GAS TO POWER EUROPE

Eloy Alvarez PelegrySecretary GeneralUNION FENOSA gas6th June

GAS TO POWER EUROPE

GAS TO POWER EUROPE

• Electricity demand and ageing of existing facilities drive new generation capacity development

• Environmental policies favour gas & renewables

• CCGTs are “easy” and “complex”

• Prices are now a concern

• Items for security of supply:

Diversification (origins, gas infrastructures generation mix)

Participation throughout the gas chain

Electricity demand and ageing of existing facilities drive new generation capacity development

World Electricity demand (2002-2030)

0

500

1000

1500

2000

2500

2002 2010 2020 2030

Mto

e

X 2

Source: IEA

European Electricity demand (2002-2030)

0

50

100

150

200

250

300

350

2002 2010 2020 2030

Mto

e

X 1.5

Source: IEA

Spanish Electricity demand (2002-2030)

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

2002 2010 2020 2030

Mto

e

X 1.8

Source: EU, MITyC

Age of generation facilites EU 29

Source: WEC

6%

50%

6%

48%

19%

17%

19%

44%

23%

22%

38%

52%

11%

37%

4%

4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Nuclear Coal Natural Gas oil

<10 years 10-20 years 20-30 years >30 years

GAS TO POWER EUROPE

Environmental policies favour gas & renewables

ETS Directiveenters into

force

European Level

2003 2005 2007

March: EUcountriesto submit

NAPsto the

Commission

June:Countries

to submit NAPsfor second

trading phase

Second trading phase(First Kyoto period)

Country Level

20122004 2006 2008

ETS critical reviewAddition

of other sectorsand

other gases?

May:Accessioncountriesto submit

NAPsto the

Commission

Firsttradingphase

Commissionto approve

NAPs

April:Installationsto surrenderallowances

for 2005emissions

February:Kyoto

Protocolenters

into force

Final NAPapproval?

Kyoto Protocol Process

GAS TO POWER EUROPE

CCGTs are “easy”

Energy Efficiency (%)

30

35

40

45

50

55

60

COALTRADITIONAL

GASTURBINE

COALSUPERCRÍTIC

DIESELCCGT

Source: Own elaboration

Estimated construction period (years)

Source: Own elaboration

0

1

2

3

4

+5

CCGTCoalNuclear

Typical Investment (€/kW)

0

500

1000

1500

2000

NUCLEAR HYDRO COAL CCGT

Source: Own elaboration

Land requirement (Ha)

CCGTCCTT

0

5

10

15

20

25

30

Ha

Source: Own elaboration

GAS TO POWER EUROPE

CCGTs are “complex”

Source: Cera, Wood Mackenzie & Own elaboration

Kenai

Libya LNG Damietta

Idku

Atlantic LNG 1Atlantic LNG 2Atlantic LNG 3Atlantic LNG 4

Bolivia LNG

Perú LNG

P. Deltana

Angola LNG

Mauritania

Skikda

ArzewBethioua

Snohvit

Sakhalin

Oman LNGQalhat LNG

Qatargas LNG 2

Qatargas LNG 3

Yemen

Qatargas LNGRas Gas 1RasGas 2

NIOC LNGIran LNG

Abu Dhabi LNG

Alba GuineaEcuatorial

Nigeria LNG BaseNigeria LNG Expansion

Nigeria LNG Plus

Brass LNGOlokola LNG

NLNG 6NLNG 7

Arun

MLNGMLNG DuaMLNG Tiga

Darwin

Australia NWS 1Australia NWS 2Australia NWS 3Australia NWS 4

Bontang

Brunei

Australia NWS 5Gorgon

Tangguh

Donggi

SunriseBrowse Basin

Ust Luga

Gassi Touil

Pars LNGPersian LNG

Ras Gas 3RL 3

EXISTING LIQUEFACTION PLANT

LIQUEFACTION PLANT UNDER CONSTRUCTION

PROBABLE LIQUEFACTION PLANT

POSIBLE LIQUEFACTION PLANT

Reserves: 23.783 bcmProduction: 1.103 bcm

LNG current production: 94,5 bcm/a

Existing LNG trains: 32

Reserves: 6.173 bcm

Production: 29 bcm

LNG current production: 22,7 bcm/a

Existing LNG trains: 5

Reserves: 68.785 bcm

Production: 1.163 bcm

LNG current production: 20,6 bcm/a

Existing LNG trains: 4

Reserves: 80.787 bcm

Production: 396 bcm

LNG current production: 108,8 bcm/a

Existing LNG trains: 40

ASIA-PACIFIC(*) ASIA-PACIFIC

SOUTH ATLANTIC

MAGREB - MIDDLE EAST

NORTH ATLANTIC

Shtokman

(*) Includes USA and Canada

International gas marketsNG & LNG ChainsE&P

PIPELINE TRANSPORT PIPELINE TRANSPORT

PRESSURE & M ETERING STATION

LIQUEFACTION PLANT

MARITIME TRANSPORT

LNG STORAGE

REGASIFICATION PLANT

TRANSPORT GRID

DISTRIBUTION GRID

CONSUMERS

LNG STORAGE

UNDERGROUND

TREATMENT

STORAGE

Source: Own elaboration

GAS TO POWER EUROPE

Prices are now a concern

GAS TO POWER EUROPE

Indicative relationships gas,coal,CO2.

Gas ($/ )

Natural gas

Coal

-80

-30

20

70

120

170

2,0 4,0 6,0 8,0

MMBtu

Co

al($

/t)

CO2 40 €/t

CO2 5 €/t

Source: Own elaboration

Generation cost structure (high prices scenario )

11%22%

9%

71%32%

12%

37%

5%

0%

20%

40%

60%

80%

100%

CCGT Coal Superc

Capital O&M Fuel CO2

Source: Own elaboration

Brent and MCIS price evolution

Source: Own elaboration

0

10

20

30

40

50

60

70

80

90

jan-9

1se

p-91

may

-92

jan-9

3se

p-93

may

-94

jan-9

5se

p-95

may

-96

jan-9

7se

p-97

may

-98

jan-9

9se

p-99

may

-00

jan-0

1se

p-01

may

-02

jan-0

3se

p-03

may

-04

jan-0

5se

p-05

$/t

0

10

20

30

40

50

60

70

$/b

bl

MCIS Brent

Natural Gas supplies to Spain

Source: Own elaboration

North Atlantic

South Atlantic

Asia

North Africa&

Middle East

Spanish demand 2005

32,3 bcm

8%

15% 77%

0%

Items for security of supply: Diversification (origins,infrastructure gen.mix)

0

10

20

30

40

50

60

2005 2006 2007 2008 2009 2010

bcm

Asia

North Africa&ME

North Atlantic

South Atlantic

Demand

40

0

510

15

20

25

30

35

1.998 1.999 2.000 2.001 2.002 2.003 2.004 2.005

bcm

Domestic Algeria Libya Egypt Middle East Norway T&T Nigeria Others

GAS TO POWER EUROPE

Sabón

ReganosaSagunto

LIQUEFACTION SHIPPING

Cádiz Knutsen

Galicia SpiritSEGAS - Damietta

QalhatLNG Oman

CCGT

NGS

Aceca

Palos

Sagunto

REGASIFICATION

2001 2005 2007

Damietta, Egypt (photograph)

and QalhatLNG Oman

PROJECTS

Items for security of supply: Participation throughout the gas chain

GAS & POWER IN EUROPE

Thank you for your attention