energy and economy Modernization and innovative development of energy and economy To achieve these goals, Russia needs cooperation with European Union 8

Key challenge for Russia: oil prices: wave dynamics and downward trend From commodity market to service & technology market Volatility reduction The end of oil business Долл. 2009 г. за баррель Fact Stagnation scenario Reference scenario Innovative scenario 9

EU and Russia cooperation: common opportunities Oil & gas Energy efficiency Modernization Arctic fields development EU-Russia Centre for energy innovation Common investment in Russia Projects of common interest Cooperation in renewable energy Interconnection of power systems Oil prices forecast Heating efficiency in Russia: EU experience is needed Cooperation in smart greed development Oil market regulation Common vision of the transit problem Regional and municipal energy cooperation Import of equipment and technology Creation of common pan-European energy space is a key goal Objective differences between Russia and EU should be regarded 10

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