1. Energy Strategy of Russia for the Year 2030 Oil & Gas Outlook Russia 2009 December, 8, 2009 Moscow Alexey Gromov PhD in Economic Geography Deputy General Director Institute for Energy Strategy

2. Energy Strategy 2030 in the System of Documents of the Strategic Development Program of long-term development of the fuel and energy complex of the Russian Far East Conception of the long- term development of the Russian Federation for the year 2020 Strategy of development of the power generation in the Russian Far East Long-term forecast of the development of Russian economy for the years 2009-2030 Eastern Gas Program General scheme of allocation of power generating facilities for the year 2020 General scheme of development of the oil industry for the year 2030 General scheme of development of the gas industry for the year 2030 Conception of the state program for exploration and exploitation of the continental shelf of the Russian Federation ES-2030 State program of energy saving Investment programs of energy companies 2

3. State Energy Policy in Russia Rational market environment Advanced standards and regulations Subsoil resources management Development of home energy markets Formation of rational energy balance Social policy in the energy sector Regional energy policy External energy policy Scientific, technical and innovative policy Strategic initiatives Energy security Energy efficiency of economy Economic efficiency of FEC Ecological security of FEC Management of state property 3

4. Aim and Goals of the ES-2030 Efficiency of reproduction, extraction and processing of energy resources Modernization and construction of new energy infrastructure Energy and ecological efficiency of the national economy and energy sector Stable institutional environment in the energy sector Further integration of the Russian energy sector into the global energy system Aim Goals Innovative and efficient energy development Aim of the ES-2030 remains stable despite consequences of the global economic crisis 4

5. Forecasted Change of the Fuel and Energy Complex’s Role in the Russian economy 2005 2030 Energy sector in GDP Energy sector’s export in GDP Energy resources in export Investment in energy sector in total investment 5

6. Expected Dynamics of Specific Energy Intensity of GDP and Domestic Demand for Primary Energy Resources 6

7. Efficient relationship between government and energy business Perfection of state price (tariff) regulations in the sphere of natural monopolies Completion of liberalization processes in power generation Development of the insurance system of long-term investments’ risks Perfection of license policy, elimination of inadequate administrative barriers Stimulation of modernization and innovative development of FEC Organization and stimulation of raising the level of stuff’s skills in FEC Optimization of tax burden Rationalization of amortization policy Formation of united leasing companies Support of small and medium-scale business in FEC First stage (2013-2015)Second stage (2020-2022)Third stage (2030) Formation of stable institutional and legal environment in FEC Financial stability of FEC and national economy 7 Economic efficiency of the energy sector Strategic aim: Principles and mechanisms of realization Creation of favorable economic environment System of prospective regulations, standards and norms Support of strategic initiatives Strategic indicators of economic (budget) efficiency of FEC

8. First stage (2013-2015)Second stage (2020-2022)Third stage (2030) Decrease in emission of pollutants into atmosphere and hydrosphere by the FEC, % by the level of 2005: no less than 15%no less than 30%no less than 50% Volume of greenhouse gases emission, % of 1990 level: no more than 83%no more than 92%no more than 105% Rate of APG utilization (in 2005 – 75%): 95% Forecasted dynamics of СО2-emissions 8 Ecological security of the energy sector Strategic indicators

9. Development of oil and gas complexes in Eastern regions of Russia Exploitation of the oil and gas potential of the Northern regions of Russia and Arctic off-shore Energy infrastructure: deevelopment and diversification Non-fuel energy Energy saving Key initiatives in the Russian energy sector 9

10. OIL NATURAL GAS  Baltic Pipeline System - 2 – 50 mln. т/y  North Stream – 55 bln. cub. m/y  South Stream – 30 bln. cub. m/y  Eastern Siberia-Pacific Ocean – 80 mln. т/y Energy infrastructure: development and diversification 1010

11. Development of oil and gas complexes in Eastern regions of Russia Exploration and exploitation of oil and gas resources in Eastern regions of Russia will help to satisfy the domestic demand for energy resources and diversify directions of export 1

12. Exploitation of Oil and Gas Resources of New Regions (including Arctic offshore) Shift in oil extraction in Russia new regions 12 Shift in natural gas extraction in Russia

13. Non-fuel energy Priority development: Nuclear Hydro Renewable POWER GENERATION Putting into operation installed capacity of 23-33 GWt will increase the share of renewable energy in power generation from 0,5 to 4,5% Forecasted development of renewable power generation 13

14. Energy Saving Saving of 240 bln. cub. m of natural gas, 340 bln. kilowatt-hour of electric power, 90 mln t of coal and 45 mln t of oil and oil products 1 2 3 4 5 Expected results of energy saving and increase in energy efficiency in Russia Improvement in competitiveness of national economy under conditions of growing tariffs for energy resources Increase in revenues from extra export of oil and natural gas: 84-112 bln. USD Decrease in governmental expanses: 3-5 bln. USD Reduction in CO 2 –emissions: 790 mln t/y Improvement in ecological situation in the country Consumption of energy resources can be reduced by: 20% in heat supply 30% in power generation 40% in industry and transportation 50% in living apartments Potential of energy saving in Russia is estimated at level of 45% of the current consumption of energy resources 14

15. Export of primary energy resources up to 2030 15

16. Strategic indicators of Russian oil industry Indicators/directions20081 st Stage2 nd Stage3 rd Stage Efficiency of land use Recovery ratio 3030-3232-3535-37 Production Share of Eastern Siberia and Far East in total production, % 310-1212-1418-19 Transportation Growth in capacity of arterial pipelines and export maritime-terminals, mln. t (basic year – 2005) 558-6065-7070-75 Proficit of export capacities (including those for transit purposes), mln. t 1725-3035-4040-45 Refining Average processing depth 727982-8389-90 Ratio of light oil products 576467-6872-73 Nelson index of complexity 4,36,06,58,5 Consumption of oil products per capita, t 0,51,01,1-1,31,3-1,6 Export of oil and oil products Share of “Eastern vector” in the total volume of oil and oil products export, % 810-1114-1522-25 16

17. 17 Oil production by region up to 2030 Oil export up to 2030 Oil refining up to 2030 Oil Sector: Forecast up to 2030 17

18. Indicators/directions20081 st Stage2 nd Stage3 rd Stage Production Share of “new region” in total production, %, including 3 13-1421-2338-39 Yamal 0 6923-24 Eastern Siberia and Far East 2 7-812-1415 Share of independent producers in total production, % 17 1625-2627 Transportation Growth of arterial pipelines’ length, % by the level of 2005 3 8-1013-1520-23 Share of reconstructed pipelines, % of the total length of United System of Gas Supply 4 10-1112-1325-26 Export Share of the Asia-Pacific in total export, % 0 11-1216-1718-19 Share of LNG in total export, % 0 4-510-1114-15 18 Strategic indicators of Russian gas industry

19. 19 Gas production by region up to 2030 Gas export up to 2030 Gas Sector: Forecast up to 2030 19

20. Forecast of investment in energy sector and energy supply of the national economy for the year of 2030 24-32% of investment in FEC will be directed in power generation, 22-26% - in oil industry, 21-24% - in gas industry and 3% - in coal industry. The sphere of energy supply will receive 22-23% of investment, forecasted in ES-2030 20

21. Expected results of ES-2030 1)Guaranteed energy security of Russia and its regions 2)Competent participation of Russia in ensuring global energy security, partly by means of diversification of export 3)Gradual decrease in dependency of national economy from oil and gas sector and respective decline of FEC’s share in the structure of GDP from 30 to 18% 4)Decrease in specific energy intensity of GDP by 2,1-2,3 times 5)Optimization of fuel and energy balance, decline in the share of natural gas in energy consumption from 52 to 46-47% and increase in the share of non-fuel energetics from 11 to 13-14% 6)Exploration and exploitation of new oil and gas producing regions 7)Development of the social partnership between energy companies and society 8) Improvement in financial stability, budget efficiency and investment prosperity of energy companies 9)Innovative renovation of production assets and energy infrastructure, development of new energy technologies 10)Ecological security and efficiency of FEC, limitation of greenhouse gases emissions (up to 100-105% by the level of 1990) owing to realization of the potential for energy saving 21

22. Thank you for your attention! 22